New Sustainable Design and Construction Contracts
Source: Construction Executive, June 2012
By: Kenneth Cobleigh
Meeting Expectations and Managing Risks
Sustainable design and construction is a rapidly evolving area for owners, architects, contractors, and others involved in the design and construction industry. This year, the International Code Council released its International Green Construction Code (IgCC) and the Green Building Certification Institute is poised to update its LEED rating system.
Building codes and rating systems attempt to define and often place parameters around what is required for a project to be considered sustainable. Owners, architects and contractors are faced with an increasingly diverse set of standards to apply to their projects. In jurisdictions adopting green building codes, such as the IgCC, projects must meet mandatory baselines for energy and environmental performance. In the absence of green code requirements, or as a supplement thereto, owners may undertake voluntary measures, such as LEED certification, to achieve energy savings or other environmental benefits. Often, these code-mandated or voluntary requirements cannot be achieved without each project participant accepting new roles and responsibilities. Clearly defining a project’s sustainable requirements and appropriately allocating responsibility for the elements necessary to achieve those requirements can greatly reduce the potential for mistakes, misunderstandings and disputes on a sustainable project. To avoid confusion and misunderstandings, design and construction agreements for sustainable projects must outline a clear process to help the project team develop and implement a plan for achieving the code-mandated or owner-initiated sustainable requirements.
In May 2011, the American Institute of Architects (AIA) released AIA Document D503–2011, Guide for Sustainable Projects, including Agreement Amendments and Supplementary Conditions, to help identify and discuss key issues related to some of the new roles, responsibilities, risks and opportunities encountered on sustainable projects. D503–2011 includes model language that can be incorporated into existing contract documents to help parties define, document, and allocate the specific roles and responsibilities of the owner, architect and contractor, as well as to assign new risks to the party in the best position to control those risks. While the model contract language in AIA’s Guide for Sustainable Projects was written for direct incorporation into existing contract documents in the design-bid-build delivery model, the concepts covered in the model contract language are appropriate for all project delivery methods.
Pursuant to the process outlined in the Guide for Sustainable Projects, the architect meets with the owner to discuss the sustainable design features of the project during a sustainability workshop. The ultimate outcome of the sustainability workshop is the development of a sustainability plan that identifies the sustainable requirements (sustainable objective) for the project, outlines the design and construction elements (sustainable measures) necessary to achieve the sustainable objective, and allocates responsibility to the team member in the best position to perform the sustainable measure.
The model contract language suggested in the Guide for Sustainable Projects imposes an explicit obligation to perform in accordance with the sustainability plan on the owner, contractor and architect. Because the sustainability plan is a contract document, it is critically important for the contractor to become familiar with its requirements as they relate to the construction work being performed.
The process of developing the Sustainability Plan is effective on a wide variety of sustainable projects, including those in which the objective includes obtaining LEED certification or incorporating performance-based sustainable design or construction elements. Furthermore, as new green codes are developed, this process will help project participants navigate the requirements of code compliance.
The Guide for Sustainable Projects also addresses other risks unique to sustainable projects, including liability for failure to achieve the owner’s Sustainable Objective; liability for the owner’s failure to obtain tax incentives and other available incentives; and liability for failure of certain sustainable construction materials and equipment to perform as intended. The Guide for Sustainable Projects suggests contract provisions, including disclaimers of warranties and guarantees, are an expanded waiver of consequential damages that addresses some of the new risks on sustainable projects, as well as new processes to deal with material or equipment substitutions and untested materials.
In May 2012, AIA released five new documents to form a comprehensive and coordinated set of documents for use on design-bid-build sustainable projects.
- A101–2007 SP, Standard Form of Agreement between Owner and Contractor, for use on a Sustainable Project where the basis of Payment is a Stipulated Sum;
- A201–2007 SP, General Conditions of the Contract for Construction, for use on a Sustainable Project;
- B101–2007 SP, Standard Form of Agreement between Owner and Architect, for use on a Sustainable Project;
- A401–2007 SP, Standard Form of Agreement between Contractor and Subcontractor, for use on a Sustainable Project; and
- C401–2007 SP, Standard Form of Agreement between Architect and Consultant, for use on a Sustainable Project.
In addition to the Sustainable Projects documents, AIA revised and updated AIA Document B214–2012, Scope of Architect’s Services: LEED Certification, which incorporates key concepts from the Guide for Sustainable Projects and the Sustainable Projects documents to provide a scope of services for the architect on projects seeking LEED certification. However, B214–2012 is not intended to be used directly in conjunction with B101-2007 SP or with the other Sustainable Projects documents. Accordingly, on projects where the architect’s services are governed by B214–2012, contractors may want to review the Guide for Sustainable Projects and consider incorporating modifications in the owner-contractor agreement or in the subcontract agreement that will help prevent liability for additional risk on sustainable projects.