Form Contract Aims to Reduce Risk of Green Construction Litigation

Green Space Today
Gwendolyn E. Drake

LEED Certification, short for Leadership in Energy & Environmental Design, is an internationally recognized green building certification system. LEED certification is a credential given to buildings that were designed, built or retrofitted to be energy efficient or environmentally friendly. Some government entities have established tax breaks for LEED certified buildings, which typically have lower energy costs for utilities due to their energy-efficient construction.

As a selling point for their services, contractors or architects may guarantee owners that the building under construction or renovation will receive LEED certification upon completion. If the building does not receive the certification, owners may sue for breach of contract, with the loss of the tax breaks and the higher energy costs considered as damages. Disputes often center around who was responsible for completing the necessary steps in the certification process and who was responsible for failure to obtain LEED Certification.

To help avoid these disputes, the American Institute of Architects has published a form contract that clearly spells out the role of each party in the process of achieving LEED certification. The form contract is AIA Document B214-2007, a design-build contract form that requires LEED goals to be set up front before the contractor bids. The form specifies that the architect will take certain steps to guide the LEED certification process through to the end, with certain other responsibilities imposed on other parties.

Pursuant to the contract, the architect is responsible for taking the lead and managing the process. This includes meeting with the owner, researching applicable criteria, attending project meetings, communicating with the project team and preparing progress reports. The architect conducts a pre-design workshop with the owner, the owner’s consultants and the architect’s consultants, in which the participants examine the overall project and develop the project’s specific goals and objectives.

The contract calls for the architect to draft regular reports to the owner, and to obtain the services of LEED-accredited professionals when needed. The architect will register the project with the United States Green Building Council (“USGBC”), which evaluates the buildings seeking LEED certification to determine whether they meet the criteria. The architect will prepare submittals for LEED credit rulings, and prepare and submit the LEED Certification Application. This application will include the architect’s calculations and documentation for each LEED credit claimed. If the USGBC requires more information, the contract makes the architect responsible for preparing any responses and submitting additional documentation as required.

The architect is to provide material specifications that incorporate LEED requirements, so these specifications can be included in the contract documents. The contract documents also must define the Contractor responsibilities in the LEED Certification process.

Before bidding begins for the project, the architect reviews differences between standard construction practices and LEED principles. The architect responds to questions from prospective bidders and clarifies or interprets the bidding documents. The architect will also identify approved substitutions of materials that may still be used for LEED Certification. The architect also assists the owner in bid validation or proposal evaluation.

If needed, the architect will prepare supplemental drawings in response to the contractor’s properly and timely filed request for additional information. The architect also makes on site inspections of work related to LEED Certification and reports on the progress to the owner. The contract specifies that the architect is not required to make exhaustive inspections, and the contractor will retain its rights to control the means, methods and techniques used to perform the work.

The architect is to review and approve contractor submittals to check for conformance with LEED Certification requirements. The architect also evaluates change orders to ensure they are not materially different from LEED Certification requirements. The contractor requesting the change order must submit a properly prepared request for the change in work, accompanied by sufficient supporting documentation. If the architect determines the requested changes are materially different from LEED standards, the architect notifies the owner, who can authorize further investigation.

The contract also lays out the owner’s responsibilities throughout the project. The owner provides a program detailing the objectives, schedule, constraints and criteria. The owner also provides data necessary for LEED Certification services including drawings, documents, manuals, plans, etc. The owner must provide access to the property and conduct walk-throughs to explain current and anticipated future use. The owner is also responsible for hiring any design consultants, testing agencies and contractors necessary for the architect to move the project through the LEED Certification process.

It is important to keep in mind that B214 doesn't address what happens if the LEED certification is not reached or provide for a remedy. However the Sustainable Project Goals Exhibit does include a "remedies" section. The Sustainable Project Goals puts the burden on the owner to identify legal requirements as opposed to the contract form itself, which appears to shift that burden to the architect. The parties also are required to agree up front on the remedy for a failure to reach LEED certification which could create an issue down the road.

Most owners presumably go through the sustainable development process to achieve long-term cost savings by way of reduced energy and operational costs, but it is possible to meet LEED and still not achieve the targeted savings. Therefore, in determining which remedy is sufficient for a contract failure, the architect needs to be prepared to discuss not only lofty environmental "goals" with the owner at the pre-meeting, but also specific, calculable and measurable goals, such as quantities of energy consumption.

By providing an overview of the certification process and assigning the various needed tasks to specific parties, the AIA form contract should increase the chances that a particular project will achieve LEED Certification. It may also reduce disputes over who is to blame in the event of a failure to achieve LEED Certification. Where the responsibilities of each party are clearly spelled out in advance, the contractors can also more accurately price their services for working on a project aimed at becoming LEED Certified. As a result, the form contract may well reduce the risk of litigation involved in promising that a certain project will achieve LEED Certification.