Green Building Contracts: ConsensusDOCS New Release, A Solution?
As green building has gained steam, so has the discussion over the legal implications of a new construction process, which relies heavily on performance during and after construction.
The US Green Building Counsel's LEED program rates the environmental performance of a construction project. Using several international building standards, the LEED program provides credits and certification of buildings, so that projects obtain funding and are generally more attractive as a sustainable and potentially low-cost energy alternative.
Those of you aware of the LEED certification credits, likely understand that there is in inherent problem in controlling for the risk that a project will not perform as intended. Therein lays the problem: if the intention of the project is to perform, how can try to contractually release or alleviate a contractor's liability for non-performance.
For the past several years, construction attorneys (like us at Wolfe Law) have carefully drafted their own sets of construction contract documents, which seek to fairly allocate risk of non-performance.
Until now, no standard set of contract documents had been released by the Architect's Institute of America (AIA) or ConsensusDOCS, the two leading contract document developers.
On November 11, 2009, ConsensusDOCS released "ConsensusDOCS 310 Green Building Addendum." ConsensusDOCS is a mixing pot of several construction industry interests, including builders, designers, developers, and sureties. Over time, they have become the AIA's chief rival in designing contracts to be used on both commercial and residential projects.
The new addendum is discussed in a recent article by Architectural Record's Scott Blair, who quoted executive director Brian M. Perlberg:
“'ConsensusDOCS 310 Green Building Addendum,' released on November 11, is intended to define, clarify, and establish the relative roles and responsibilities needed to successfully deliver a green-building project."
"Perlberg says the drafters 'made a very conscious effort to make the document neutral.' While it's likely the majority of users will be seeking LEED certification, it is designed to work with other third-party certifications or when an owner wants to meet its own independent green goals."
We truly hope that this document assists in clarifying the allocation of risk of non-performance. As we try to get our hands on this document, we turn to the ConsensusDOCS website to get a more in-depth view at the drafters' intentions.
The ConsensusDOCS website provides the following:
"Another industry first – appropriate for use on projects with green building elements, particularly those seeking a third-party green building rating certification such as LEED. It provides a contractual mechanism to identify clear objectives, and assign roles and responsibilities to achieve green goals. The parties designate a Green Building Facilitator (GBF) to coordinate or implement identified objectives, which can be a project participant or consultant. It contemplates that such services will be included in the underlying agreement with the project participant or in a separate agreement with a GBF."
ConsensusDOCS also published a written handbook, explaining each of the contract addendum's Articles. The structure seems to have a more generalized approach, allowing the parties to select particular performance parameters consistent with the project goals.
At first glance, the addendum seems to be a very basic framework, which permits the contracting parties to fill in many gaps.
Article 3 lays out the project's goals and procedures. The Article also contemplates the selection of a particular rating system, the methods of attaining those ratings, and timelines.
Article 4 create a "Green Building Facilitator," (GBF) whom seemingly has a role similar to that of a construction manager. The GBF is entrusted with facilitating the relationship between designers and contractors, while ensuring that the proper documentation is submitted to attain accreditation.
Article 6 incorporates the particular "green measures" that are to make up a portion of the design and construction work to be completed on the project. In effect, this portion of the addendum adds to the overall job scope. The Article further provides mechanisms which assist project participants in handling conflicts between "green measures" and the original scope of services.
Under Article 6, the contract clearly indicates that the architect will remain responsible for incorporating "green measures" in to the job scope. The GBF helps to facilitate the architect's plan and the contractor's building process.
And then, we get to what we were hoping to see: risk allocation. Article 8 discusses liability and risk, and who and when a party might be liable.
One absolutely necessary provision was the waiver of an architect's or a contractor's liability for "defects or deficiencies inherent in the elected green measures as they affect their ability to achieve the elected green status."
Another provision handles consequential damages that are incurred by a project owner, when the project does not meet green standards. This allows the parties to determine whether or not these types of damages would be waived under a typical consequential damages waiver, or be subject to liquid damages, or otherwise.
Finally, the Article address the GBF's liability in managing the goals of the project. It appears that the addendum leaves this liability to contracting parties.
In sum, the addendum seems to brush over the major topics, while leaving day-to-day project management and performance to the agreement of the parties. The ConsensusDOCS addendum appears to be a good first step in controlling green building liability, but we are certain that the agreement will be (and should be) persistently tweaked and bulked up in the coming year.
Doug, as someone "in" on the process, I am sure that it will be tweaked as its practical effect shows in the field.