It is no secret to anyone in the construction industry that the design and construction of green buildings is growing at a rapid pace. The value of the green building market in the United States is about $45 billion today and is expected to more than double by 2013. This remarkable growth is a source of tremendous opportunity for the construction industry, but it also presents new risks that common contract practices and forms may not adequately address.
In response to this growing demand for green design and construction, both the American Institute of Architects (AIA) and ConsensusDocs have released contract addendums that attempt to address the green building process. Where AIA’s addendum specifically addresses risks associated with LEED® certification, ConsensusDocs is directed at all green certification processes.
While different in form and approach, both of these addendums provide those in the green building industry with a way to protect their interests and allocate risks. Both addendums attempt to define the duties of parties involved in a green construction project and identify the consequences associated with the failure to adequately perform those duties.
AIA - B214™ (2007) Standard Form of Architect’s Services: LEED® Certification
The AIA standard forms of agreement are the most widely used form of design and construction agreements in the United States. These agreements are written to address the relationships, rights and responsibilities of most of the participants in the design and construction process and can be used in all phases of the project. According to the AIA, all interested groups have had input into the creation of the agreement documents, including owners, contractors, attorneys, engineers and architects.
As its title indicates, AIA - B214™ (2007) is specifically written as an addendum to the agreement between the owner and the architect on projects seeking LEED certification. The addendum is tailored for LEED® projects and focuses specifically on the role of the architect in that recognition process. The AIA - B214™ (2007) follows the allocation of risk that is standard in AIA agreements: the owner defines the scope of the work with the assistance of the architect; the architect prepares plans and specifications that respond to the owners needs and goals; and the contractor builds in accordance with the architect’s plans and specifications. In AIA - B214™ (2007), this traditional allocation is applied to the LEED® process and calls on the architect to assist the owner in identifying the level of certification the owner wants to achieve.
While AIA - B214™ (2007) provides for the architect to be the central coordinator of the LEED® certification process, it does not include the contractor as a party or required participant. The key responsibilities of the architect, as laid out in the document, are to assist owners by providing them with options that address their green goals, and to ultimately design and manage the project in a manner that incorporates and strives to achieve those goals. AIA - B214™ (2007) contemplates that a contractor will be involved in the process, but no responsibilities are given to them in the document.
The language of AIA’s green addendum clearly involves the architect as the central figure in the LEED® certification process. While the agreement could be altered to allow its use in projects aimed at a different green recognition program, it is written for and probably best used in connection with the LEED® certification process. AIA - B214™ (2007) also fails to address the key issue of consequential damages related to the failure to achieve the desired LEED® certification level.
ConsensusDocs 310™ – Green Building Addendum (2009)
Created in 2007 by a large group of organizations in the construction industry, ConsensusDocs provides model contract documents for use in construction projects. The stated goal of ConsensusDocs is to protect the best interests of the project rather than those of a single party.
Compared with AIA - B214™ (2007), ConsensusDocs 310™ takes a much broader approach in providing the green building industry with a green contract addendum. ConsensusDocs 310™ addresses the efforts of all project parties, not just those of the architect. Additionally, the ConsensusDocs green contract form is not limited to LEED® projects as it is with AIA - B214™ (2007). Under ConsensusDocs 310™, the owner is free to choose which green certification it wishes to pursue and the form is written in a manner that allows it to be tailored to processes other than LEED® (e.g., ENERGY STAR and Green Globes).
Furthermore, where AIA - B214™ (2007) places the bulk of the LEED® certification responsibility upon the architect, ConsensusDocs 310™ provides for a Green Building Facilitator (GBF) to lead the green certification process. While the GBF can be the architect, engineer or contractor, it doesn’t need to be—the owner is free to choose anyone to fill that role. The addendum identifies the GBF in several sections as the party responsible for coordinating and facilitating the process of achieving the chosen green standard by working closely with the owner and all other involved parties. The contract forms provide for this by detailing the responsibilities of the GBF, outlining the relationship between the GBF and the owner, and identifying the reporting responsibilities that belong to the GBF throughout the process. Even though the addendum addresses risks and nuances associated specifically with green projects, the traditional role of the owner, architect and contractor are not affected. The architect is still responsible for working to understand the green goals and wishes of the owner and to incorporate those into plans and specifications. The contractor is still responsible for constructing the building and is entitled to rely on the architect’s plans and specifications in the process.
Because ConsensusDocs 310™ takes a broad approach, it can be readily applied to a green certification process other than LEED®. However, because the approach of ConsensusDocs 310™ is broad enough to apply to any green standard, there is some tailoring that must be done to make the addendum responsive to the needs of the individual project.
While both of these green addendums attempt to provide clarity to the issues that could arise out of a green building project, there are several issues that are not effectively addressed by either contract form. First, even though a standard of care can be pulled from the language of the two addendums, neither is explicit in outlining what standard of care can be expected from the project parties. Both addendums seek only to address green specific risks and do not purport to change any of the standards of care as they are addressed in the underlying or governing contracts.
Second, the issue of substantial completion is not addressed as it would apply to a green building project. This is significant in that the green certification process can take years to complete, possibly affecting warranties or even statute of limitations arguments.
Finally, neither of the two contract forms clearly identify if they make any warranties or guaranties, and they do not provide indemnity provisions or discuss which party is responsible for managing compliance issues. All of these are potentially important in a green building context and they should be addressed by the parties in their green building contracts.
Both green contract addendums force the parties to examine the issues and responsibilities of the parties involved in the process. However, neither AIA - B214™ (2007) or ConsensusDocs 310™ address all of the concerns that are likely to arise in the course of designing and building a green project. These issues, like clearly outlining the consequences of failing to achieve the desired green standard, must be negotiated between the parties if they wish them to be addressed.
Before using either form, those engaged in a green construction project would be wise to clearly identify exactly what goals and objectives exist for that green project. Only after identifying the goals of the project can the contract get specific about the roles and responsibilities of the participants and how risk should be allocated between the parties.