Contractors and Green Building: I feel the need … the need for LEED!

For this week’s Guest Post Friday, Musings welcomes Ryan Bowers (@ryanbbowers).  Ryan is a construction law attorney and business litigator. Ryan’s construction practice draws on his years of hands-on experience in the construction field, which predates his practice of law.   He also maintains Law under Construction, a blog built for Indiana construction professionals to monitor legal news and developments.  Ryan is an attorney at Kroger, Gardis & Regas, LLP in Indianapolis, Indiana, a full service law firm founded in 1937.

First and foremost, I would like to thank Chris for the opportunity to guest post on Construction Law Musings.  Earlier this year, I finally had the opportunity to pursue a blog that combined by two passions: construction and hockey the law.  After stumbling across Musings in the wee hours following one too many coke zeros and a half finished fireplace remodel, I was both impressed and inspired.  Law under Construction was born.   I am honored to take my blog on the road so soon in its rookie season.

I am a construction junkie.  Having a father who is a master plumber, licensed builder, and owner of a mechanical construction company will do that to you.  Learning to solder at 15 will do that to you.  Installing fire suppression systems at 19 will do that to you.  Remodeling a 1929 house will….   So, I have found inspiration for my blog posts (many yet unfinished, like my house…) in the practical experiences of my past.

A recent thanksgiving post-turkey, pre-nap, conversation with my brother, the president of the aforementioned contractor, sparked one such idea.  When the topic of LEED came up, he said, and I (sort of) quote “man, I am seeing LEED everywhere, should I get LEED accredited?”  Honestly, I was a little stumped.  Good thing the tryptophan set in.

I have since pondered the question: should contractors and subs seek LEED accreditation for someone on staff (or at least gain a working understating)?  Fortunately, in the interim, I also had the opportunity to attend a wonderful event put on by SMPS Indiana, where owners who led green projects gave their post-LEED certification perspectives, which provided some very useful information (referred to herein as the “panelists”).  Given the lack of litigation involving LEED issues, there is no clear answer.  However, I am hopeful that you (and my bro) will find my insights useful.

The pros…

Obtaining projects: I recently read that the “green movement” is no longer a movement, but rather here to stay.  Indeed, one of the panelists confirmed that her university has committed all future new construction or significant renovations to LEED silver certification (or higher).  And it’s not just buildings anymore – “green” will encompass other critical infrastructure projects (see here).  Thus, in order to obtain work on “green” projects, contractors may need to obtain accreditation or, at least, become knowledgeable.  Although this applies more in the context of integrated project delivery, design-build, etc., it will likely only increase as green building increases.  The economics of these project structures demand quality and skilled contractors.  One of the panelists noted that one of their first steps was to bring in a LEED accredited contractor familiar with the local skill set and local supplies.  Another noted getting novice subcontracts to understand the LEED process proved difficult.

Less potential for construction defects: Geothermal heating and cooling.  Vegetative roofs.  Mini-wind turbines.  Hal 9000.   Ok, I am kidding about the last one.  But these are new, sophisticated, and often unproven technologies (especially with Platinum certification).  It takes a careful reading of the spec manual.  There is a risk of noncompliance and the need to allocate risk.  LEED accreditation, as well as the required continued education that follows, may help a contractor’s understanding of these technologies and avoid future defect claims.

Fewer delays: Working on a LEED project with no prior experience may lead to project delays, such as the inability to follow the site-specific LEED action plan or unfamiliarity with submittals for LEED or the unique materials.  One panelist noted that, although the project was publically bid, they were lucky enough to land a LEED contractor, as it was extremely beneficial.  On the flipside, another had a demolition contractor with zero prior experience, who had to be constantly educated on LEED.  This inevitably led to delays.

Equal (and green) footing: Often, the architect on a LEED project is accredited and leads the overall effort.  Having equal knowledge of various LEED related processes, designs, technologies, etc. may be helpful.  For instance, when you submit a LEED related claim to the architect, LEED knowledge may help you decide how to proceed after a denial.  One of the panelists pointed out a situation where engineers on a project had designed to traditional specs, which the contractor caught thanks to LEED knowledge.

Likewise, the cost increases on LEED projects can range from 2-10% (based on various sources).  One panelist noted a 3% increase.  Knowing and recognizing these differences can help ensure accurate project bids and help maintain already thin profit margins.  Furthermore, if you know LEED, you may actually be able to bid lower if you don’t have to add “risk” costs to your bid.  Always a good result.

Finally, with guarantees of LEED certification popping up in contracts, new provisions affecting rights and liabilities on green projects may also pop up (i.e. for failure to achieve LEED certification or later decertification).  There may also be special warranties for green products.  Understanding these concepts prior to executing contract documents (or associating with a qualified attorney) will help minimize unknown risks.

Obtaining project bonds: Although not a current concern, it may be in the future.  With the emergence of more green projects (and of greater value), the way sureties handle such projects may change.  Since the surety is guaranteeing completion in accordance with plans and specifications, and given the concerns raised above, having a LEED AP on staff may become a prerequisite to qualify for a bond on a green project.   Green insurance products are already emerging, this could be next.  Remains to be seen.  (thanks to my co-blogger, and resident surety expert, Jennifer Watt for the input here).

Safety: As a result of the way debris is handled on a LEED project (reuse, recycling, salvaging, etc.) one panelist noted a 0 accident site.  And a healthy employee is a productive employee.  On the flipside, I don’t often hear contactors complain about fewer workman’s comp claims.

Goodwill and peace on earth: Just as the panelists remarked that their green projects have resulted in an overall better public image (better recruiting of employees / students), a more eco-friendly image for a contractor can be a positive.

On to the cons…

Competing standards: Although the most widely recognized, LEED is not the only player in the game.  Other “green” standards include Green Globes and Energy Star.  Further, recently an individual filed a class action against the USGBC attacking LEED.  (see here)  Ignoring the merits (or lack thereof) to the case, why invest resources into something that may not stand the test of time.  For example, one panelist noted that, while they achieved LEED certification with one project, on a subsequent project they were pursuing the LEED elements generally, but not seeking the formal certification due to time and money concerns.  Another panelist was now pursing Energy Star on a project.  One should also consider the new International Green Construction Code (IGCC).  If the code achieves widespread adoption, simply building to the code may alleviate the concerns above, and separate LEED knowledge may become superfluous.

It is hard: As a lawyer studying for the LEED Green Assoc. exam right now, I can attest to this fact.  Several of the most skilled plumbers and sharpest mechanical minds I know have had difficulty with the testing aspect of their master’s exam.  Putting in the time (and money) may not result in accreditation.  Plus, you need to maintain continuing education hours, an additional burden.

Enough actual “green” projects?: I don’t have any real data on this one, but it is worth considering whether you even want to get involved in this area.

Sub it out: There appear to be myriad LEED consultants out there (and likely one is already involved in your LEED project).  Get the information from someone else when you need it.

Image: The “green movement” raises red flags in some people’s minds.  For anyone with this mindset, I leave you with these thoughts:  a hospital represented on the panel stated that it did not seek LEED certification to “save the world;” but rather to “save the sanity” of the staff with a better workspace (via incorporation of daylight).  Further, many of the elements of the LEED project (no formaldehyde / no voc) were things that everyone already wanted – so there was no hard sell.  Green building may simply be what people already want, but just don’t realize.

Thanks for reading. If interested in LEED accreditation, continue on to the Green Building Certification Institute (GBCI), which administers the LEED Professional Credentials.   Great info located on the USGBC website as well.

As always, Ryan and I welcome your comments below.  Please subscribe to keep up with this and other Guest Post Fridays at Construction Law Musings.