Hidden Liability Issues May Wilt Green Building
07/09/2008
There’s one sure way to kill an idea: Sue it to death. Amid the excitement and the challenges posed by sustainable design and construction, increased litigation is a possibility as green building begins to flourish. Designers and contractors, accustomed to standard risks on projects,are finding a whole new set of problems in the green-building context . How the industry addresses these problems may have a big impact on the sustainability market for the foreseeable future.
More than most types of projects, green building requires a team effort. The U.S. Green Building Council’s Leadership in Energy and Environmental Design program encourages sustainable design, construction and product contributions and measures their effectiveness. Other programs are similar. The ultimate goal is to produce better buildings that cost less, use less energy, consume fewer non-renewable resources, spew fewer emissions and are more comfortable for occupants. What’s not to like?
The legal side of the equation is more complicated. No single entity controls the green-building process, and shortcomings by any party could result in failure to achieve LEED certification or compliance with laws or regulations mandating sustainable structures. The law is in its infancy and will take years to mature. Until that happens, no one will be comfortable in the market, and the first big legal case assigning considerable liability for a green misstep is likely to have a chilling effect that ripples across the industry.
This makes the issue of responsibility and risk allocation critical. Risk and responsibility have been hot topics in the industry for years. Like so many other issues, there has been more talk than action. But the development of building green now has brought these issues to a head. The first step is to understand the risks that are unique to or enhanced in the green-building process. Second, a fair standard must be developed that everyone can understand and use.
Insurers are stepping up efforts to educate the industry on these risks and help it understand that green building is not simply a feel-good exercise but a major management challenge. Next, model contracts should be created that can be a neutral starting point for parties’ rights, responsibilities and risks.
Construction is a management-intensive business, and green initiatives are adding another layer of complexity. Clear delineation of roles and fair division of the contractual risk would allow all parties to manage their part of the process to success at a reasonable cost. To do otherwise could result in added costs and a resistance to sustainability, which is contrary to this philosophy and which could cause the green-building movement to wilt.