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Managing Risk in Green Building Contracts

By Vincent J. Mangini

Managing risk is crucial for anyone who seeks to construct a high performance building, especially with respect to the attainment of certification under a green building rating system, such as the U.S. Green Building Council's Leadership in Energy and Environmental Design (LEED) Green Building Rating System, or the receipt of grants or tax credits for the installation of energy-efficient improvements or renewable energy facilities.  One way to manage these risks is the proper delegation of tasks to those on the project team with the greatest capacity to perform them successfully.  For example, the architect should take responsibility for adjusting project design in the event there are changes in the law relating to energy efficiency or building performance or changes in the standards relating to the applicable green building protocol being utilized by the project owner.  Likewise, the architect should be made to pay for compensatory and consequential damages that flow from any failure to achieve LEED certification or the loss of financial incentives if either such occurrence is due to design deficiencies or any other act or omission on the part of the architect.  However, these and any other type of risk allocation would have to be specified in the contract in order to be enforceable.

Full post as published by New Jersey Law Blog on July 01, 2010 (boomark / email).