Unintended Consequences in Green Design

I finished reading “Super Freakonomics” while on vacation and although I find some of their statistical conclusions based on “stretched” assumptions, you none the less come away from the book recognizing two key principals: [1] individuals respond to economic incentives and [2] that “one of the most powerful laws in the universe is the law of unintended consequences.” This, is turn, started me thinking about the “unintended liabilites” associated with Sustainable Design for the architecture and engineer community.

Will a move towards a “high performance” Built Environment lead to new types of claims against DP’s? Despite the fact that virtually every Professional Liability carrier is acutely aware of a “perceived” new exposure to the “green design” services offered by their clients, there simply has not been a sufficient volume of claims against the A&E teams regarding same. That said, the best-known green liability case to date is Shaw Development v. Southern Builders. [Basically Shaw sought $635,000 in state tax credits lost after a Condo project to build a LEED silver-level building was delayed] was reflective of the types of claims that are likely to be unique to these types of buildings. [But even this was a Developer vs Contractor claim not involving the A&E.]

Surety Bonds? My friend Rich Anderson of RG Anderson randerson@rganderson.com tells me that obtaining performance bonds on LEED projects can prove challenging for the reasons you would expect. Does the contractor have the requisite skill and experience? Are there contractual performance guarantees that go beyond the normal 1-2 year warranty period? Most sureties look to avoid the vageries associated with 3rd party certifications and the bonding companies are terrified of contracts that call for specific energy / lifecycle cost reductions. [In Washington, D.C., The District created a green building requirement [that takes full effect in 2012] for specific private / public projects. Projects that fail to meet the new green standard would pay claims of up to 4% of CV’s to a city green building fund. Let’s see how tough it will be to get those projects bonded.]

Unrealistic Owner Expectations memorialized in the contract documents. Here in New Jersey, most schools are funded via the NJSDA / New Jersey Schools Development Authority. Certainly lifecycle costs, innovative use of sustainable materials and thoughtful design help enhance the student’s experience. Unfortunately, the funding agency has directed their efforts toward “Green Buildings” into the architect’s contract documents.

(a) As applicable and in accordance with any NJSDA Grant Agreement to which the Board may be a party, the Provider shall prepare the plans for the Project so as to meet or exceed 26 points toward the “Leadership in Energy & Environmental Design (LEED)” Version 2.0 rating scale, in accordance with Executive Order 24 (2002).

Although achieving 26 points should not prove particularly difficult, it would still [likely] be considered a “warranty or guarantee” statement from the insurance company’s perspective and therefore serving to raise the standard of care above negligence and negatively impacting the availability of coverage.

Understand that I am 100% in favor of the AIA’s efforts to help the Design Community “take the lead” when it comes to sustainable design. However, are there unintended consequences associated the AIA 2020; “Walk the Walk” and specifically revisions to their Code of Ethics which speaks to “sustainability” as a goal?

Canon VI implements in the Code of Ethics the existing public policy of the Institute regarding sustainability:

* Members should promote sustainable design and development principles in their professional activities.

* E.S. 6.1 Sustainable Design: In performing design work, Members should be environmentally responsible and advocate sustainable building and site design.

* E.S. 6.2 Sustainable Development: In performing professional services, Members should advocate the design, construction, and operation of sustainable buildings and communities.

* E.S. 6.3 Sustainable Practices: Members should use sustainable practices within their firms and professional organizations, and they should encourage their clients to do the same.

The 2007 revisions to the B101 address sustainability more directly with specific obligations for the architect:

§ 3.2.3 The Architect shall present its preliminary evaluation to the Owner and shall discuss with the Owner alternative approaches to design and construction of the Project, including the feasibility of incorporating environmentally responsible design approaches. The Architect shall reach an understanding with the Owner regarding the requirements of the Project.

§ 3.2.5.1 The Architect shall consider environmentally responsible design alternatives, such as material choices and building orientation, together with other considerations based on program and aesthetics, in developing a design that is consistent with the Owner’s program, schedule, and budget for the Cost of the Work. The Owner may obtain other environmentally responsible design services under Article 4.

The “trigger” for all professional liability policies has always been “negligence” meaning that you failed to meet the standard of care ORDINARILY exercised. It would seem to me that the “standard of care bar” has been raised for architects in particular. [In fact, such a novel legal argument has already been made against an engineer as in the case of Michael v. Huffman Oil Co. Inc. (661 S.E.2d 1, NC App., 2008) involved an expert who testified that an engineer’s failure to comply with a code of ethics for engineers constituted a deviation from the standard of care. Of course the court didn’t agree – but it has been tried.]

Furthermore, the rapid achievement [in recent years] of the LEED AP [along with the recent curriculum change] coupled with the “green expert” representations that many architects and engineers are making [including their marking and sales material] certainly will increase the owners expectation [who, by the way, account for 60+% of the claims against the A/E] that the DP will produce a design that performs at a more efficient level than in the past. Of course the concern is that there will be marked differences amongst DP’s in terms of their knowledge of “green design.” So the movement of the “ordinary” standard will certainly lead to the growth of a “green expert community” who will inform us [in court proceedings] what the new standard of care should look like.

Timothy Esler’s original articles are published in The Zweig Letter.