Secondly, the downside is limited. While $50k is not a small sum, in the context of a $41MM budget, it can be paid and the job can still be a good and profitable one for the design builder.

Thirdly, the need to be accountable to the Owner becomes a deal point that must be addressed in an acceptable manner by the design builder. After typically selling the owner on the desgin bulder’s expertise in sustainable design and familiarity with LEED building rating system, it is difficult for the design builder to throw up her hands and say ” I’m not assuming any risk on this LEED certification deal that I am designing and building”.

I do think it becomes more complex once one leaves the design build project delivery system. Under the traditional design-bid-build delivery system, both the A/E and the GC are independently responsible for differing credits sought by the project owner. In such cases, it is only fair and reasonable to hold each entity responsible for achieving the targeted credits each has (hopefully) expressly assumed responsibility for in their (hopefully well drafted) contract.

What I haven’t seen discussed but is a real distinct eventuality is what happens when LEED certification is not achieved due to failure to obtain, for example, 4 targeted credits. As a result, the LEED scoresheet falls one credit short of either certification or the desired level of certification. Assume further that responsibility for failure to achieve the 4 credits is allocated as follows: 1 credit to each of the architect, civil engineer, general contractor, and landscape architect (each of which has a separate direct contract with the Owner). This is not a far fetched hypothetical and yet all but the most exacting (and coordinated) set of contracts will fail to address it.

As usual, many thanks for your thoughtful comment and insight. One thing I’m not sure of, though, is why the design-builder (or consultant, or design professional, as the case might be) would be willing to expose itself to liquidated damages by accepting the risk of a third-party entity’s certification decision when that process is almost completely outside of the design-builder’s control. As you point out, some of that risk can be mitigated by understanding the two-tiered nature of the USGBC/GBCI certification review process, but there is still an awful lot of responsibility for the final certification that rests completely with an unaccountable third party. As Ujjval points out in his comment below, the lag times associated with third-party review are still an issue, notwithstanding USGBC/GBCI’s commitment last year to address the ongoing backlog. In the negotiation you describe above, was there any pushback from the design-builder on that issue?

With respect to identifying and allocating as between Owner and design professional those risks that relate to sustainable design and construction, I agree that to date the industry generated forms have been inadequate. For this reason, I prepared a separate contract document addressing in detail LEED related processes, liabilities and rights. Addressing these matters in detail at the beginning of the project serves to avoid the misaligned expectations between owner and design builder that consign so many projects to years of protracted litigation/arbitration.

An excellent post and once again we are discussing an issue that shows the weakness of organizations and associations in this area. The AIA, DBIA, AGC (though this seems the most thoughtful), and many other associations and even standard setting bodies are trapped in trying to attach their label to the green marketing train while relying on the standard internal processes to craft language addressing the risks and opportunities. Michael Gibbons response is also on target though I do not share his faith that architects are the best party to determine the Legal Requirements of green issues. Frankly, design professionals are probably the worst group to really address the legal or risk issues as I have seen repeatedly in my practice in this arena. They most often, as the AIA desires, cast themselves in the role of green advocates with little or no knowledge of the legal issues surrounding their recommendations. The significant participation by architects in the various USGBC state and local government lobbying efforts demonstrate their lack of policy knowledge in spades and continue to create liability chains that will lard litigation in this area for some time to come.

It is disappointing that the DBIA did not take this opportunity to demonstrate that its delivery system actually provides the potential for creating real high-performing buildings instead of green marketing alone. Traditionally owners that seek out DB options are interested, for various reasons, in the performance and efficiency of delivery associated with their building assets. The DBIA I think missed a real opportunity here to show its radical departure from the AIA’s views. The DBIA could have easily taken the view that it would absorb the risk, as it does for so much else, to assure the certification while creating a mutually agreed upon dollar ceiling for its liability given the lack of control over third-parties. This would have allowed owners a sense of comfort and provided solid pricing signals in the market for obtaining the certification.

It is also good to see that the problems associated with substantial and final completion are beginning to be addressed. I was recently involved in drafting documents for my client in a LEED Gold building project for a prominent building association and was stunned to discover that they have still not received certification almost two years after project completion.