Bids for a new 14,000-square-foot student technology center at Cabrillo College in Watsonville, California were opened up a couple of weeks with the lowest bidder nearly $1 million over the project’s estimated $5 million budget. The Green Technology Center, as the new building will be known, was designed by architect Peter Kasavan of Salinas, California, who had some interesting comments about the project’s plans for LEED Platinum certification. According to Kasavan, the increase in the project budget is
“largely due to the expensive recyclable materials required and risk involved in constructing a LEED platinum building. There is a lot of liability with [LEED] and no margin of error. There are a number of requirements by the general contractor in terms of record keeping, special handling and a special commissioning after it’s finished by a third party.”
Absent any additional facts, it seems like a bit of a stretch to blame a 20 percent budget overrun solely on the risks associated with the LEED certification process. However, I do think that Mr. Kasavan’s identification of the financial risks associated with LEED certification are important to note because they echo the conclusions contained in last summer’s Marsh report, Green Building: Assessing the Risks, Feedback from the Construction Industry, which we wrote about here at GRELJ. As you may recall, Marsh convened four forums in Washington D.C., San Francisco, Chicago, and New York City in late 2008 and early 2009, which were attended by a total of 55 A/E/C industry executives, who identified financial risks (i.e., the costs of third-party certification, the risks of delay in receiving certification, and the risks of failure to obtain incentives) as the top perceived green building risk.
Although there is certainly liability associated with the LEED certification process, whether those liabilities alone should be blamed for the increased costs here is unclear, particularly absent any indication that the project’s failure to earn LEED Platinum would result in the college failing to earn anticipated financial incentives. I would be curious to see the terms of the RFP and whether it contains any contract provisions passing along those risks to bidders in order to put Mr. Kasavan’s comments in some sort of context.
In any event, Salinas plans to continue working on the budget and the project is slated for review by the controlling local board sometime later in the fall.