Should You Guaranty Performance on a Green Project? (Law note)

guarantee sealBy now, I hope you know me well enough to know that I’d never, ever say you should make a guaranty of performance, period, let alone guaranty the green performance for a new building.  However, sometimes caution has to be thrown to the wind to get the job– at least in the case of a recent GSA design-build project in Seattle.

There, the design-build team agreed that the GSA could withhold 0.5% of the original contract amount, or $330,000, pending the achievement of energy goals.  As writer Suzanne H. Harness, J.D., AIA, noted recently:

The GSA’s approach is diametrically opposed to the recommendations of the American Institute of Architects, which advises both architects and contractors not to guarantee or warrant the achievement of a sustainability goal.  The AIA’s 2011 Sustainability Guide explains the obvious:  contractors and architects can design and construct a building, but the owner operates it, and the owner’s actions are beyond the control of the design and construction team. If the owner operates the building differently from the assumptions used during design, performance goals will likely not be met, even if the building is perfectly constructed. [Emphasis added].

Ms. Harness also correctly noted that professional liability insurance would not cover such a guarantee of performance.  So beware to the design team who takes such a project on: they can be held contractually liable, but there will not be insurance to cushion the fall out from any lawsuit.

Just DON’T do it!



2 thoughts on “Should You Guaranty Performance on a Green Project? (Law note)

  1. mitchell swann says:

    Following this advice would certainly preclude getting into trouble, but it may soon be unavoidable in the context of green buildings. If you really process the requirements of LEED 2009 in energy modeling and “as designed” performance targets and the logical (and reasonable) outcomes of the M&V credits in submitting energy use and bills to USGBC for a period of 5 years after beneficial occupancy, you arrive at what is a performance expectation that is quanitifed in large measure. If you use even more rigorous tools like ASHRAE Std. 189.1 you begin to include process loads and other components that would typically be excluded under standards like ASHRAE 90.1. The advent of building labeling will also put numbers next to the ‘adjectives’ used to describe sustainability. So even if it isn’t explicit, we may be backing into promises of performance…and maybe insurance products need to adjust for that condition.

    • Melissa Dewey Brumback says:

      Mitchell: Thanks for your comments. You really hit the nail on the head with your final remark re needing insurance products for the green market. I’ve seen much discussion of this, but am not aware whether anyone has yet taken the plunge. Obviously, once there is an insurable product, these issues will be resolved.

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