A green revolution is sweeping the country, with carbon neutrality, net-zero energy and other initiatives making their way throughout various industries, including architecture. Yet the risks of green building performance standards are numerous, posing new challenges for you and your firm.
Green building performance standards are regulations that require a completed building to meet certain energy usage criteria based on the building’s size, use, location and other factors. Initial, periodic and ongoing reporting may be required, and building owners who fail to meet the applicable standards can face penalties. New standards are being proposed and adopted at the local, state and federal level. Even the new Inflation Reduction Act includes tax incentives tied to buildings that meet certain green standards.
For architects, engineers and other design professionals, green building performance standards represent an opportunity as well as a challenge. If a client or building owner finds that their building doesn’t meet building standards, either today or years in the future, they could claim it was due to your negligence. That could result in a lawsuit, an insurance claim and harm to your business. Here’s what to know.
1. Client Discussions
Green building performance standards can emerge as a risk early in a project. Your liability could rest on what client discussions occurred, when they occurred, whether they were documented, what advice you gave and whether that advice was complete and accurate.
One challenge you’ll notice right away with newer green standards is that compliance is a moving target with many variables. Most of your clients will be familiar with green benefit programs, such as LEED certification.
However, newer green initiatives may be in the form of laws and regulations that not only reward long-term compliance but require it. Newer codes are also less familiar to everyone, including architects, and some codes that will eventually apply haven’t been written yet.
As a design professional, you’ll play an important role in helping clients understand these issues. Your clients should understand that achieving a green certification and complying with current energy codes may not translate into compliance with future building performance standards.
This means that any client decision now carries a risk for the future. Factors such as how a building is built, used, operated and maintained will also impact its long-term energy usage. Architects can help clients make informed choices for the building today and in the future — while being certain to document everything.
2. Project Contracts
Green building performance standards can also become a risk when drafting and negotiating your contracts. Common risks include what details are specified and included, whether contractual language is present that may expose you or another party to excessive risk and what processes and remedies are planned if a disagreement does occur.
However, green contract risks are also complicated by the fact that the contract models and templates many design professionals rely on don’t adequately address building performance standard issues.
On the one hand, your established templates will become outdated as new standards are introduced. On the other, many standards are still being introduced at the local level, making generalized templates less suitable as a model for your firm.
All the same, even though generalized sustainability documents leave a lot to be desired, they can still serve as a solid foundation when used correctly.
Design professionals should look to documents that help you and the client define relevant sustainability requirements, agree to targets, goals and expectations, stipulate the limits of predictive modeling tools and define the roles that all project participants will need to play to achieve the identified goals.
3. Standard of Care
Green building performance standards also introduce new risks for a design professional’s standard of care obligations. Some jurisdictions base their building codes and requirements on performance to a particular standard. Because architects are obligated to meet these requirements for projects in such jurisdictions, a professional negligence case could be opened in the event that a building’s performance falls short.
This is another area where green building standards can be a challenge for all design professionals. Whether a particular building meetings current or future performance standards depends on many factors that are out of the architect’s hands, such as the construction, operation, use and maintenance of the building.
Plus, even if you are obligated to meet a particular standard, you have to be careful not to warrant or guarantee that the project will meet such a standard. Such language in a contract can cause problems if a building performance dispute later arises.
To manage this risk, you can ensure you provide services that meet the common law definition of the standard of care, that is, that you have exercised the same care that a reasonably prudent design professional would exercise in the same or similar circumstances to create a design to meet the necessary performance standards.
You can also take care to specifically disclaim in your contracts that you do not warrant or guarantee the project will meet any specified performance standard, due to the fact that compliance with the standard depends on factors beyond your control.
Managing Your Risk
Green building initiatives make it an exciting time to be an architect. But these new opportunities also present a number of risks and challenges. Luckily, you don’t have to navigate all these things alone. Your insurance provider can be a key partner and resource for managing the risks of green building performance standards.
The Lockton Affinity Architect and Engineer Insurance Program is tailored to meet the needs of design professionals like you. Our Professional Liability coverage covers claims of professional negligence, including those related to building performance standards. Our insurance experts can help you find the coverage you need to lower your risk. Plus, our insurance comes with valuable risk management resources, including complimentary contract reviews from Marshall Dennehy for every new project.
You can see what our coverage will look like for your business with our quick and easy 10-minute price indication.