LEED: The “Green” Wave -- Opportunity but Some Risk for Contractors

February 15, 2008

There has been much discussion about “green” building and LEED certification lately. What makes a building “green” or “LEED certified,” and what should contractors and developers know before getting involved in a green construction project?

According to the U.S. EPA, green building is the practice of creating healthier and more resource efficient models of construction, renovation, operation, maintenance and demolition. In 1993, the United Stated Green Building Council (USGBC) was founded to develop a national consensus on green building and to bring together the entire building industry to chart a path for market transformation. Today, the counsel has more than 12,000 members including building owners and end-users, real estate developers, facility managers, architects, designers, engineers, general contractors, subcontractors, product and building system manufacturers, government agencies, and nonprofits.

In 2000, the USGBC published the Leadership in Energy and Environmental Design (LEED) green building rating system as a means of objectively quantifying a building’s sustainability. The USGBC promotes LEED certification as “third party validation of a project’s green features and verification that the building is operating exactly the way it was designed to.” Buildings can receive LEED certification by earning LEED points for satisfying specific green building criteria.

There are 69 possible points divided in six different categories: (1) Sustainable Sites; (2) Water Efficiency; (3) Energy & Atmosphere; (4) Materials and Resources; (5) Indoor Environmental Quality; and (6) Innovation in Design. Buildings can achieve different levels of certification by earning the requisite number of points. The different levels of certification available are: Basic, Gold, Silver, and Platinum. To obtain a given level of certification, the project team must first register online at www.leedbuilding.org.

The value of Green Building exceeded $12 billion in 2007, and membership in the USGBC has grown tenfold since 2000. Green construction is predicted to continue to grow exponentially and will provide many lucrative opportunities for “green” contractors. However, contractors can take on undue liability if not careful. For example, poorly written specifications and bid documents may render contractors responsible for meeting performance requirements that are not clearly identified. If the contractor does not include proper products in its bid, it may not be reimbursed for the cost difference required to purchase products necessary to meet project performance requirements. Another potential problem for contractors could arise if a project does not achieve the energy savings and sustainability promised by the contract. Contractors, particularly those unfamiliar or inexperienced with LEED construction, should be careful that their contracts do not unintentionally create performance guarantees.

Green construction may revolutionize the construction industry and have a very positive impact on society as a whole. However, contractors must be conscientious of the potential risks associated with these uncharted waters. For more information, visit www.usgbc.org.

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