By: William E. Kelley, Jr., LEED AP BD+C
In a prior blog entry here, we provided an introduction and overview of the newly released American Institute of Architects (AIA) Document D503-2011, “Guide for Sustainable Projects”. A follow-up entry here addressed what Architects should know about the new Guide. This blog entry focuses on application of the “Guide for Sustainable Projects” from the Contractor’s perspective.
The AIA A101-2007 Owner-Contractor Agreement does not address the incorporation of sustainable project goals into the project contracts, let alone any defined process for third-party certification under LEED or any similar green building rating systems. Just as significant is the fact that the A201-2007 General Conditions does not contain any provisions relating to these issues either.
Why is this noteworthy? For Contractors, the lack of contractual language relating to sustainable project goals means that those goals are often included as project specifications, as opposed to contractual requirements. While the specifications may define what materials and processes the Contractor is responsible for in relation to the sustainable project goals, the specifications do not address issues such as whether the Contractor can be held liable for the failure of a project to achieve third-party certification. Specifications also do not address issues relating to (1) whether a substantial completion date is affected by achievement of sustainable goals or certification; (2) what responsibility Contractor has for evaluating potential impacts to sustainable goals when submitting Change Order Requests; and (3) what damages (if any) the Owner may be entitled to recover from the Contractor in the event the project does not achieve the sustainable project goals.
The Guide for Sustainable Projects attempts to remedy this situation by defining a process for establishment of sustainable project goals, and incorporation of the individual requirements and measures for those goals into the Owner-Contractor Agreement and the General Conditions for the Project. To begin with, Contractors should familiarize themselves with the new definitions addressed in the Guide, including “Sustainable Objective”, “Sustainable Measure”, “Sustainability Plan”, “Sustainability Certification”, “Documentation for Certification”, and “Certifying Authority” (which are discussed in more detail here). While the Contractor may not be involved in the goal-setting process, especially in a hard bid scenario, it is imperative for the Contractor to understand the goal-setting process, and how those goals will be incorporated into the contract documents.
The Guide for Sustainable Projects also contains model contract language to be incorporated into the A101-2007 and A201-2007 contract documents, including the following:
- The Contract Documents: The Guide includes model language to amend Article 1 and Section 9.17 of the A101-2007, as well as Section 1.1.1 of the A201-2007 General Conditions, in order to specifically include the Sustainability Plan as begin part of the Contract Documents. By doing so, the sustainable “goals” for the projects are thus made part of the plans, specifications, and contract documents, which the Contractor is bound to abide by. This also becomes important when the Contractor incorporates the Contract Documents into its subcontract agreements, in order to ensure that the Subcontractors are bound by the same sustainable project goals and requirements.
- Substitutions: Contractors experienced with green building projects understand that selection of materials for the Project can be a critical component to success, especially where the Project is seeking third-party certification. Use of non-conforming materials can jeopardize the Project’s ability to achieve targeted credits for materials and resources for the Project. The Guide address this issue by providing a new contract clause to be inserted as Section 184.108.40.206 of the A201-2007 to provide that the Contract “shall provide with any substitution requests” a “written representation identifying any potential effect the substitution may have on the Project’s ability to achieve a Sustainable Measure or the Sustainable Objective.” In other words, the Contractor must fully understand how the products and materials fit into the overall Sustainability Plan, so that it understands the potential impact that substituting materials or products may have on those goals. This also imposes an element of potential liability on the Contractor in terms of selecting appropriate substitutions that will not negatively affect the sustainable project goals.
- Warranties & Damages: Similar to the Owner-Architect Agreement, the Guide proposes model contract language making clear that the Contractor does not warrant or guarantee that the Project will achieve the Sustainable Objective. In addition, the Guide includes model language to clarify that the mutual waiver of consequential damages shall include claims relating to “unachieved energy savings, unintended operational expenses, lost financial or tax incentives, or unachieved gains in worker productivity.” However, the Guide recognizes that in situations where the Owner refuses to include either the disclaimer of warranties or a mutual waiver of consequential damages that the Contractor may want to pursue a limitation of liability clause to cap its damages for any resulting claims.
Like any guide document with model contract language, there is no “one size fits all” solution for all project scenarios. Coordination among all contract documents, including the General Conditions, Supplementary Conditions, and Subcontractor Agreements, is especially important for these types of projects. Contractors should familiarize themselves with the Guide and work with legal counsel to prepare contract forms that sufficiently addresses the unique aspects that may be present in these types of sustainable projects.