Managing Construction Contract Risks

Green Construction

As energy costs continue to rise and building standards become more environmentally rigorous, it’s not uncommon for construction projects to specify sustainable building practices, or “green” building principles. But capitalizing on the trend to build green can quickly turn your profit margin from black to red if you don’t have a clear understanding of your additional contract exposures.

What is Green Construction?

According to the Environmental Protection Agency, green building is the practice of creating structures and using processes that are environmentally responsible and resource-efficient throughout a building’s life cycle; from siting to design, construction, operation, maintenance, renovation and deconstruction.

These structures meet specific objectives that protect the occupant’s health, are more energy-efficient, use resources more effectively and provide business tax incentives.

How is Certification Achieved?

To uphold green building standards, the U.S. Green Building Council created the LEED (Leadership in Energy and Environmental Design) program, which outlines standards for building using natural resources, recycled or healthy materials.

The LEED system evaluates projects based on design, construction and operation, serving as the voluntary national standard for sustainable buildings. It uses a checklist and point system of recommended practices, achieving various point levels can certify the building as having achieved certified, silver, gold or platinum status. These practices involve such issues as efficient water and energy use, the reuse of waste materials, and the use of renewable and regionally produced products.

The LEED certification standards are rigorous, and a simple misstep, such as not following a project’s material recycling or erosion plan, can put a project’s certification in jeopardy.