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The "green"
refers to a method of design and construction that minimizes burdens
on our natural resources and the environment. More and more, owners
from the public and private sector are attracted to the concept of
green construction and are starting to demand high-performance
buildings. Some state and local governments have established "green"
guidelines and incentive programs, as well as requirements for their
own public-sector buildings. As interest expands, the construction
industry is increasingly challenged to demonstrate its commitment to
the environment.
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Green Construction
Factoids:
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Green construction
costs range from 1 percent to 7 percent more than
traditional methods, depending on the scope of a
project.
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In the first three
quarters of 2007, venture capital firms poured a
record $2.6 billion into clean tech startups.
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Green building starts
are projected to reach $12 billion in 2008.
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Twenty-two states and
Washington, D.C., currently enforce “Green Laws”
that define the use of green building materials, and
many other states are considering similar actions.
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Green Construction vs.
Traditional:
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9 percent lower
operating costs
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7.5 percent higher
building values
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3.5 percent higher
occupancies
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3 percent higher
rents
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Going Green doesn’t come without
Risk…
Green buildings
are still a new concept, incorporating some materials that are
relatively untested and lack results that determine how effective
these new technologies will work. As a consequence, insurance
companies are weighing the efficiency and safety benefits of green
buildings against their potential risks. New legal niches are
emerging to confront claims against builders for substandard green
construction that did not meet expectations.
Green
Construction – Apparent Risks:
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Construction
materials and building techniques are new and untested.
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Tendencies
toward water intrusion and mold.
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Substantially
increased weight bearing load on roof.
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Tendency for
the habitation of vermin on roof (insects, termites, mice,
pigeons…), which could migrate to the interior.
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Potential
pollution of surrounding ecosystems with recycled water.
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Building
Owners expose themselves to Errors & Omissions claims if tenants
do not see expected energy cost savings.
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Building
Owners could also face liability issues if tenants degrade a
building’s certification by using non-green finishing materials.
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Architects &
Engineers could face liability if a building does not perform as
expected due to inadequate design documents.
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Contractors
become liable for construction means, methods, & materials.
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Building
Owner lacking adherence to laws, codes and standards.
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Building
Owners should ensure contract language protects their interests,
paying special attention to building phase milestones.
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Recouping
“soft costs” associated with re-building in the event of a
partial or substantial loss to structure(s).
Green
Construction – Legal Issues to Consider:
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Negotiate and draft contracts that reflect each project
stakeholder’s role in earning the desired level of LEED or Green
Globes certification and allocate that responsibility
accordingly.
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Select design professionals and consultants that have
participated on other green projects and are familiar with
sustainable design, green building rating systems, and the
corresponding certification process.
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Contract for a design that requires specific green materials,
systems, and products whose ability to deliver the necessary
level of green performance can be verified.
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Accurately survey existing state and local legislation, applying
to both public and private sector construction, either mandating
green building standards or offering incentives for compliant
projects.
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Green design implicates new and non-traditional challenges for
construction project stakeholders.
If you’d like
to learn more about Green Construction and risk mitigation
techniques, please contact:
Thomas Marchetti
Tel. +1.201.661.5075
tmarchetti@als-uic.com
Green Construction Resources
Liability in Green Buildings -
Construction Executive - June 2008
Managing Risks in Green Construction
- Construction Executive - June 2008
Green &
Growing - www.agentandbroker.com
The Greening of Property Insurance
- Vol. 33, No. 1 issue of Viewpoint (Summer 2008).
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