Article

Green guarantees Vex Firms with added risk

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Abstract

More government owners of green projects are demanding long-term performance guarantees, and contractors and designers are trying to figure out how to defray the risks of such commitments. Required guarantees can range from getting a specified LEED certification to promising a building will deliver a specific amount of energy savings after occupancy. Owners' insistence that architects, engineers, construction companies and other contractors guarantee their work on sustainable projects coincides with the rise in demand for LEED-certified and other sustainable buildings. Owners pay a premium for green buildings, and they want to make sure they get their money's worth. Requiring new buildings to be sustainable has even become part of some city and state building codes, so contractors must deliver those buildings by law. Some insurers suggest contractors get all parties participating in any guarantee involved in the process as early as possible and perhaps bring in a third-party facilitator as well. That strategy ensures that parties understand and agree to the same objectives.

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