ASHRAE Region III CRCASHRAE Region III CRCNorfolk, VANorfolk, VA

Sustainability:Sustainability:UnUn--definable Success in a Defined Worlddefinable Success in a Defined World9 August 20079 August 2007

E. Mitchell Swann P.E., LEED APPrincipal swann@mdcsystems.comwww.MDCSystems.com

Program OverviewProgram Overview

• Current Context• Key Components of ‘Green

Design’• Business Aspects of the

Practice• The Intersection of

“Execution” and “Business”– Avoiding heavy traffic in that intersection

• Implications on the Practice

So what are we talking about?

Green buildings?

Sustainable

Development ?

Definitions

•• ‘‘Sustainable development Sustainable development involves...meeting the needs of involves...meeting the needs of the present without the present without compromising the ability of compromising the ability of future generations to meet their future generations to meet their own needs.own needs.’’

•• Reshaping the Built Environment Ecology, Ethics and Reshaping the Built Environment Ecology, Ethics and Economics Economics -- Edited by Charles J. Edited by Charles J. KilbertKilbert Island Press, Island Press, Washington, D. C. USA 1999Washington, D. C. USA 1999

Definitions Position Document approved by ASHRAE Board of DirectorsJune 23, 2002

• ASHRAE supports building sustainability as a means to provide a safe, healthy, comfortable indoor environment while simultaneously limiting the impact on the Earth’s natural resources.

• ASHRAE will use its position as the technical society recognized as the global leader in HVAC&R technologies and applications to develop and disseminate technical information, standards, educational programs and research on issues of social importance to promote building sustainability.

Short Form

• Green is good.• ASHRAE is good.• ASHRAE likes green.• ASHRAE helps green.

But there’s more!!!

• Green is not just a good idea!!!

With increasing frequency…

February 2007: Mandating GreenNew Laws Push Sustainable Design into Regulatory Mode

States, municipalities, and local development authorities acrossthe region are expanding green design and construction into the public policy realm.

Various public entities are mandating green building or creatingincentives…

“…moves are [also] afoot in other municipalities and at the state level in Connecticut and New Jersey.

Such moves…likely to expand the use of sustainable design beyond bigger firms…to the smaller end of the market as well.

…and growing sophistication…

Green Report: Charm City Sees Silver LiningThe City of Baltimore is… passing a progressive green building requirement across both public and private sector development.

“… mandate energy and environmental requirements equal to a Silver LEED rating for substantially all new commercial projects and significant rehabs within city limits…”

“If … enacted,…Baltimore will join East Coast neighbors Boston and Washington, D.C. as the only major American cities to officially put public/private green development provisions on the books. “

…it’s the law.

Four Green Building Bills Advance in Virginia:Four bills to increase the energy efficiency of buildings have recently passed both houses of Virginia’s General Assembly. H.B. 2618 and S.B. 1051 authorize counties, cities, and towns to establish a tax break for buildings that exceed the Virginia Uniform Statewide Building Code energy efficiency standards by 30 percent. …

Sustainable design…• …is based upon traditional design and construction

techniques.• …goes ‘beyond’ the normative design practice. • …goes beyond typical construction and construction

management practice.– in workmanship– in management– in procurement

??The resultThe result……• more energy efficient building; • reduced resource demand• healthier indoor environment.

Sustainable Design• …requires a team commitment to a

common goal.• …is responsible design, responsible

construction, responsible ownership.• …is a ‘life cycle cost’ based

approach.• …is ‘value-added’.• …yields a high(er) performance

building (‘better’ buildings). • …is a desirable methodology.

Green Building success…• …requires greater team

cohesiveness & coordination;• Integrated Project Delivery

• …emphasizes ‘high performance’buildings as an outcome;• ASHRAE Std. 189P

• …measured over time!

So what does a typical project

need?

Capital Projects require…• Team Execution

• Design• Construction • Operations

• Tangible Objectives• Building size• Building ‘function’

• Defined Performance Metrics• Schedule (“a date certain”)• Cost (budgets, Lump Sum, G-Max, etc)• “Quality” (plans and specs, custom & practice)

So how do all these pieces relate?

How are these relationships traditionally defined?

?By contract. By contract.

RelationshipsAre they important?

?

Definitions• Contract, n.

– 1. An agreement between two or more parties creating obligations that are enforceable or otherwise recognizable at law;

– 4. A promise or set of promises by a party to a transactiontransaction, enforceable or otherwise recognizable at law; the writing expressing that promise or set of promises.

Definitions• value, n.

– 1. The monetary worth or price of something; the amount of goods, services or money that something will command in an exchange. Black’s Law Dictionary – Abridged Seventh Edition, USA 2000

– The ‘something’ is most often tangible and the transaction is most often monetarily.

• Thus an item only has value if there is an exchange between parties.

‘Value’ in design and constructionAn increase in the value of the services provided or the

product delivered• = an ‘add’ to the contractReduction or removal of ‘scope’ (design or construct) • = a ‘deduct’ from the contractWhat if……the team fails to deliver the ‘product’ as promised• = diminished ‘value’ ?

Would an adjustment in the contact be expected?

“Value”Everybody wants it. Who can deliver it?

• What is the ‘capital project’ “value chain”?• Design• Construction• Operations• Finance

• What is the relationship between these ingredients?• How do we compare “delivered value” to “promised

value”?

What is it worth?

RelationshipsThey are important!

“Traditional” definitions and roles…Set by contract. Set by contract.

Do “green” projects challenge “traditional” project relationships?

?

Basic Question

How is “delivered” value compared to “promised” value for the completed

project?

60 seconds on E & O

What are the ‘units’ of sustainability?What are they worth?

When do you know that you ‘got’ what you ‘bought’?

What distinguishes ‘sustainable’from normal design?

Remember…• …more energy

efficient • reduced resource

demand • a healthier indoor

environment

Performance metrics• Energy use• Resource use• Environmental

Quality• Operating expenses• Certifications*

LEED Rating System

Think about personnel management, shop drawings, CA.

SustainableSites

14 pts.Water

Efficiency 5 pts

Energy & Atmosphere

17 pts

Materials & Resources

13 ptsIndoor

Environmental Quality15 pts

Design Process & Innovation

4pts

Who Takes the LEED?

* “Operations” is assumed to be ‘by Owner’

SustainableSites

Water Efficiency

Energy & Atmosphere

Materials & Resources

Indoor Environmental

Quality

Design Process & Innovation

Operations* Design

Construction

LEED FundamentalsLEED Fundamentals

Prerequisites • Fundamental Building Commissioning• Energy Performance - previous

requirement• Meet ASHRAE 90.1

• Prescriptive or Predictive • CFC Use in HVAC & R Equipment• Indoor Environmental Quality

• Meet Applicable Ventilation Standards • ASHRAE Standard 62

LEED FundamentalsLEED FundamentalsNEW Prerequisites • Energy Performance • USGBC RAISES LEED PERFORMANCE

REQUIREMENTS– …the U.S. Green Building Council (USGBC) vote[d]

to boost LEED performance requirements. All LEED certified projects are now required to earn at least two Optimize Energy Performance points.

– the new criteria will raise energy performance of all LEED certified green buildings by 14% for new construction and seven percent for existing buildings. The standard is effective immediately for all newly registered commercial LEED projects.

– The USGBC is currently creating a prescriptive compliance path to help with the certification process.

Energy and Atmosphere Energy and Atmosphere ““BonusBonus”” Points!Points!• Further Improved Energy Performance

• Enhanced Commissioning• Indoor Air Quality

• Design and Materials of Construction • Renewable Energy

• On-site generation• “green” power purchase

Impact on Impact on ‘‘builtbuilt’’ Value Value Energy Performance• Cost of OperationCommissioning• Energy, Maintenance and Life Cycle CostsIEQ/IAQ• Occupant Satisfaction

• Often ‘productivity improvements’ are attributed to IEQ/IAQ!

• Rating\Certification level may also impact on (potential) market value AND possible tax breaks, loans or subsidies.

Improved Energy Performance

“Achieve increasing levels of performance…”• Better energy performance = reduced cost • And more LEED points! (‘better’ building rating!)

Keys to performance: • Design Construction Operations

How do you…• monitor and track performance? • audit operations, construction & design?

Indoor Environmental QualityIndoor Air Quality

In Design– CO2 monitoring– Displacement Ventilation

In construction– materials ‘storage’ and handling– Housekeeping– Adhesives, Sealants and Lubricants

Operations– “Continuous” Commissioning– Housekeeping program and materials

Other Areas

• Lighting– Light Pollution

– Daylighting– Lighting Controls

• Water Management – Stormwater Management– Rainwater Harvesting– Landscaping

• Waste Management– Construction Waste– Minimization (reuse)– Recycling

• Roofing – Heat Islands

– Reflective Roofing – Green Roofs

– Heat Island– Stormwater

– Cooling Load

The implications of ‘performance’

• Does delivery of ‘better buildings’ require additional design time and effort? Specialty consultants? Special construction techniques?

????• Does application for a Green Building Tax Credit commit a

building to ‘performance’ requirement?

• Is this a ‘guarantee of performance’ or Implied Warranty?

• If ‘certification’ is a requirement of the contract, then would failure to achieve certification imply an ‘error’ or ‘omission’ by the designer?

What does this do to liability insurance?

“Innovation in Design”

The “Standard of Care”• …[to] "exercise the average degree of

skill, care, and diligence exercised by members of the same profession (or specialty within that profession), practicing in the same or a similar locality in light of the present state of the profession"

• (Gillette v. Tucker). See Black's Law Dictionary, 6th edition. 1404-5.

The Standard of Care

If a firm is a ‘green’ firm and • …green = better buildings…What is the Standard of Care…

…for a green project? • …for other projects at that firm?

?• What is the Standard of Care for the area? • What happens to ‘non-green’ firms?

?

Impacts on the PracticeImpacts on the Practice

• LEED 2.2 - Post Occupancy Evaluations – to secure thermal comfort credits. – Should evaluation include operations review too?

• “Carbon 2030 Challenge”60% reduction in carbon footprint by 2010.

• BIM requirements– Integrated documentation and integrated

delivery

Energy & SustainabilityEnergy & Sustainability

Sustainability is more than just energy.• Resource Use & Management

• Reduced Energy Consumption• Reduced Demand

• Reduced Resource Footprint• Extended Range of Infrastructure• More ‘usable’ building per square meter of

site• Higher potential ROI for each building • Less need to upgrade infrastructure

Sustainability as a Business Issue Sustainability as a Business Issue

The Impact of Resource Demand…

…drives innovation

And possibly a competitive advantageAnd possibly a competitive advantage……

Implications to the ContractTypical Contracts…

• Time– The duration of the project; not post-occupancy!

• “Completion”– at “Beneficial Occupancy”

• (possibly validation or certification – hospitals, pharma)

• 3rd Party Certification – Code compliance

• ‘static’ – ‘snapshot”

• Operations!!!???– Your Mileage May Vary!!!

The “Performance” context• ‘Contractual’ targets introduce risk.• Failure to meet the targets triggers financial

liability.

Sustainability = performance over time

How does the design\construction team mitigate the impact of owner performance?

Risk – Transfer and Mitigation

• Does the owner have a legal recourse to evaluate the building’s ‘performance’ relative to the targets?

• If so, then the design and construction parties should establish some guidelines or criteria for operation to verify proper usage.

An Owner’s Manual?

Establishing Performance Targets

To establish ‘reasonable’ performance targets…• …the prudent engineer would want to establish

targets which ‘accommodate’ some owner ‘misbehavior’.

• …the prudent owner would want to know what is customary for such projects based on industry ‘norms’ including first cost.

Finding a baselineWhat if the owner has no such knowledge?

Options??? Consider a 2 step process.1. Perform an analysis (on a ‘T & M’ basis)

– use an investigatory project to research the ‘typical’, the ‘possible’ and the ‘probable’

2. Once determined, shift to a fixed fee or lump sum contract once the scope and targets have been set.

What about the contractor?

Generally, little change.• In Design/Bid/Build the contractor

still must do a proper job in accordance with the plans and specifications.

But…

…what about…Product substitutions• Due to pricing, availability, interruption• Product “compatibility”

– Defective workmanship claim?(Sub)contractor defaults• Must be properly skilled or experienced

– “suitable”• Failure to replace in a “timely fashion”• Potential delay or LD costs.

The Owner and Sustainability(OR, ‘YOUR MILEAGE MAY VARY’)

Success depends upon three items:• the quality of design

– selecting the ‘right’ answer to the ‘right’ question

• the quality of construction– the proper tool in its proper place

• the quality of operation– the correct use of the correct tool at the correct time and the

commitment to maintain that tool in the correct manner

How is the impact of the Owner accounted for in the Contract?

‘Role reversal’• In all buildings, operations & maintenance

overtake design & construction.• A owner’s ‘failure to maintain’ would not

‘induce’ damages for the design or construction team, but…

• It could negate a claim by the owner that the facility did not meet the expected performance.

The Impact of Operational ChangesDriven by business conditions

• How do you evaluate “variations” ? • Are new conditions an ‘extension’ or

deviation to the ‘baseline’?– adapt the model.

• Differences between the predicted and actual = basis for evaluation/audit

• Impact of “time” on performance must be considered. (Things fall apart – C. Achebe)

Certification ‘troubles’• Any ‘action’ by either the designer or the

contractor that results in lower or non-certification of the building could be seen as a ‘diminished value’ claim by the Owner.

??– On-going operating costs– Market value – Is this akin to consequential damages?

Some Tools…Performance • Original input, assumptions and criteria determine

the final design solutions– can be used as a basis to measure operations

performance. – Include some weather data ‘basis’ and acceptable

deviation– The translation of the ‘what did I say’ aspects of the

design, and the ‘what did I mean’ aspects as well.

• Design to facilitate monitoring, modeling and optimization.

More tools…• Beyond traditional operating manuals.

– includes methods, modes and schedules of operation

– Develop maintenance guidelines.– Require training, re-training and sign-off

• If a dispute arises, allow design\construct team to monitor operation and review data history.– Use the BAS to track compliance

Is a new framework required?New Items:• Data Logging, Trending and Retention

– “Operators” capacity to mitigate damages• Provisions for…

– Substitutions during procurement– Inspection during Construction– Replacement contractors of ‘like skill set’– Audits

• How to resolve performance “debates”

Is a new framework required?• Indemnification

– May not be possible.• Limits of Liability

– protection against on-going “operating costs”– protection from ‘consequentials’ of marketplace

• Require PLI from ‘specialty’ consultants– Energy modelers– Commissioning Agents

On Construction issues…Defaults, Substitutions, etc.• If ‘time is of the essence’ consider a waiver of

certification requirements …• If not consider built-in compensation for ‘extended

duration’ project costs..• Surety obligation to find ‘qualified ‘ replacement

contractorsCertification ‘failure’• Look at obtaining/requiring/revising performance

bonds to cover remedial work• Certification is a performance issue!

New Approaches are Required• Project specific targets and set time period. • ‘Reasonable’ goals relative to costs and

‘complexity’;• Include criteria for operations & maintenance

– facilitate ‘best use’;• Performance measured over time; • The evaluation of the impact of operation

relative to design relative to construction on the overall achievement of the sustainability targets will be critical to evaluating the long term performance.

Performance measurements will control ‘value’perception.

What becomes of Sustainability?• value will increase as demand increases;

– Both ‘resource’ driven and ‘market’ driven • integration into ‘the custom and practice’;

– New contractual context for new ‘custom and practice’. • Differences in execution, delivery and evaluation of

sustainable projects will require new approaches to defining a successful project...

… and evaluating contract compliance.

Questions?Thank You

Have a great day!

What is Std.189P?Standard for the Design of High-Performance Green Buildings (Except Low-Rise Residential Buildings)

• ASHRAE Targets Building Codes with a New Green Standard.

“…Standard 189P (Standard for the Design of High-Performance Green Buildings Except Low-Rise Residential Buildings), the standard is the nation's first to target inclusion in building codes.”

• “…goal is to achieve a minimum 30% reduction in energy costs --and equivalent carbon emissions reductions -- over the current energy efficiency standard…”

• “…Standard 189P would provide baseline environmental requirements as a prerequisite for a Certificate of Occupancy. “

• "Standard 189P will become the benchmark for all sustainable green buildings in the United States because it is being developed for inclusion into building codes," ASHRAE President Terry Townsend said in a statement. “

What is the impact?Standard for the Design of High-Performance Green Buildings (Except Low-Rise Residential Buildings)

• Performance Assessment Methodologies require additional analysis for ‘verification’…

• …and the initial effort must include an original analysis to drive the design to the objectives…

• As 189 becomes ‘standardized’ how will this impact the relationships and expectations of the parties?

• If satisfying 189P becomes a requirement before receiving a “C of O” how does that impact the overall execution of projects?

Maryland Green Building Tax Credit• During Design complete and submit the “Initial Credit

Certificate Application” to the Maryland Energy Administration (MEA).

• MEA reviews and issues an “Initial Credit Certificate” stating the maximum eligible credit amount;

• After receiving C of O, project LEED AP submits “Eligibility Certificate” to MEA. – …which states that the building meets the

criteria necessary to receive the tax credit. • After reviewing Eligibility Certificate and

accompanying documentation, MEA will issue you a Final Credit Certificate which will state the amount of credits you are entitled to from the Comptroller.

E. Mitchell Swann, PE, LEED APswann@mdcsystems.com

MDC Systems, LLC (www.MDCSystems.com)

• Mr. Swann is a Principal and Partner at MDC Systems, LLC. He has over 25 years of experience in design, management, construction, forensics and dispute resolution. His background includes work for pharmaceutical, health care, commercial, industrial, semiconductor, institutional and residential clients and owners. He has served as liaison between the design and construction team during multiple projects and has had leadership roles in commissioning, validation and critical systems testing assignments. He is well versed in the various types of project execution approaches from traditional bid\spec to design\build and has prepared packages and scope documents for all types of projects.

• Mr. Swann has authored several articles on issues in professional practice including the Green Building Issues, Standard of Care and Consequential Damages and is a co-author of the ASHRAE Survival Guide to Design\Build. Mr. Swann is the two-term former chair of ASHRAE TC 9.11 (Cleanrooms) and active in several other Technical Committees including TC 1.7 General Business, Management and Legal Education, TC 2.8 Sustainable Design and TC 9.10 Laboratory Systems.

• He is also a member of ISPE where he was part of the original development teams for the Baseline Design Guides for both Bulk Pharmaceutical Chemicals (APIs) and Oral Solid Dosage Forms and a member of the American Bar Association where he is vice-chair of the Alternative Dispute Resolution Section Committee onConstruction.

• MDC Systems is a project management, engineering and construction consultancy serving clients in North America and around the globe. MDC's primary services include forensic and predictive engineering analyses, strategic and project management consulting, dispute resolution services and support and expert witness litigation support and testimony.