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Lifecycle performance in commercial design & construction

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Currently in Australia, there is no set of rules for classifying the environmental performance of a building material or for labelling that material.  Research on ways of measuring such performance is being undertaken by product manufacturers, government bodies, academics and organisations although there is no unified methodology to date.  This is important to appreciate particularly where parties commit to a green design and construction project based on set environmental performance outcomes or stated key performance indicators in respect of building efficiency, lack of adverse occupational hazards and similar criteria.

Green materials and products

When we talk of green materials and products, there is often a distinction between what is called “embodied energy” and “operational energy” used in both the construction and operation of the building.  “Embodied energy” is the energy used to extract the raw materials, to transport them to and from the manufacturing plant and in manufacturing the materials.  “Embodied water” has an analogous meaning, referring to the amount of water used in the manufacturing process.  On the other hand, “operational energy” is the energy used in temperature control, ventilation and lighting control.  Operational energy can be reduced by incorporating passive design features and selecting efficient systems and lighting.  It can be influenced also by the way occupants behave.

A common way of measuring the environmental performance of materials is the “life cycle assessment” (LCA) method.  This process assesses the environmental impacts associated with a material, product, process or service throughout its complete life cycle starting with the extraction of the raw material onwards to processing, transport, use, reuse, recycling or disposal.  There is a measurement for each of the stages for the resources used and their environmental impact.

Assessing performance

It is easier to measure, by using LCA, the performance of a particular type of material.  Things can get more complicated where one wants to measure how a whole building performs.  It is now becoming increasingly common to look at segmenting the building construction into elements including walls, floors and roofs.  This method is known as “environmental profiling” which is, in effect, a way of measuring the impact on the environment by adding the contribution of the component parts.  Those who prepare specifications and designs then can compare one element with another that performs (or is meant to perform) the same function.

The Building Products Innovation Council in Australia has established an initiative to work out a uniform way of determining the life cycle of building products, as part of the Australian Life Cycle Inventory Database.  The LCA information will be used in rating tools, design tools and material product eco labels to allow the environmental performance of a building and its components to be measured over their full life.  The BPIC’s members represent the major sectors of the building products industry.

Examples (without this being an exhaustive list) of product certification regimes include:

  • the Australian Green Procurement Database which is a free resource of environmentally preferable products in Australia.  The GPD seeks to evaluate the environmental performance of products as well as provide contact details and technical information about them
  • ECO-Find, a listing of green products by keyword
  • Ecospecifier, which is subscriber based

Due diligence

Since, at the moment, there is a range of product certification regimes that calculates environmental performance of a product or material against a set of criteria, caution should be exercised by stakeholders and contracting parties making representations as to (a) whether the particular scheme adopted is meant to have any contractual force; (b) which products and materials (whether all, or only some) are being assessed against set criteria and (c) whether the certifications indicating desirable attributes of the product for the intended purpose are consistent with any contractual warranties and / or the manufacturer’s own product information sheets, in assessing the suitability of the product for use.

A significant part of green D & C discourse, which often can find its way into tendering discussions, focuses on aspirations and what comes with that is the potential for ambiguity and misunderstanding.  A classic example is the question of “extended producer responsibility”, or (if we follow the concept through to its basic legal implication) the extent to which contractual negotiations will require that a producer of a material or product is required to be responsible over its entire life cycle.  It is all very well to talk about EPR as a concept or ideal.  What does being responsible imply?  Is the business that manufactures, supplies, imports and / or sells the material or product required to be financially or physically responsible for it after its useful life?  Is this workable or realistic in the context of a particular project?  Are there obligations to take back spent products and manage them through reuse, recycling or energy production, or have a third party be responsible for this (a “producer responsibility organisation”) which is paid by the producer for spent-product management?

Limitation of actions

Claimants who wish to sue for loss and damage in the context of a green design and construction project need to appreciate that where proceedings are contemplated in relation to allegedly defective building works, even in respect of the incorporation of a green material or product (once this is assumed by the builder as a contractual obligation), the Building Act 1993 (Vic) provides that a building action cannot be brought more than ten years after the occupancy permit or certificate of final inspection has been issued.

This applies in relation to projects completed, broadly speaking, after 1 July 1994 (with other rules on “reasonable discoverability plus six years” acting as the limitation of actions pre 1 July 1994). However, where breach of contract claims (other than claims in negligence for defective work) are contemplated, and there may be many types of contractual breach possible, the limitation of actions is six years from when the cause of action accrued (i.e. from when the breach occurred – the determination of which can be an exercise in itself).  Potential green claimants need to appreciate this duality.

In the LCA context, interesting questions certainly arise.  For example, what happens if the life of the green element, material or product ends “prematurely” (in view of its intended life cycle) only after the limitation of actions expires?  The question becomes even more interesting where a developer might want to make claims in a retrofitted building that has both old and new elements.

Reality check

The above considerations will impact on the drafting of contractual clauses that relate to the procurement, manufacture and supply of materials and products as well as express terms dealing with the warranties that attach to them, This is particularly the case given that common law warranties to do with fitness for purpose that can tend to “step in” to the extent that the contract is silent on warranties.

If you have any questions regarding this article or topic contact one of our Construction & Engineering lawyers.

Author:  Stuart Miller