September 2014

LEEDS protocols can be tough taskmasters. The increased record keeping and verification requirements stagger an already paper-choked industry. So how can you comply with LEEDS in a risk managed culture?

First, organize. Separate the LEEDS protocol into two main concerns. Materials, products and installation issues; and waste and recycling issues.

Check deliverables for compliance, waste is in the details. Do the materials or products match the specification? If not, source the correct item and send back the deliverable. Don’t wait for the mismatched product to show up on site.

Source materials as close to the site as possible. One of the more difficult LEEDs requirements concerns transporting materials long distances. Transportation and sustainability coexist uncomfortably.

Check every delivered item to confirm compliance with the LEEDs requirements. You may need the documentation to earn the correct ranking.

Plan trash reduction, recycling and removal from the site. Confirm these rules are followed by every contractor. Most construction scrap material can be recycled. Excess product can either be left on site as replacement parts for maintenance or taken to the next site. The next site, however, may not spec that product.

Risk management begins with identifying and assessing risk. Checking deliverables and managing waste implies a gatekeeper on duty to record everything in and everything out. This solution is exactly correct.

Risk reduction, or in this case, increased compliance implies a coordinated effort. Take a leadership role in recycling and trash reduction. Be innovative. Reward active participants in some small way.

Reducing the volume of excess material brought to the site might require simply limiting storage or lay down space. Force subcontractors to right-size their incoming material orders.

Finally, commission the final product. Commissioning companies find defects or confirm completion. Either way, you have the opportunity to correct LEEDs defects or rejoice in a job well done.

Leeds is about documenting the process. Confirm and document everything, every day on the job site. The audit will move along much smoother.

Brownfield sites are environmentally impacted properties which have been okayed for development based on risk assessment rather than strict regulatory compliance. So, if it’s cleared, what can go wrong?

Coordination Problem #1: If the cut soil cannot be reused on the site, and it is impacted soil, you still pay an environmental tipping fee at a disposal facility, if they accept the soil.

Civil engineers do not always know where the impacted soils are, or what to do with them. Environmental engineers do not always know where the building excavations are planned, utility trenches or storm water structures go.

A better plan can be devised if both sets of engineers give input.

Efficient utilities with a minimum impact on contaminated soils. One or the other costs money.

Coordination Problem #2: Will laborers be working in contaminated soil? Any confined space or similar conditions may require respirators and protective clothing and gloves.

The civil engineer may not know the sanitary sewer at eight feet below grade will touch impacted soils. When the fumes enter the trench, work must stop. The trench must be ventilated. Special personal protection or specialty crews must be brought in.

Wouldn’t you rather know these conditions in advance?

Coordination problem #3: Where can you take the soil?

If the environmental engineer knows what soil is likely to be disturbed, they can sample and test the soil for landfill criteria. This process takes about ten days of laboratory time. Spend the money in advance rather than shutting down the site waiting for manifests to move the soil.

More coordination between civil and environmental engineers is required than is often allowed. Together, they can resolve many costly delay problems in advance.

And, it doesn’t hurt to have the structural engineer or architect in these meetings. As they may be unaware of the issues raised by their design, coordination often leads to a better project.

The construction business evolved over the past many years to a more brokered business. Thirty years ago a general contractor landed on a site with a dozen workers to build most of a building. Now, specialists combine to do everything from site clearing to painting stripes on the parking lot.

The general contractor and some of the subcontractors handle paperwork, verify completion, and handle payments to subcontractors. They’ve become service companies rather than construction companies. Construction managers rather than builders.

Insurance recognizes this change as moving from a completed operations liability risk to a professional liability driven risk. So, what does that mean to you?

General liability insurance covers the site premises and the process of physically building a structure. Professional liability covers issues concerning planning, designing, verifying designs and plans, surveying, advising, coordinating and most compliance. The two policies do not overlap in any significant way.

Even if you are not technically a design build firm, if you verify design, or if you interpret the design in any way to build, or if you substitute or allow the substitution of materials or products to build, you are redesigning the building.

Under current energy codes, energy to light a room is restricted. If you substitute or allow to substitute a less energy efficient or higher wattage light fixture for a more expensive, hard to find specified fixture, you changed the energy design, the functioning of the energy system, and will fail to meet compliance with the energy code on commissioning. Sounds harsh, but that is today’s professional liability risk.

Rethink your procedures beginning with the decision: which type of business do we want to be?

If you want to build structures, consider a protocol which sends a “verify the source” request for information on unknown or unfamiliar materials or products. And think about getting some professional liability insurance anyway for those unusual field decisions made to expedite completed operations.

Getting the job. It’s a tough task where too much optimism can cost dearly, too little can cost receiving the bid. If too many low bids occur, who’s responsible to the stockholders?

Because the construction industry works by a bidding system rather than a negotiated contract, errors can be difficult to remedy. Leaving out the painting number on a half-million foot office building costs dearly.

Computerization of the bid process has helped and hurt. The program will not allow forgotten inputs, but people tend to believe a computer generated number.

Quality control for bids is essential for survival, both for the estimator and the executives. The estimator calculates the bid, but the executive signs the contract.

The decision to sign the contract drives the scrutiny if money is lost. Directors and officers insurance protects the executive financially when stockholders seek redress in response to a catastrophic contract.

Getting fired is the lesser issue to being sued for incompetence or fraud. The directors and officers exposure boils down to one unfortunate fact. The covered position must make decisions in real time ahead of perfect knowledge; the claimant has the benefit of hindsight.

You can protect yourself by knowing your duties as a director or officer:

1. You must act in good faith and give prudent care in your decisions.
2. You are required to be loyal to the business.
3. Disclosure: you must disclose material facts to regulators, other board members, officers, creditors,
bondholders, stockholders, and other potential investors.

Implement a policy of redundant checks on all contracts, bids, offerings, scopes of work, payments, or any other routine agreements which can lull people into complacency. Routine hides defective work well.

Spot check bid numbers against industry averages, or have this capacity in the computer program. If you’ve been in the industry awhile, check your gut instinct against the line items in the bid. If they don’t make sense, recheck. Consider every contract your responsibility, otherwise they may come back to haunt you.