by AF 0607b3 — June 12, 2009—A new report from Marsh Inc., a leading insurance broker and risk advisor, found that despite growing enthusiasm for green-built and LEED-certified projects, the potential risks associated with them may be significant and construction project participants are not sure how best to manage these risks.
According to Marsh’s report, building owners, contractors and design firm executives are most concerned about potential financial risks, including the impact of green design, construction and ownership on profitability, cost and the ability to complete projects on time and on budget.
The report ranked the top five risks associated with green building projects, based on feedback from 55 senior executives involved in green design and construction who participated in one of a series of four half-day forums held from mid-2008 to early this year by Marsh in major U.S. cities.
In terms of potential frequency and severity, the executives participating in the Marsh forums ranked the following exposures among the top five green building risks confronting the construction industry:
Performance risks, which center on the ability of products, systems and buildings to perform in a green environment.
Consultant, subconsultant and subcontractor risks, including challenges associated with making sure firms assigned to a project have the appropriate training and expertise, and questions about the ability to replace a defaulting contractor with one that has appropriate certifications and qualifications.
Regulatory exposures, such as uncertainty about how the regulatory environment might evolve with respect to green building, including the concern that the potential for punitive damages might drive owners to seek warranties and guarantees to recapture costs from contractors and subcontractors.
Other key risks identified by the Marsh green building forum participants, include supply chain challenges, technology, brand and reputation exposures, education, and return on investment.
Marsh’s report, ,Green Building: Assessing the RisksFeedback from the Construction Industry, is available free of charge by making a request online through Marsh.
