Risk Aversion: The Unintended Consequences for High-Performance Façades
Risk aversion permeates the building envelope design and construction. Perceived risk was the third of seven major barriers to adopting high-performance façades found in the Façade Tectonics (FTI) research study.
Risk aversion drives behaviors that maintain status-quo façade performance, hampering the adoption of new, higher-performance assemblies, materials and installation processes. The higher performance being rejected may not even be “new” to the market; it could just be “different” from a design and construction team’s current familiar practices. “Different,” even if proven by others, still adds perceived risk for the team.
Who Can Blame Them?
Who can blame design and construction teams for taking a conservative approach and defaulting to using known systems and processes? Remediating façades when things go wrong can be expensive, and accessing the exterior of tall buildings, especially in cities, can be even more challenging.
And then, there’s the risk of costly litigation and the cost of necessary insurance. VERTEX’s study of construction defect cases from 2011 to 2019 concluded that construction disputes commonly involve the building envelope, with those most prominent involving water damage from penetration through the envelope. They also note that “alleged building envelope construction defects…are increasing.”
Cultural Inertia
Cultural inertia also drives the repeated use of the same products and methods. This inertia must be overcome to allow the consideration of higher-performance alternatives. If such alternatives are outside the scope of the design and/or construction teams’ experience, they will likely not be adopted.
Lack of Trained and Experienced Glazier Labor
The systemic shortage of experienced glaziers also increases the risk profile of new and/or different solutions for the glazing subcontractor. The glazing subcontractor is already taking on more risk with increased delegated design responsibilities, pushing them to try-and-true older solutions rather than try out higher-performance systems.
The North American Contractor Certification (NACC) program for contract glaziers and its sibling program, the Architectural Glass & Metal Technician (AGMT) certification for individual installers, are helping to build capacity and validate that contractors and their teams have the necessary skills and confidence for more complex installations.
Insufficient Budget
Often, insufficient funds are allocated to support a focused façade design and verification process essential for developing and implementing high-performance solutions.
Schedule Compression
Increasingly, developers are shortening design and construction schedules to reduce the time to achieve an income stream from their initial investment. This leaves insufficient time for evaluating novel or different but more conventional, high-performance façade options that the team has not implemented before.
Consequences
The following is a list of risk management strategies typically seen from players in the design and construction value chain. These strategies act to preserve the status quo of low-performance façade design and often result in other unintended consequences—the suppression of innovation and an artificially high price premium over business as usual. This makes achieving a return on investment (ROI) for a higher-performance façade more difficult (see previous blog).
- Risk price premium for new or different: Contractors often add a price premium for new or different façade systems to manage their risk. They often offer lower-cost, lower-performance alternatives with which they are more familiar.
- Lack of bidders: In some cases, if an unusual product or system is specified, insufficient bidders may be willing to do the work. A lack of competition can also artificially increase the price of higher-performance façades.
- Request for a 10-year track record: Architects and/or contractors require a 10-year track record to minimize the risk of newness. This slows innovation adoption and reduces its benefits.
- Request for three equivalent products: Architects and/or contractors often ask for three equivalent products in their specifications–often in public projects–otherwise, a high-performance system cannot be used. This also slows innovation adoption and further suppresses innovation since innovative companies must wait for their competitors to catch up before adopting their product.
Solutions
The FTI research study offers a blueprint for addressing the market barriers, including the following, which target risk mitigation:
- Ensure there is sufficient selection of high-performance fenestration systems and trained installers available for a competitive market via
- A prize program for the development of high-performance window wall and curtainwall systems;
- A research and development collaboration to develop and deploy next-generation systems; and
- Develop and deploy an installer training program for high-performance systems and methods. Since NACC already has the infrastructure, this would be a great collaboration opportunity.
- Increase façade knowledge and education across the full value chain. In particular, the development and deployment of installer and contractor education programs and façade-specific professional development programs for architects. There are also educational needs for architecture students, building owners and developers, tenants, code officials, local policy-makers, planners and utilities.
- Provide incentive programs that focus on reducing risk for contractors and designers as well as owners, such as:
- Free or subsidized insurance for subcontractors installing high-performance façades to help them manage their risk around schedule, product performance and durability. (I dove into this potential opportunity last year).
- Free or subsidized training to increase comfort with features, benefits and installation of high-performance systems.
- Fund design charettes to design façades to a high-performance specification.
- Fund qualified façade consultants to offer design services for owners who commit to using high-performance façades.
- Funding incentives for projects that utilize full envelope commissioning. Funding would contribute to the cost of the commissioning, reducing risk and building capacity. Ensuring that incentives accrue to all participants to offset their risk will be important.
- Provide time-based incentives to allocate sufficient time to designing high-performance façades.
- Provide a range of financial incentives for owners to reduce their risk and increase their ROI. Such incentives could include tax credits, capital gains exemptions, low interest rates, Property Assessed Clean Energy (PACE) loans, utility rate reductions and relaxed zoning rules.
Mitigating the risk for all participants in the value chain for façades is critical to driving high performance. Otherwise, the “rinse-repeat” design and construction will continue to win.
The typical design-bid-build project delivery process contributes to status-quo maintenance and must be addressed to move the market to higher performance façades.