Christopher (Kit) S. Houston | Taft Stettinius & Hollister LLP | January 30, 2019
There was a time and place where a violation of the local building code could result in the execution of the contractor. The time was the 18th century B.C., and the place was Babylon. Hammurabi created the world’s first known building code, and it was a performance-based code. A performance-based code is one that leaves discretion to the builder in regard to means. Compliance is judged on a set of performance criteria such as a specific load capacity for a load bearing structure.
Hammurabi’s Code dictated the performance standard that the final product of a builder shall not fall. Hammurabi’s Code, § 229. As simple as this concept may now seem, it captures the essence of performance-based design. As low as Hammurabi’s threshold may have been, failure to achieve compliance came at a great price. If the structure failed and caused death, the contractor would pay the ultimate price. Id.
Modern building codes have dropped the death penalty, thankfully, and have also trended towards prescriptive requirements. Prescriptive codes judge compliance by requiring certain materials and designs in order to achieve a standard deemed safe for construction. They tell the designer how to achieve the result, in contrast to the performance standard, which requires the designer to achieve a particular result but allows some freedom as to how to achieve it. Evaluating compliance with a prescriptive code is clear because the code itself dictates an easily measurable standard. For example, a building code may require joist spacing at certain prescribed distances.
This prescriptive element is designed to alleviate the need to test for load capacity. Determining compliance with such a provision is easily verified.
Many portions of prescriptive codes, however, have a performance-based fallback provision. These provisions allow for alternate designs if adequate assurance is given as to the adequacy. This assurance usually comes in the form of a mathematical model or confirmation by analytical methods. This, however, can be costly to obtain.
The primary criticism of prescriptive codes is that they deter innovation in design. As one commentator noted, prescriptive codes hampered the implementation of base isolation systems in earthquake-prone areas. See Greg C. Foliente, Developments in Performance-Based Building Codes and Standards, Vol. 50, Issue 7/8, Greg C. Forest Products Journal (2000). Some feel that performance-based codes, which are generally thought to encourage innovation, would have fostered this technology more quickly. Id.
There is a growing contingent of design professionals advocating for more performance-based codes. They argue that prescriptive codes, in addition to inhibiting innovation, are outdated due to advancements in design. The disconnect between prescriptive codes and practice is felt most keenly in the construction of large complex buildings. This may be because building codes are many times written with smaller construction projects in mind. Also, the price of innovation, as a percentage of total project costs, is less and its benefits are multiplied when leveraged in the design of a larger, more complex structure.
Despite this, there is no indication that governing bodies are eager to abandon their prescriptive codes. They are easy to enforce. Instead, what we are seeing is an increase in regulators allowance of performance-based alternatives, especially for complex projects. See Alternative Design Procedure (Performance-Based Design) for Seismic Analysis and Design of Tall Buildings Utilizing Complex Structural Systems, Los Angeles Building Department, Ref. No. ASCE 7, Section 12.6, Doc. No. P/BC 2017-123, Effective Jan. 1, 2017 (setting forth alternative design procedure for seismic analysis of alternative design for tall buildings).
Regulatory bodies have also layered performance-based incentives on top of prescriptive regulations. One example is found in LEED certification. The various degrees of LEED certification are driven almost exclusively by performance of the construction as it pertains to energy efficiency. Many local governments give tax incentives for achieving various levels of energy efficiency, which is the essence of LEED certification. The construction, however, is still subject to any controlling prescriptive codes.
Regardless of the structure of the governing building code, performance-based design can serve a role in construction contracts. Because many codes have the flexibility to allow regulators to consider alternate designs, performance-based standards can be an integral part of a contractual agreement. For example, performance-based design is found more frequently in design projects in earthquake or hurricane zones. Contractual performance-based standards can make clear that the structure must be able to survive a certain earthquake magnitude or wind speed.
An owner may not, however, want to leave all design features to be based solely on performance criteria. Aesthetics are often important. When drafting a performance-based contract, or when inserting performance-based provisions into a contract, careful drafting is required to achieve certainty. Performance-based goals should be determined prior to engaging a design team. See Sandra Henry et al., Taking a Performance-Based Approach to Building Procurement (2017) (finding many performance goals were introduced too late into projects so that they could not be achieved).
Once identified, the owner must determine how to create a definite and measurable standard to govern contract performance. All parties to the contract will likely agree that certainty as to the standard for compliance is beneficial. One concern with performance-based design is that the failure to achieve the standard may not be discovered for years after completion. The typical one year correction period for defects is not adequate to address this risk. Contractors, however, will be hesitant to extend a warranty in perpetuity, so a negotiated agreement must be had. Moreover, an owner needs to be cognizant of the applicable statutes of repose and limitations.
The owner should require the design team and contractor to gain approval for any alternate designs (to prescriptive requirements). The owner may also want to control certain aesthetic features. However, an agreement can integrate specific design features demanded by the owner while leaving discretion to the design team on other features. Early and frequent communication with the design team is paramount to achieving success.
Performance-based design is enjoying a modern resurgence due to its capacity to foster innovation. Hammurabi would be pleased. Nonetheless, to avoid pitfalls, be sure to plan carefully before engaging the design team and prepare an agreement with the proper allocation of responsibilities and risks, negotiated warranties and a clear standard of compliance.