Chair’s Letter: Might Building Performance Become Contractual?

Blog Author: Richard Saxon, CBE

At present, building contracts are designed to manage the completion of a capital project on budget, on time and without defects, dealing with failures should they arise. The new situation, driven by concern for climate change and for occupant safety, is that buildings must also perform as promised, over time.

The reality today is that buildings are designed only to meet capital budgets, with little concern shown for the lifecycle costs which usually exceed capital costs. They are also designed to meet regulations or aspirations for energy performance but usually fail to deliver. There is little comeback about these failures as they are not clearly perceived, nor is it the responsibility of building managers who are unlikely to have been involved in the capital project.

That lack of concern is going away, however. Whole-life cost and carbon emissions are rising up the list of client priorities for good environmental, social and governance policies, often shortened to ESG. This is an update of the concept of Corporate Social Responsibility (CRS) but one made more urgent by the climate emergency. If we are to approach the targets of eliminating carbon emissions by mid-century, we are encouraged to try to design buildings due to open in 2030 to have net-zero emissions. Retrofitting the existing stock will take the rest of the period. For a building to achieve net-zero in 2030 it will need to be designed in 2025. New methods and regulations are evolving, but might there also be contractual requirements?

Net-zero is now becoming definable. A new study by the London Energy Transformation Initiative (LETI), a volunteer group of designers from top firms, has produced an invaluable document: the LETI Climate Emergency Design Guide ( They look at the potential for the UK to produce carbon-free electricity and at the scope to achieve low energy use in all-electric buildings. This top-down and bottom-up study of the possibilities reveals how much zero-carbon energy can be spent by typical building types so that operating buildings becomes net-zero.

The UK is doing well in de-carbonising the National Grid, but as demand broadens to include building heating and electric cars, so energy budgets for future buildings look tight. LETI suggest that housing should not consume more than 35 kwh/m² annually, with offices at 55kwh/m² and schools at 65 kwh/m2, to include their plug loads, not just the current regulated component. These numbers are tough but possible, given a series of design measures, plus the ability to store power so that peak demand can be flattened. Very good insulation and airtightness, good natural light with summer shading and a variety of good controls are needed. The report is full of ideas and options, though it shows how difficult its going to be to also cut embodied carbon in making and maintaining the building itself.

To tackle these operational targets the current ‘performance gap’ must be closed. Buildings today typically fail to deliver expected performance due to a series of failures: design simulations are not as good as they could be; performance gets lost as value engineering seeks to hit the capital budget; workmanship often fails to deliver air tightness or to eliminate cold bridges; building operators often fail to understand how to run the facility. The LETI Guide maps out the many factors. The result is cost pushed from capital to operating budgets and carbon emissions many times the expected level. The facts of this are hidden because nobody publishes them.

Future good policy is going to involve joined up responsibility for building performance for a period after handover. It’s also going to involve publishing data on performance, to see what benchmarks matter and to put pressure on clients with purported ESG policies to walk the talk. Australia has already achieved a lot with its published NABERS statistics, driving up performance very strongly. (see JCT News, April 2019)

And inevitably these requirements are going to be put into contracts, broadening the list of outputs that are demanded and assessing penalties for failure. The idea of building completion will evolve too, moving into the in-use period to prove performance before the final reckoning. Business models that provide Space as a Service may prove attractive, keeping responsibility with the owner. Integrated digital design and building management, the so-called Digital Twin, will be one of the powerful new tools to increase performance and certainty and to provide feedback for better design next time.

The next five years will be very interesting.