Project managing a retrofit

Under the energy performance contracting model, an energy services company is hired to improve the energy efficiency of a building.

The key feature of energy performance contracting is that the energy services company guarantees the energy savings it will provide. They are paid from these savings for the term of the contract. If the savings are not achieved, the energy services company isn’t paid. Once the work is completed and the contract has ended, the full savings revert to the building owner. The energy services company takes on a project management role and is responsible for hiring, managing and paying the third parties required to carry out the works (which may include engineers, installation contractors, commissioning agents and builders). This means the building owner deals directly with one party rather than several.

The implementation process for a typical energy performance contract is as follows:

1. Assess whether energy performance contracting is suited to the size and conditions of the building being retrofitted. There is a threshold of economic viability which dictates that energy performance contracting is best suited to large projects. Appendix 2 of the Best practice guide to energy performance contracts provides a basic checklist for assessing this threshold.
2. If the building is suitable, expression of interest documentation is released and energy services companies interested in the job are identified. Detailed guidance on the expression of interest process is contained in Chapter 2 of the Best practice guide to energy performance contracts.
3. A preferred supplier is selected from the proposals submitted by interested providers.
4. The preferred supplier will inspect the building thoroughly and prepare a detailed facility study. This study will be used as the basis of the energy performance contract and will include the baseline energy consumption for the building.

   The building owner is normally required to pay the costs of preparing the detailed facility study if, after being presented with it, they decide not to go ahead with the energy performance contract. This is sometimes referred to as a walk away fee.

   If the building owner goes ahead with the energy performance contract, the cost of preparing the detailed facility study is usually rolled into the capital costs of the project.

5. The final contract is negotiated between the building owner and the energy services company. This contract will state, among other things, the level of energy savings guaranteed by the energy services company, the fee structure for the project and the duration of the project. A typical energy performance contract period is four to ten years.
6. The energy services company will finalise its designs for the building, hire the sub-contractors required to carry out the works and prepare a detailed works specification and timetable. The energy services company should consult with the building owner to ensure the timetable doesn’t interfere with critical periods of building operation and takes best advantage of planned holidays or periods of low occupancy.
7. The agreed works are carried out.
8. The systems are commissioned and training on their operation is provided to the building’s facility manager, tenants or other relevant staff.
9. The building is monitored for the remainder of the energy performance contract period and energy savings are verified and reported to all parties.
Payments are made based on these savings: by the building owner to the energy services company if savings are in line with those promised in the contract, or by the energy services company to the building owner if they fall below the guaranteed levels. The party that carries out the monitoring and verification should be nominated in the energy performance contract. Monitoring and verification is usually carried out by the energy services company, though an independent third party can be used instead.

10. Maintenance is performed on the relevant systems for the life of the energy performance contract to ensure the guaranteed energy savings are delivered. The energy performance contract will set out who is responsible for the various aspects of maintenance. Usually the building owner will be responsible for some aspects, and the energy services company will be responsible for others.

    Note that an energy performance contract doesn’t have to apply to just one building – multiple buildings or facilities can be included.

The traditional implementation model for construction projects involves the building owner selecting a number of suitably qualified parties. These parties carry out the work under the direction of a project manager. Overviews of the roles of these different parties are provided in the consultants section.

There is no fixed method for how retrofits are implemented or how many parties need to be involved – the best option will likely be dictated by the scope of the retrofit works and the experience of the relevant parties.

A traditional approach would have the building owner appoint a designer, who inspects the building and designs the changes to it. The work for these changes would then be tendered out to building and installation contractors, who would carry out the works. The project would then be commissioned.

The integrated design approach follows similar principles, but it involves all parties at the design stage. Integrated design has been used extensively in recent years to improve the environmental performance of buildings. An example integrated design project may run as follows:

1. Carry out due diligence on the building and its systems. Review the building’s energy consumption data and have an energy audit carried out by a qualified energy auditor. This will ensure baseline data is accurate and that the potential savings from the retrofit can be measured.
2. Prepare a project brief based on the results of the due diligence and energy audits, which clearly states the goals and other parameters for the retrofit. The building’s facility manager should be able to provide guidance in the preparation of this brief.
3. Seek submissions from a designer – an engineering, architecture or building firm as appropriate – based on the brief. The designer should inspect the building and provide a thorough proposal of the works they suggest be carried out, the results they expect the works will yield, how much the works will cost and how long they will take to complete.
4. Based on the submissions, select and engage a designer.
5. Assign a project manager. This role could be performed in-house by the building manager, by the selected designer or by a third party.
6. In consultation with the designer and project manager, select the other parties required to work on the project (such as installation contractors, commissioning agents and other builders, engineers or architects as required). This will likely involve another round of submissions.
7. Before design commences, all the parties who will be working on the project should meet, exchange ideas on the project and then remain in contact throughout the works. This should ensure that the design is well-conceived, its intent is well-communicated and it can be fully realised during installation and commissioning. Major equipment suppliers may also need to be involved in this process. This process, known as using an integrated design team, has been identified as being crucial in the delivery of many successful green building projects.

   It is important that all parties work together from the beginning of the project, because research shows that the biggest influence on the sustainability of a building is had at the pre-design stage. Sufficient time should to be allocated at the beginning of the project for this process to take place.

8. The building owner should sign off the final designs with the design consultant and agree to a schedule of works. The design may go through several iterations before it is finalised to the satisfaction of all parties.
9. Installation contractors will carry out the works following the design and schedule, consulting with other parties as required.
10. The commissioning agent will commission and fine tune the building’s systems to ensure they are operating correctly, consulting with other parties as required.
11. Train building staff, tenants and other relevant personnel on how to operate the building and its newly retrofitted systems.
12. Once the project is complete and the building is being used, ongoing maintenance needs to be performed on the systems and monitoring and verification needs to be carried out.

    This can be done by the installation contractor, the building’s facility manager or a third party as required, and is necessary to ensure the design intent is being realised on an ongoing basis. Further fine tuning may be required.

The design and construct model is similar to the traditional or integrated design models, except that in steps 3–9 the design, installation and construction are all performed by the same party.

In the case of energy efficiency retrofits, installation contractors are the ones most likely to be offering design and construct services. Alternatively, a builder may offer the design and construct service and sub-contract other trades for the project as required.