Saving Money on Construction

Performance Contracting – When and How To Use It

In my discussions with owners, architects, engineers, contractors, etc, it seems “performance contracting” is the least understood of the project delivery methods available in the marketplace. Knowing and understanding all delivery options is critical in getting the most for your construction dollars.

According to the Energy Services Coalition (www.energyservicescoalition.org), “Energy savings performance contracting enables building owners to use future energy savings to pay for up-front costs of energy saving projects, eliminating the need to dip into capital budgets.” Under this delivery method, the energy services company assumes the risk by guaranteeing the savings will pay back the up-front funding they provide.

When to Use Performance Contracting: Performance contracting is applicable when the following conditions are satisfied:

Outside funding is required to finance the work
Energy savings are adequate – and guaranteed – to pay back the initial investment

How to Use Performance Contracting: If these conditions exist and you choose to move forward with performance contracting, your goal will be to get a comparable construction value to that of design/bid/build or construction management delivery. This will involve competitively bidding all of the construction work to qualified contractors. You will also need a procedure for measuring and verifying energy performance throughout the payback period.

Summary: Know and understand performance contracting and all available delivery methods before selecting the one that is best for you and your project. Customize performance contracting or other selected method to get the most construction for your money. Measure the value received.

Independent Construction Advisors

Independent construction advisors, or owner’s representatives, such as Sitton Consulting Group, are available to assist owners with their project delivery method selection, customization, and measurement. An independent advisor should save you money several times the cost of their services.

Save Now

Are you saving money on construction when you...

Negotiate contracts?
Select and customize your project delivery method (CM, performance contracting, etc.)?
Measure and manage the performance of all parties?
Make decisions and approve of work?

If not, click here to start saving immediately: www.constructionsavings.com

Missouri School Superintendents

Thanks to those of you who stopped by our booth at the MSBA Annual Conference. It was good learning more about your specific issues and allowing me to share ways to save money. If you didn’t get a chance to stop by, click here to ask a question or request assistance.

Illinois School Superintendents

Stop by Booth 417 at the IASB/IASA/IASBO Annual Conference to learn more about saving money on your current or future projects, or click here to ask a question or request assistance now.