Delivering More Construction for Less™

"High" Performance Contracting™ - Getting the Most from Your Energy Savings Performance Contract

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." It has become more common to use performance contracting for projects that also include non-energy savings improvements, and those for which the Owner has the capacity to finance the project on their own. With this expansion of performance contracting, it's important to understand its application as well as its potential shortcomings. It can be a viable option for an Owner IF you 1) understand it and 2) manage it closely.

Part 1: Understanding Performance Contracting

When considering performance contracting delivery, ask yourself these questions:

Do we need the Energy Services Company (ESCO) to provide the up-front financing?
Over what period do we want the energy savings to pay back the cost of improvements - 5, 10, 15 or 20?
Do we have non-energy savings improvements that we would like to include in the project?
Do we have the project delivery expertise in place to closely oversee the contracting, design and construction?

Depending on the answers to these questions, you can determine whether or not performance contracting is your most cost-effective option.

From a Three-Legged Stool to a Two-Legged Stool

Most construction projects use a delivery method that has checks and balances built into the process by the existence of three legs on the construction stool: Owner, designer and constructor. In the case of performance contracting, the delivery is design-build, meaning the ESCO is responsible for both design and construction. It is critical that you understand this dynamic, for you will need to provide 100% of the oversight and checks and balances.

"High" Performance Contracting

If you decide on performance contracting for your project, you should customize the process to maximize the value delivered. Customizing will help you get the maximum scope of work at the highest quality, and at a competitive price.

Next Issue: Part 2: Managing Performance Contracting

Help Is Available

For assistance in managing a performance contract or other planning, design or construction project, visit our booth at one of this spring's school conferences.

Or contact Doug Sitton, President of Sitton Construction Group at: dsitton@sittoncg.com, 314.412.5677 or 618.406.0993. Sitton Construction Group (www.ConstructionSavings.com) is a professional construction management firm, led by Doug Sitton, a 30-year veteran of the design and construction industry. Mr. Sitton is available to answer individual questions or speak to groups about improving the facility planning, design and construction process.

Sitton Construction Group

Missouri: (314) 412-5677
Illinois: (618) 406-0993
Email: info@sittoncg.com

Additional Sitton Info:

Providing Construction Management & Energy Consulting in St. Louis, MO, the St. Louis Metro East and throughout Missouri & Illinois.

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