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Part 4: M&V Plan Review Key Documents Risk / Responsibility Matrix M&V Plan Template Detailed Guidelines for FEMP M&V Option A superespcs_mvresources.cfm Phase 1 Phase 2 Phase 3 Phase 4 Phase 5 Phase 2: Project Development Contractor Responsibilities

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Part 4: M&V Plan Review

Key Documents

  • Risk / Responsibility Matrix

  • M&V Plan Template

  • Detailed Guidelines for FEMP M&V Option

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Phase 1

Phase 2

Phase 3

Phase 4

Phase 5

Phase 2: Project Development

Contractor Responsibilities

  • Develop Risk & Responsibility Matrix

  • Develop M&V Overview

  • Explain and justify approach.

    Owner Responsibilities

  • Review Risk & Responsibility Matrix and M&V Overview and provide feedback

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Phase 5

Phase 1

Phase 2

Phase 3

Phase 4

Phase 3: Negotiation and Award

Contractor Responsibilities

  • Perform Detailed Energy Survey (DES) and document baseline information

  • Modify M&V plan to satisfy owner needs and desires

    owner Responsibilities

  • Review and approve M&V Plan

  • Witness and observe DES

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Risk & Responsibility Allocation

  • How to allocate risks and responsibilities? Typically:

    • Performance: Contractor

    • Usage: owner

    • Financial: Shared

  • M&V approach should focus on:

    • Verifying performance

    • Characterizing usage

    • Minimizing uncertainty cost-effectively

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Need to balance M&V rigor with project risk

Measure things that need measuring

Consider required precision

Estimate (stipulate) where risks are acceptable

Law of Diminishing Returns applies

Typically, initial M&V costs will be 3 – 15% of the capital cost (see DO-2); annual M&V costs will be 3 – 15% of the savings (see DO-3)

Cost Effectiveness

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M&V Costs

M&V Cost


Incremental Value of information

M&V Rigor

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M&V Costs and Project Savings

Source: Initial Applications of the FEMP Measurement & Verification Guidelines in Super ESPC Delivery Orders: Observations & Recommendations. Schiller Associates, 1999

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Reviewing Measurement & Verification Plans for Federal ESPC Projects


  • M&V Plan review requires qualitative assessment of engineering strategies

    Intimate understanding of project helpful:

  • Owner goals

  • Site specific issues

  • Agreed-upon risk allocation

  • Objectives and constraints for each ECM

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Overview of 6 review steps Projects

STEP 1: Gather project documentation

STEP 2: Rank ECMs based on savings

STEP 3: Initiate review

STEP 4: Evaluate M&V approaches

STEP 5: Develop written report

STEP 6: Ensure key issues are resolved

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Overview of 8 review steps Projects(cont)

STEP 5: Evaluate M&V approach

STEP 6: Develop report using review template

STEP 7: Provide written review to Owner & DOE

STEP 8: Ensure that action is taken on key issues

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Step 1: Gather project documentation Projects

  • Final proposal, including technical appendices

  • Note available documentation

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Step 2: Rank ECMs based on savings Projects

  • Identify all sources of savings for each ECM Rank ECMs on:

    • % total cost savings (energy & water, O&M)

    • % total commodity cost savings (energy & water)

  • Note % savings for ECMs

  • Focus on largest $ saving measures first

  • O&M generally verified separately from energy & water savings

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Step 3: Initiate Review Projects

  • Review Final Proposal

    • Sections of proposal other than the M&V plan may be required

  • Identify obvious deficiencies

  • Use graded approach in review efforts

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Step 4: Evaluate M&V approaches Projects

Are M&V approaches appropriate?

  • Note source of savings for each ECM

    • Is M&V adequate for all sources?

  • Review Risk & Responsibility Matrix

    • Does M&V plan match proposed risk allocation?

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Step 4: Evaluate M&V approaches Projects(cont.)

Evaluate quality of baseline developed

  • Were key variables measured?

  • Are assumptions reasonable and well documented?

  • Were performance characteristics recorded?

  • Are the energy and savings calculations correct? Reasonable?

  • Were utility or weather based models validated?

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Step 4: Evaluate M&V approaches Projects(cont.)

Evaluate performance period activities:

  • What is the likelihood of success for this measure?

    • Higher risk = more rigorous M&V

  • Will key variables affecting ECM be measured? How often?

  • Will meaningful performance period data be used to calculate savings?

    • Sufficient to support guarantee?

  • If only post-install measurements are used, is this data likely to change?

  • Is the savings risk level appropriate? Aligned w/ R&R matrix?

  • Have all objectives and constraints for the project been considered? For each ECM?

  • Have O&M reporting responsibilities been adequately defined?

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Step 4: Evaluate M&V approaches Projects(cont.)

Evaluate overall project assumptions

  • Are contracted energy rates based on actual rates?

  • Are marginal (not blended) rates used?

  • Are escalation factors based on latest NIST data or other credible source?

    Evaluate proposed M&V Costs

  • Do M&V costs align with planned activities?

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Step 5: Develop written report Projects

  • Transfer key notes & findings to written report

  • Summarize recommendations for each ECM in Summary of Findings

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Step 6: Ensure issues are resolved Projects

  • Send review to Owner staff

  • Note dates and names of recipients

  • Confirm actions are implemented to address recommendations

  • If not implemented, provide written explanation

    Documentation is critical in contracts that will most likely outlive staff

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M&V Plan Reviews - Lessons Learned Projects

  • Use a Savings/M&V Options Table

  • Prioritize the review

  • Improve proposed M&V approaches

  • Document recommendations

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1) Use a Savings/M&V Options Table Projects

  • Gives a one-page picture that IDs all savings streams and associated M&V strategies

  • Helps spot missing M&V options

  • Helps you prioritize your M&V Plan review

  • Is easy to create,

  • Documents an important step in starting a review

  • Is a valuable reference any time M&V of the project is revisited

  • Helps focus future performance period reviews when details have been forgotten and the project begins providing measured results

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2) Prioritize Your Review Projects

  • Use Savings/M&V Options Table to focus your review

  • ID where most of the project savings lie

  • Assess error potential with each savings stream to ID highest priority streams

  • Prioritize ECMs/savings streams in accordance with savings potential and error risk

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3) Improve proposed M&V approaches when needed savings)

  • Change to more rigorous M&V options

  • Add measurements to minimize uncertainties (particularly for large savings streams where errors could be most significant)

  • Reduce M&V costs (switch M&V option, optimize sampling, etc.)

  • Optimize sampling:

    • minimizing number of measurements by focusing on the largest contributors

    • rotating sampling during the performance period

    • assuring random sampling where appropriate

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4) Document recommendations from M&V Plan reviews savings)

  • Use to verify that ESCO/customer have addressed recommendations

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Summary savings)

  • GET IT RIGHT! M&V Plan reviews are critical:

    • Great protocols/guidance do not equal great M&V Plans

    • M&V Plans define project success

    • Weak M&V Plans = weak projects

    • Combine guidance with good engineering judgment to produce great M&V Plans

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Summary (continued) savings)

  • Think of reviews as a process such that your experience will lead to quality improvements

  • Use/develop review tools, they will:

    • Focus your efforts on a path through the myriad details involved

    • Help you minimize oversights

    • Provide useful reference material for reviews and a basis for QA improvements

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More M&V resources: savings)

  • M&V Guidelines, M&V Planning Tool, etc:


  • Draft: Reviewing Measurement & Verification Plans for Federal ESPC Projects (and other M&V documents):


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Review & Discussion savings)

  • Performance must be verified to guarantee savings

  • owner often assumes usage risk

  • Uncertainty is inherent in M&V

  • M&V costs need to be balanced against project risks

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Review Questions savings)

  • How do we measure savings?

  • When might an owner accept performance risk?

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