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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
Part 4: M&V Plan Review

Key Documents

  • Risk / Responsibility Matrix
  • M&V Plan Template
  • Detailed Guidelines for FEMP M&V Option
phase 2 project development

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
phase 3 negotiation and award

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
risk responsibility allocation
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
cost effectiveness
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
m v costs
M&V Costs

M&V Cost


Incremental Value of information

M&V Rigor

m v costs and project savings
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

reviewing measurement verification plans for federal espc projects
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
overview of 6 review steps
Overview of 6 review steps

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

overview of 8 review steps cont
Overview of 8 review steps (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

step 1 gather project documentation
Step 1: Gather project documentation
  • Final proposal, including technical appendices
  • Note available documentation
step 2 rank ecms based on savings
Step 2: Rank ECMs based on savings
  • 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
step 3 initiate review
Step 3: Initiate Review
  • Review Final Proposal
    • Sections of proposal other than the M&V plan may be required
  • Identify obvious deficiencies
  • Use graded approach in review efforts
step 4 evaluate m v approaches
Step 4: Evaluate M&V approaches

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?
step 4 evaluate m v approaches cont
Step 4: Evaluate M&V approaches (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?
step 4 evaluate m v approaches cont16
Step 4: Evaluate M&V approaches(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?
step 4 evaluate m v approaches cont17
Step 4: Evaluate M&V approaches (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?
step 5 develop written report
Step 5: Develop written report
  • Transfer key notes & findings to written report
  • Summarize recommendations for each ECM in Summary of Findings
step 6 ensure issues are resolved
Step 6: Ensure issues are resolved
  • 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

m v plan reviews lessons learned
M&V Plan Reviews - Lessons Learned
  • Use a Savings/M&V Options Table
  • Prioritize the review
  • Improve proposed M&V approaches
  • Document recommendations
1 use a savings m v options table
1) Use a Savings/M&V Options Table
  • 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
2 prioritize your review
2) Prioritize Your Review
  • 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
3 improve proposed m v approaches when needed
3) Improve proposed M&V approaches when needed
  • 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
4 document recommendations from m v plan reviews
4) Document recommendations from M&V Plan reviews
  • Use to verify that ESCO/customer have addressed recommendations
  • 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
summary continued
Summary (continued)
  • 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
more m v resources
More M&V resources:
  • M&V Guidelines, M&V Planning Tool, etc:
  • Draft: Reviewing Measurement & Verification Plans for Federal ESPC Projects (and other M&V documents):
review discussion
Review & Discussion
  • 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
review questions
Review Questions
  • How do we measure savings?
  • When might an owner accept performance risk?

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