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UESC Project Identification. Establish Terms & Conditions. The Utility Audit. The Feasibility Study. Preliminary issues Arranging the audit Kickoff meeting The audit The audit results. Key sections Interest rate Issue and evaluate Negotiate CO signs contractual documents.

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Uesc project identification
UESC Project Identification

Establish Terms & Conditions

The Utility Audit

The Feasibility Study

  • Preliminary issues

  • Arranging the audit

  • Kickoff meeting

  • The audit

  • The audit results

  • Key sections

  • Interest rate

  • Issue and evaluate

  • Negotiate

  • CO signs contractual documents

  • CO issues TO for Study

  • The feasibility study

  • Agency review

Go/ No go Decision

Go/ No go Decision

Stop and $/

Go to Engineering & Design


The utility audit

The Utility Audit

  • Preliminary issues

  • Arranging the audit

  • Kickoff meeting

  • The audit

  • The audit results

Go/ No go

Decision


Working the preliminary issues
Working the Preliminary Issues

  • Contact your utility to find out audit offers and any associated fees

  • Meet with your acquisition team and decision makers to establish concurrence


Arranging for the audit

App. 4

Arranging for the Audit

  • Contact your utility and request the audit

    • Provide some form of written documentation that says whether or not the service is for free or fee

    • Designate your agencies COTR

  • Schedule a kick-off meeting with the utility and key acquisition team players


Hosting your audit kick off meeting
Hosting Your Audit Kick-off Meeting

  • Establish your project expectations

  • Hand over your collected facility data

  • Share the outcomes of the acquisition strategy development

    • Make site specific needs & constraints clear

    • Answer all questions completely

  • Arrange a tour of the facility (notify your tenants)


The partnership begins here
The Partnership Begins Here

  • Remember: This is not traditional contracting! Success depends on open communication.

  • By minimizing utility’s costs you maximize government’s value.

  • Consider a formal partnering session


The audit
The Audit

  • Utility collects and reviews utility bills, purchased fuels data and metered data

    • Evaluation of utility rate schedule options

  • Utility performs a site visit to look at:

    • the operation and use of buildings, building envelope and systems

      • O&M procedures, insulation of pipes and tanks

    • all energy consuming equipment

      • Lighting, heating and cooling, motors, hot water

    • the utility systems


The audit results
The Audit Results

  • Utility provides report that:

    • documents existing equipment

    • describes recommended ECMs

    • offers a preliminary estimate of savings

    • establishes baseline conditions

    • offers technical recommendations

    • estimates payback periods


Note the audit is an estimate
Note: the Audit is an Estimate!

  • Don’t expect “a bulls eye”, it’s the first approximation of the project

  • Use this as an opportunity to evaluate the utility’s technical ability and compatibility

  • It’s all negotiable (technical and price) until the contract is signed


Evaluating the audit
Evaluating the Audit

  • Place more weight on technical factors and approach over price

  • Distinguish between significant issues that could affect project economics/feasibility and lesser details that can be fixed in negotiation


Focus the evaluation
Focus the Evaluation

  • Is the ECM package reasonable and does it provide solutions to site problems?

  • Are estimates of energy and O&M savings reasonable?

  • Are assumptions, analyses and calculations clear and credible?

    • ECM costs, simple payback, energy and cost savings


Keep the evaluation focus
Keep The Evaluation Focus

  • Were requested items included?

  • Are you comfortable with what you see?

  • Do you think this is a good fit for your continued partnership?


Make the go no go decision
Make the Go/ No Go Decision

  • You make the call

    • Will you say thank you and go separate ways?

    • Will you ask for revisions?

    • Will you approve the audit and move forward?


Exercise examining audit results

Exercise: Examining Audit Results


Establish contract terms and conditions

Establish Contract Terms and Conditions

  • Incorporating terms and conditions

  • Interest rate

  • Issue and evaluate

  • Negotiate

  • CO signs contractual documents


Uesc vehicles
UESC Vehicles

  • Areawide Contract (AWC)

    • Task order placed underneath to establish terms and conditions for energy management services

  • Site Specific Contract

  • Basic Ordering Agreement (BOA)/ Agency Master Agreement


Gsa areawide users manual

App. 3

GSA Areawide Users Manual


Construction and service contracts
Construction and Service Contracts

  • Most UESCs are a combination construction/ service contract. Utilization of FAR clauses is dependent on type of work

    • Determined by project specs and CO (Navy considers contracts to be pure construction)

    • For project’s design activities and performance phase activities (O&M, M&V), use FAR clauses for services

    • For project’s installation activities, use FAR clauses for construction.


Construction and service contracts1
Construction and Service Contracts

  • Wages and rates

    • Davis Bacon rates for construction, Services Contract Act rates for services

  • Warranty

    • FAR 52.246-20 for construction, FAR 52.246-21 for services

  • Payment and performance bonds

    • Requirements determined by CO, utility letter of credit is low cost option

    • FAR 28.102 or 52.228-15 for construction, FAR 28.103 or 52.228-16 for services


Incorporate your terms and conditions
Incorporate Your Terms and Conditions

  • More detail can be incorporated through the Uniform Contract Format

  • Specific detail for each additional project phase is incorporated in task orders associated with the phase

    • TO for Feasibility Study, TO for Engineering & Design Package, TO for Construction & Installation


Uniform contract format
Uniform Contract Format

  • Part I: The Schedule

  • Part II: Contract Clauses

  • Part III: List of Documents, Exhibits, and Other Attachments

  • Part IV: Representations and Instructions


Section b supplies or services and prices cost
Section B: Supplies or Services and Prices/Cost

  • Required supplies and services

  • Total price (minimum/maximum)

  • Ordering

  • Utility margins


Section c descriptions specs work statement
Section C: Descriptions/ Specs/Work Statement

Use performance specifications. Prescriptive

specifications should be used only when necessary.

  • General Requirements/ Project Scope

  • ECMs- types and restrictions

  • Facility Performance Requirements

  • M&V of ECM Performance

  • Installation Requirements

  • O&M, Repair, Response Time, Training

  • Subcontractors


Section e inspection and acceptance
Section E: Inspection and Acceptance

  • Inspection requirements

  • Acceptance requirements

  • Warranty of service


Section f deliveries or performance
Section F: Deliveries or Performance

  • Period of performance

  • Principal place of performance

  • Deliverables


Section g contract administration data
Section G: Contract Administration Data

  • Invoicing Instructions

  • Invoice submittals for TO projects


Section h special contract requirements
Section H: Special Contract Requirements

  • Wage determination

  • Title and ownership of equipment:

    • Government decides who retains title during the contract term (taxes, subsidies and interest are impacted)

  • Payment and performance bond requirements

    • Performance bonds on typical construction contract carry a penal sum of 100% of the price of implementation phase.

    • Payment bonds carry a penal sum of 40% if the project is 1-5 million dollars


Section h special contract requirements1
Section H: Special Contract Requirements

  • Financier protection

    • Assignment of claims (direct finance payment to financier)

    • Notification to government of problems

  • Buy-down provisions

    • Index formula vs. fixed schedule

    • decide to either decrease the payment or reduce the term


Loan amortization schedule
Loan Amortization Schedule

  • Termination for convenience (FAR 52.249-2)

  • Required by financiers

  • Mutually agreed upon by agency, utility and financier

  • Buy-out options:

    • Add lender fees to capital portion of termination schedule

    • Increase the interest rate to accommodate risk

    • Leave it open to be agreed upon at time of buy-out

    • Indexed formula (recommended)

Termination contracts- FAR 49, FAR 52.217-2


Section i contract clauses section j list of attachments
Section I: Contract Clauses Section J: List of Attachments

  • I: Clauses incorporated by reference

  • J: Definition of terms applicable to contract, Required schedules


Section l instructions conditions notice to offerors
Section L: Instructions, Conditions & Notice to Offerors

  • For each ECM in technical proposal, specify

    • Description and purpose

    • Current status

    • Implementation costs, rebates,

    • Annual energy and O&M costs (may not offer O&M)

    • Life-cycle cost analysis

    • Commissioning plan (Commission guide on FEMP web site)

    • M&V (if requested)

    • Guaranteed savings, if requested (Not offered by all utilities)


Section l instructions conditions notice to offerors1
Section L: Instructions, Conditions & Notice to Offerors

  • Requirements for price proposal

    • Specify cost reasonableness verification method

      • Explanation of equipment choices

      • Number of vendor quotes for generic equipment

      • Competition for subcontractors


Section m proposal evaluation factors
Section M: Proposal Evaluation Factors

  • Demonstrated knowledge of site requirements and constraints

  • Complete and accurate description of technologies

  • Evaluation of all directed ECMs

  • Management Plan

  • Construction schedule

  • Quality control plan

  • Price reasonableness demonstration


Optional elements that impact interest rate
Optional Elements that Impact Interest Rate

  • Cost savings guarantee

    • is more risky to financier, could add up to 2-3%

  • Performance guarantee:

    • provides energy savings incentive to utility

  • Level of M&V

  • Responsibility for O&M


10 ways to lower financing costs

App. 5

10 Ways to Lower Financing Costs

  • Time is money– don’t delay

  • Learn about financing

  • Use standard terms and conditions

  • Negotiate prepayment formula

  • Include assignment of claims

  • Ask for appropriate M&V

  • Don’t buy a rate lock

  • Bundle ECMs

  • Annual instead of monthly payments

  • Compare rates


Contractual documents
Contractual Documents

  • Your contracting documents are determined by agency procedure

  • Reach agreement with utility

  • Utility signs, agency CO signs and project proceeds


The feasibility study

The Feasibility Study

  • Issue Task Order for Study

  • The feasibility study

  • Agency review

Go/

No go Decision

Stop and $


Feasibility study
Feasibility Study

  • Definition: an investment-grade review of the site’s condition & potential efficiency improvements, and a detailed assessment of both the technical and economic viability of the proposed ECMs.


What the feasibility study should include

App. 4

What the Feasibility Study Should Include

Verifies the audit assumptions

  • Technical

    • Building physical conditions

    • Hours of use or occupancy

    • Areas and use of conditioned space

    • Inventory of energy consuming equipment or systems

    • Inventory of energy consuming equipment operating conditions & loads

    • Baseline weather


What the feasibility study should include1
What the Feasibility Study Should Include

  • For price

    • Estimated annual operating cost

    • Project cost by ECM

    • Estimated annual cost savings by ECM

    • Unit cost by major components and systems

    • LCC analysis

    • Breakdown of implementation cost and estimate of annual energy savings


What the feasibility study should include2
What the Feasibility Study Should Include

  • Other

    • O&M plan

    • M&V plan

    • Guaranteed performance/savings

Ensure that individual ECM schedules

don’t interfere with mission activities


What to look for when evaluating the study
What to Look for When Evaluating the Study

  • Inclusion of all required ECMs

  • Reasonable savings for each ECM

  • Reasonable baseline

  • Reasonable assumptions and interaction of multiple ECMs

  • Inclusion of ECMs for water and renewables


More things to look for when evaluating the study
More Things to Look For When Evaluating the Study

  • Fuel neutrality

  • Price reasonableness

  • Reasonable financing rate

  • Savings that exceed payments

  • Reasonable term

  • Recognition of site-specific issues

  • Consideration of environmental benefits


The economic review of the feasibility study
The Economic Review of the Feasibility Study

  • Check to see if the utility looked at the rate schedule when calculating savings

  • Analyze the project implementation costs

    • Use cost estimating handbooks and past experience to compare

    • Consider level of competition among subcontractors

  • Examine adders: project management, hourly rate, OH and profit (both % and basis), taxes

  • Consider early ECM payoffs and financial impacts


Take a look at the estimate of energy and cost savings
Take a Look at the Estimate of Energy and Cost Savings

  • ECM baseline consistent with requirements

  • Acceptable ECM assumptions

    • Operating hours

    • Weather data

  • Acceptable variance between audit and final figure in feasibility study

  • Compare with an independent estimate and check the savings calculations


Evaluating optional items
Evaluating Optional Items

  • Does what you see comply with the levels you asked for?

  • Will O&M be conducted by in-house staff or through the utility’s subcontractor

    • O&M handled by someone other than the utility will require a performance guarantee

    • do you still want it?

  • M&V cost benefit analysis

    • the FEMP M&V Guidelines provide information on available options


Why m v
Why M&V

  • The Guidelines are grouped into four categories or options (A, B, C, & D).

    • Each option is a generic approach to measurement and verification of energy and water projects

    • The options address accuracy and risk allocation


Option a engineering calculations
Option A – Engineering Calculations

  • A stipulated approach which may include measured values at the retrofit

  • Example: Lighting retrofits

    • Based on calculated energy savings and time of use schedules or light loggers


Option b metering and monitoring
Option B – Metering and Monitoring

  • A measurement approach which may include spot, short term or continuous measurement at the retrofit

  • Example: Variable Speed Drives

    • Based on actual, measured motor speed and corresponding monitored run time


Option c utility meter billing analysis
Option C – Utility Meter Billing Analysis

  • An approach which studies the overall energy use through utility billing data analysis

    • Derived from long term, whole-building, facility or sub-metered data analysis

  • Example: Building Envelope

    • Used when the conserving measures cannot be measured directly.

    • Used when the anticipated energy savings is at least 20% of the total metered energy use.


Option d computer simulation
Option D – Computer Simulation

  • A computer simulation modeling at the retrofit or the building level

  • Example: New Construction

    • Based on a comparison of the building energy use without energy and water measures less the energy use with conserving measures installed


M v plan key elements
M&V PlanKey Elements

  • Clarify the objectives

  • Determine the baseline approach

    • Consider the building characteristics, intended measures and interaction between measures

  • Specify the option to be used for each measure

    • Identify methods and procedures of data gathering and analysis for each measure

  • Indicate the reporting format and schedule

  • Identify budget impacts and resource requirements


M&V Results

ECMs installed here

Baseline

Baselineor adjusted baseline

Avoided use or savings

Energy Usage

Measured or calculated performance

Time


Make the go no go decision1
Make the Go/No Go Decision

  • You make the call

    • Will you say thank you and go separate ways?

    • Will you approve or modify the feasibility study and issue a TO for the next step?

  • If you opt out here, you pay the fee established in the task order


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