Performance Contracting — Design/Build

Design/Build Scenario

• Design/build contractors (D/Bs) bid on the upfront cost to build a building, not the long-term operating cost. Therefore design options that might cost more upfront but save energy and money in the long-term are omitted (e.g. daylighting controls often have paybacks of a few years).
• D/Bs have little incentive to explore energy-saving synergies that can reduce the upfront cost (e.g. downsizing the AC system can offset the extra cost of high performance glazing.)
• D/Bs have little incentive to insure that building systems are installed to operate efficiently. For example, fans can be wired backwards thereby doubling their energy consumption, lights that should be programmed to go off at night can be left on, and economizers are often improperly installed so that free cooling is wasted. As long as the occupants don't complain, everyone is happy, except the owner, who is stuck with an exorbitant utility bill.

The Solution: Give D/Bs an Incentive to Save Energy

• Develop an energy target with a computer model (e.g. $100,000/yr in utility bills). The model should represent a reasonably efficient building. For example, it could represent minimum compliance with an energy code. Include the energy target in the contract but leave it up to the D/B to determine the combination of energy measures that meet the target at the lowest cost.
• Model the proposed building during the design process to make sure it will meet the target. If the building is off target, the D/B must improve the design.
• Monitor actual energy use in the second year of occupancy. Adjust the energy target for factors beyond the D/B's control (e.g. plug loads, occupant schedules, and weather). If the building uses less energy than the adjusted target the owner pays the D/B a pro rated bonus (up to a maximum amount). If the building uses more energy than the adjusted target the D/B pays the owner a pro rated penalty (up to a maximum amount).