UESC Project Implementation

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UESC Project Implementation
Engineering Design Package
Construction Installation
The Payment Period

• Issue TO for construction
• The pre-construction meeting
• Review/accept final construction package
• Commissioning

• Invoices
• Payments
• Periodic Performance Verification
• Follow-on projects

• CO issues TO
• Review ED Package
• CO negotiates final price proposal

Decision Go/ No go
Stop and
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Engineering and Design

• CO issues TO
• Review ED Package
• CO negotiates final price proposal

Decision Go/ No go
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Initiating the Engineering and Design Package

• Issue your task order for engineering and design
• Include agency and site specific requirements
• The utility will respond with a full set of plans
  and detailed specifications

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When You Review the Package

• Look for consistency with the feasibility study
  in engineering drawings and design specifications
• This should be 100, you shouldnt see any new
  design in the construction phase
• Use FEMP for assistance
• They have specialized expertise in advanced
  engineering technologies and can offer cautions
  and advice in areas like photovoltaics, systems
  controls and others

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Reviewing the ED Package

• The design package should include at least the
  following for each ECM
• Installation drawings
• 100 of plans and specs
• Commissioning, MV, OM (if required)
• Final price proposal
• Estimated construction schedule
• Planned service interruptions
• Environmental compliance
• Quality control
• ECM installation sequence

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Payments Performance Bonds

• Within a specified time frame after approval of
  ECM installation plans, the utility shall submit
• Acceptable payment and performance bonds or
• Letter of credit

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Start Planning for Installation

• Make sure that site inspection personnel are
  available
• Provide for a site individual to assist project
  implementation

Youll want to have this set up so you can move
once you see the final construction schedule
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Commissioning and the Design Phase

• Develop design and operating intent
• Perform commissioning-focused design reviews
• Develop Commissioning Plan Specifications for
  construction
• Should include specifics on commissioning during
  construction, acceptance and post acceptance

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Negotiating the Final Price Proposal

• Price proposal includes
• Construction cost
• Financing cost over the term of the loan
• Optional item cost (non-required costs)
• Project management costs
• Interest rate

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Structure the Interest

• Interest payments during the construction period
  and the post-acceptance period
• Option 1 Structure the financing so that the
  cost of interest during the construction period
  is added to the total project cost resulting in
  one amount to be financed.
• This is the most common option
• Option 2 Structure the financing to include
  separate interest rates during construction
  (short term) and post-acceptance (long term).

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Total Interest Rate
Base rate (SWAP rate) 6.00 Adder
1.40 Hedge 0.36 Total 7.76
Rates can be found at http//www.bloomberg.com/
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Components of the Interest Rate

• Base rate
• Historically based on the Treasury Note rate for
  payment term of contract
• Currently based on SWAP rate

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Adders

• Basis points added as a result of financiers
  perception of projects risk
• Basis point 1/100 or .01
• Contributing elements
• Utilitys credit rating
• Loan amount
• Loan term
• Projects technical risk

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Adder Example

• Given a major utility company with a good
  balance sheet, a 1 million project with a 10
  year term and proven relatively simple
  technologies
• Adder should be on the low side, 150-180 basis
  points
• A less appealing project would have a higher
  adder

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Hedge

• Basis points that protect the financiers risk of
  interest rate fluctuations during project
  implementation
• A typical hedge is 3-5 basis points per month
• 12 months _at_ 3 basis points per 36 basis points
  or .36

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Sources of Financing

• Utility internal financing is not usually
  competitive due to internal rate of return
  requirement (gt10)
• Consider some form of competition for third
  part financiers

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Project Management

• Projects are partnerships but the utility is a
  business and must make a profit for shareholders
• Utility profit (IRR) is typically 10-14 on
  services provided
• You will be charged for project management and
  overhead (OH) fees
• OH fees are 15-20 on services portion
• Project management fee is 3-5 depending on
  complexity

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Go or No Go?

• Will you continue the process?
• No? Pay for the EDS.
• Yes. CO finalizes the contract, move to
  construction and installation

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Construction and Installation

• Issue TO
• The pre-construction meeting
• Final construction package
• Commissioning

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Initiate Project Construction and Installation

• CO issues Task order for Construction and
  Installation Phase
• Arrange a pre-construction meeting

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Pre-construction Meeting

• The COTR and other facilities or engineering
  staff and utility reps must review and
  coordinate the project schedule and installation
  inspection
• Approve the final construction schedule
• Bring in your designated inspection and
  implementation site personnel (identified during
  DE)
• Check to see that appropriate permits have been
  acquired

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Construction

• The agency monitors the utilitys and
  subcontractors progress throughout the
  installation period to assure work is proceeding
  as planned

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Project Documents (Deliverables)

• OM manuals for installed ECMs
• Inventory of spare parts (lamps, ballasts)
• As-built drawings or revisions/updates to
  existing as-builts
• Training
• Warranties

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Commissioning and Acceptance

• Commission each ECM as you go
• The utility must notify the agency when the ECM
  is ready for testing and performance verification
• The government must verify that new equipment was
  installed properly, then test equipment to ensure
  that it is performing to spec.

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Commissioning and the Construction Phase

• Building systems including architectural,
  structural, mechanical, electrical, and controls
  are installed, undergo pre-functional performance
  tests, and are placed into operation.

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Project Completion and Acceptance

• Per contract requirements, the utility notifies
  the agency of project completion
• Agency deems
• Substantial completion/beneficial occupancy
• Final completion and acceptance
• Completion of punchlist
• The agency notifies the utility of project
  acceptance

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The Payment Period

• Invoices
• Payments
• Periodic Performance Verification
• Follow-on projects

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Invoices

• Invoices are only accepted and processed after
  ECM installation and government signature on a
  Certificate of Completion (or whatever is
  required by the contract)

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Payments

• CO must notify the utility that the installation
  has been accepted and that it complies with the
  terms of the contract
• Utility bill paid from funding account determined
  during acquisition planning

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Post-Installation

• Conduct periodic performance verification
• Receive MV regular interval reports (if
  required)
• Verify and document the performance and actual
  energy savings progressing in sequence, from
  individual equipment through subsystem operation
  to complete systems and finally whole building.

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Include Training

• Hands-on operation of the equipment including
  start-up, operation in normal and emergency
  modes, shutdown procedures, seasonal changeover,
  and manual/automatic control
• Requirements and schedules for routine
  maintenance
• Energy Management and Control System sequencing,
  strategies, operation and programming
• Health and safety issues and concerns
• When and how to re-commission

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Performance Acceptance Phase

• Operations are proven under partial and full
  load, in all seasons, and under abnormal or
  emergency conditions.
• Some commissioning contracts require an effort to
  fine-tune and optimize system operation, comfort
  control, control parameters, sequences and energy
  efficiency.

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Performance Acceptance

• Important in ensuring the effective, ongoing
  functioning of a facilitys architectural,
  structural and other systems.
• As use and function of facilities change, the
  building systems need to be adapted to the
  changing requirements of occupancy and
  utilization.

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Follow-on Projects

• Any additional ECMs or services proposed must be
  within the contract scope
• If desired, CO will issue a task order and
  utility will submit a technical and price
  proposal.

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Wrap UpQuestion and Answers