Nello L. Tortora, PMP, F.SAME, is director of federal programs at Southland Energy. He is a retired Army colonel who previously served as commander of the U.S. Army Engineering & Support Center in Huntsville, Alabama. Contact him at NTortora@southlandind.com.
When I reported to my first assignment as a platoon leader in the United States Army 30 years ago, I was given an unexpected duty as energy conservation officer. The title sounded impressive, yet my mandate proved limited. In fact, my only job was to place stickers that said “Turn Off” on every light switch. While the stickers did get people to turn off the lights, I had no way of determining just how much energy our buildings used or saved.
Today, it is clear that the federal government’s perspective on energy has changed. Federal mandates now stipulate specific energy goals, such as requiring a reduction of energy intensity or increased use of renewable energy.
Leadership is adopting minimum requirements or standards for new and renovated facilities such as LEED, ASHRAE and Energy Star. For example, the Department of Energy recently adopted the more stringent 2010 American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) building standard.
This new emphasis is consistent with the nation’s goal of energy security and the need to reduce U.S. dependence on foreign oil. That means not only developing other sources of energy, but also maximizing the benefit of the energy we currently use.
The significant advances in energy conservation technologies that have occurred across the board are also an influence; most importantly, the wealth of information stemming from the convergence of information technology (IT) and energy efficiency technology.
Still, while the federal government’s recognition of energy efficiency programs has evolved, challenges of implementation remain.
This has prompted a deliberate push by the federal government to pursue third party financed alternatives for funding energy efficiency projects through Energy Savings Performance Contracts (ESPC) and other alternative financing methods.
To help facilitate effective implementation of ESPCs, there are several points that federal energy managers looking to work with Energy Service Companies (ESCOs) should keep in mind. First, it is very important that the agency designate an energy-efficiency champion for its project. This is challenging for any Federal organization given the significant budget and manpower limitations, but for a successful project there needs to be a champion to keep everyone focused.
It is critical that the project champion, contracting officer, and ESCO project manager work together as one team throughout the life of the project, even after implementation is complete. They will form the nucleus of a project team that will include many players throughout the project life cycle. The agency should also assign a local project manager, who may or may not also be the champion.
A primary goal of this team, along with other subject matter experts brought in along the way, is to work with all stakeholders to obtain buy-in for the project and ultimately deliver the expected savings for the customer. To achieve that goal, the team should consider the following:
- Engage senior management support early and often. Understanding management priorities and challenges will allow team members to make sure they address those challenges while mitigating risk when leadership turnover occurs.
- Educate project team members and stakeholders on the financing and contracting mechanisms of performance contracts. The team and stakeholders must be confident in the mechanisms used to deliver these projects and understand how ESPCs work.
- Recognize that energy and financed projects can have a long development cycle and require numerous reviews and approvals. Identify all reviews and approvals required and determine how long each will take to avoid unnecessary delays.
- Develop and manage the project with a detailed schedule and identify potential risks that must be managed and mitigated. Active schedule management is critical to success.
- Maintain project documentation during all stages of project development, implementation and performance. This will provide important background for new players joining the team and be critically important in reviews and audits of the project. When the team can present accurate documentation, answering comments and concerns is easier and saves time.
- Plan for project transitions between phases: Planning, Preliminary Assessment, Conceptual Design/Investment Grade Audit, Design, Construction, Warranty and Payment Period. As the project progresses, it is critical that the transitions are smooth and carried out in an efficient manner.
It is clear that public-private partnerships, along with alternative financing options, are here to stay when it comes to government energy projects. A very important way to achieve success is by forging a strong partnership among the entire project team, built through open and transparent communication from both the ESCO and the government. Keeping lines of communication open helps federal managers achieve effective working relationships with ESCOs, and ultimately ensure a successful project outcome for everyone.
