Have you seen the latest green building news? Even the U.S. Department of Defense is now mandated to prove the financial value of LEED certification.

We're entering an era of green transparency, my friends, and we better stop making excuses why our LEED projects fall short of energy expectations.

Our “plain English” EUI results from a series of projects with a public school client.

My last post pointed out three problems with LEED energy goals, and why achieving their energy efficiency targets tend to be hit or miss. This week let's flip those problems into opportunities. Here's a three-step strategy to LEED energy success.

1. Communicate the energy goals in plain English.
2. Establish energy accountability measures.
3. Begin with the end in mind—a sensible Measurement and Verification (M&V) plan.

Communicate the energy goals in plain English.
Learn to speak the language of Energy Use Intensity (EUI). Nothing says more with so little effort. If you don't know the definition of EUI, you should. It's a single number that represents a building's energy use relative to its floor area. EUI serves as the basis of the Energy Star Portfolio Manager tool. The EPA has a nice explanation of the concept on its website.

So what I'm advocating is this: On LEED projects, where it's necessary to seek certification points based on X% improvement from a theoretical base condition, convert that goal into an EUI target. In the case of our example cited in my last post, the 25% savings from the ASHRAE 90.1 baseline converted to an EUI of roughly 50 kBtu/square foot annually. Now that's a good goal. It's easily communicated and committed to memory. It implies responsibility both on the parts of building designers and operators. It's easily measured and verified on the project's tail end.

Getting the project team to think this way might take awhile. But doing it time and again will eventually make you a building energy prophet. Our team can often predict energy retrofit outcomes with very little effort. After initial engineering analyses, we subject our energy goals to the all important "sniff test." If it doesn't smell right, we re-check our calculations. No kidding!

Establish energy accountability measures.
After my last post, a colleague wrote, "I would be interested to hear if you have any ideas on how to improve the [accountability] process for LEED projects other than the obvious recommendation of a [Guaranteed Energy Savings Agreement.]" He knows of our appetite for energy performance-based contracts.

Putting a single entity contractually on the hook for energy performance is the absolute best way of assuring successful outcomes. As he said, that's obvious. Unfortunately, this method of contracting hasn't reached the building construction industry mainstream yet, and I'd be perceived as a radical by proposing widespread acceptance of performance contracting as the LEED energy solution.

So what accountability measures can be introduced to traditional building design and construction models?

If you aren't willing to institute a contractual framework, how about simply assigning a LEED energy champion? Let's call him the Energy Czar. We did that in my college fraternity. We gave him authority. When the Czar spoke, we obeyed. It was simple and highly effective.

As with our successful performance-based contracts, the Czar would have energy expertise. He'd play a role in conceptualizing, designing, administering construction, and commissioning the facility. There would be no fragmentation of energy responsibilities. It seems so simple, but I've never experienced anything like it on a project seeking certification.

Begin with the end in mind – a sensible M&V plan.
Stephen Covey asserts that Habit #2 of Highly Effective People is to Begin with the End in Mind. I suggest that thoughtful M&V plans do just that on any project with an energy goal.

Many perceive M&V plans as adding a layer of paper-laden bureaucracy to the end of a construction project. It doesn't need to – and shouldn't – be that way. The most effective M&V plans are action-laden, paper-light. We prefer to use International Performance Measurement and Verification Protocol (IPMVP) standards and our reports are rarely more than 20 pages.

Commit to engaging the M&V team early in the design phase, and then, give them a voice to influence design decisions. After living with our energy guarantees for over a decade – the good, the bad, and the ugly – I can unequivocally swear that this step is essential to create a legacy of energy success stories.

M&V plans should be specific to the building, and every building is unique. By having the M&V plan feed the design, actual execution of the plan after occupancy can feel like a formality. When's the last time you experienced that on a LEED-certified project?

LEED energy victory is within our grasp.

I’ve written several times about the energy performance gap that we frequently experience on projects seeking LEED certification. That is, the gap between the LEED score card targeted performance and what’s experienced in actual operation. LEED building energy performance can be hit or miss. Yet experience with our portfolio of Guaranteed Energy Savings Agreements has been exceptional, with aggressive energy targets repeatedly scoring direct hits.

An example of the LEED energy performance gap.

So what is it between the two delivery processes that creates such distinction in performance expectations? Let’s start with the LEED goal-setting process. We’ve narrowed it down to three simple points.

1. They aren’t communicated in plain English. The goals are obscure at best. We’re currently working on a LEED project where the energy goal is to achieve 25% below an ASHRAE Standard 90.1 2004 baseline condition. Confused? I thought so. Even the most experienced HVAC engineer needs to do some background checking to figure out what this goal might mean. That kind of technical language intimidates a lot of players on the project team. What are the chances of achieving aggressive goals when few understand what they really are? Since the targets aren’t simply stated, they rarely guide consensus-based design decisions.

2. Nobody is ultimately accountable for achieving the goal. Usually when an energy question comes up during a LEED project’s design activities, all eyes turn to the project’s mechanical engineer. But that engineer usually has little authority over team decision making. Further, the energy engineer is rarely contracted to ensure implementation of various energy model assumptions, including an effective owner-training program.

What happens if a facility owner discovers that his LEED energy goals are missed? Here’s one head-spinning sequence we observed not long ago: The owner called the construction manager, who then contacted the architect, who then contacted the mechanical engineer. After some initial investigation the engineer advised the architect who advised the construction manager that something was wrong with the building automation system (BAS). So the construction manager called in the mechanical contractor who then called on his BAS subcontractor. The BAS sub pointed out that they met their contractual obligation, so the construction manager advised the owner to call in their third party commissioning agent, who held a contract directly with the owner. The commissioning agent wasn’t on the hook for hitting energy goals, either. So, the owner had to pick up the pieces.

Nobody was accountable. The goal was purely a failed theory. The buck never stopped, and I think it’s still running wild despite the LEED plaque on the lobby wall.

3. There’s rarely a sensible plan to measure and verify results. There’s only so much energy efficiency that can be designed into a building. Even the most efficient of designs can fall flat on its face through inadequate operational practices. Yet, despite the ability to gain LEED points through instituting a measurement and verification (M&V) plan, most project teams are disbanded shortly after a building’s substantial completion. When M&V activities are contracted, they usually engage too late in the design process, as if they’re bolted on to a confused and suspicious project team.

A good M&V plan is a road map to energy success. The best plans are conceived during the design development phase, so that they can influence design decisions. Post-occupancy M&V activities create an ongoing energy feedback loop to building operators and designers, allowing them to diagnose problems and make timely adjustments.

So the natural follow-up question to all of this is, How should LEED (or any other) energy goals be set? The short answer is that we should state the goals in plain English, establish accountability measures, and create specific M&V plans early in the design process. I’ll share some of the secrets to our success in our next post.

Next week I’ll be participating on a panel at a social media conference in Harrisburg. My panel discussion will feature C-level executive perspectives on the use of social media at work. In my case, the focus will be corporate blogging. The speaking assignment is so far outside of my comfort zone that I decided to commit some perspectives to writing.

Splinter & Dan

My favorite explanation of blogging motivation is by Ken Mueller, in his post 10 Reasons Why I Blog (And Why You Should, Too!) While his post effectively describes my own blogging experiences, I’ve found three additional reasons to keep cranking out the content.

It Builds Writing Muscle. My mom was a full blooded, first-generation Italian who graduated high school as valedictorian. She participated on her collegiate speech and debate teams and later became a high school English teacher. Words mattered in my family. That said, my engineering education was decidedly left-brain focused. I’ve spent a good part of my adult life trying to play right-brain catch-up. Blogging helps me to continually develop my communication skills. Writing is like exercise; the more you work at it, the more developed the muscles become.

A Recruiting Tool. There’s a tendency among executives to focus on the bottom line when executing any marketing strategy, blogging included. I’m asked questions like, “How many new customers has it gotten you?” A happy unforeseen consequence of the blog is in the recruitment of a different sort of customer. That is, future employees and colleagues. Young tech-savvy folks find us through our blog and related Google searches. Many of them like what they see and seek us out. They write things like, “I saw the work you did at the East Lycoming School District and that’s the sort of thing I want to be involved with.” Since we started blogging, recruiting has taken a new twist, with young, highly marketable job candidates knocking on our door. This, alone, makes our blog an essential business tool.

The Splinter Effect. I chose to work for a large contractor under the belief that it would make me a more effective engineer. Think about it: How many engineers have immediate access to the cost, schedule, and constructability issues implied by daily design decisions? But when I left my old consulting firm, many colleagues spoke to me as if I was leaving the engineering profession. I shrug off that attitude now as I did 14+ years ago. I like to say that engineering for a contractor makes you learn in dog years. There’s strength in diversity. Anything we can do to foster interaction among our diverse skill sets makes our business stronger. Our blog is doing that.

I could share many examples, but my favorite is the case of our shop manager, nicknamed Splinter. He and I couldn’t be more different (see graphic for proof). Our responsibilities represent the full breadth of McClure Company activities. While he’s focused on fabricating high-quality large bore pipe assemblies for our men in the field, I’m writing proposals or preparing for our next evening board presentation. Our paths don’t cross frequently enough.
But Splinter enjoys The M Files blog, especially when we talk energy. We occasionally pass each other near the coffee station. Instead of exchanging an obligatory, “How ya doing?” or “What’s up?” we share our views on energy or the latest blog post.

It’s given our respective worlds a new opportunity to intersect. We’re speaking the same language and, whether he realizes it or not, he’s contributing to our written content.

I have more stories to share during our panel From the C-Level: Why Should Business Engage. Hope to meet you there!

Bad news for stereotypical engineers: Personality matters as much as technical aptitude.

In a post titled Design-Build Discussion Generates Buzz, PC Construction Company concisely captured what those of us immersed in successful Design-Build practices already know (bold underlines added by me):

When asked the question “What one piece of advice can you give to improve our future success with Design-Build?” the panel agreed that selecting the people with the right personality traits is key. This was a bit surprising to some who have never been involved with a Design-Build project. They imagined success would relate directly to engineering, technical, or organizational skills. Mike Cecil of PC Construction added that those skills can be learned, whereas personality traits are inherent. Collaboration, communication, and trust are just as important to the success of a Design-Build project as are technical aptitude.

And so we have our predicament. Collaboration, communication, and trust aren’t traits we associate with the stereotypical Dilbert-esque engineer. Successful Design-Build scenarios require those with sharp analytical skills to step outside the comforts of their womb-like offices and to listen and engage.

My alma mater used to invite me to speak to sophomore engineering students about what it’s like in the real world. The students would invariably ask, “What are my most important classes?” or “What are you looking for when hiring engineers out of college?” Highly educated professors would spit out their coffee at my responses. I would tell students that getting into and graduating from the arduous engineering program was enough evidence of technical aptitude. I wanted folks who could read, write, and carry an intelligent conversation. That viewpoint didn’t exactly make me a candidate for a distinguished engineering alumni award.

Good Design-Build practices encourage open conversation among stakeholders throughout the project’s life cycle. Trust is an essential element for win-win outcomes and only develops out of relationships. Relationships only develop through honing the soft skills of communication.

In 1995, I was a young engineer charged with designing factory certification test stands for a major manufacturer’s largest water-cooled chillers. It was the project of a lifetime, requiring intimate knowledge of national testing standards and mechanical engineering principles. It also involved installing many thousands of feet of circuitous large-bore steel piping.

As required on competitively bid projects, it was my job to tell the bidding installers through specifications how they should hang, support, weld, and generally put together the pipes. I was faced with the same unspoken dilemma that all young college-educated engineers have: I didn’t know jack about installation methods for large-bore piping. My expertise was in fluids, thermodynamics, and heat transfer. Nothing in my personal experience could have possibly taught me anything about installing heavy pipe. Yet, our contracting method demanded that I specify how that ought to be done. So I pretended to understand the AIA Master Specification and did my job.

Luckily the project was awarded to a company with a strong field crew. Their superintendent was a seasoned veteran named Ken. Instead of following the normal rules of contractor-engineer engagement on competitively bid projects by firing off RFIs or issuing change orders, he would ask me to visit the site, where we would take the time to interact. Ken would show me how the piping layouts could be designed for the better, to reduce installation time, and save the customer some money. It was fun and very revealing.

Our respect for each other made the outcome a positive one for all stakeholders. Ken had knowledge that college-educated engineers didn’t, and we valued his specialized expertise. Correspondingly, I knew the technical rationale and physical laws governing the design, and sometimes Ken counted on me to offer those insights in return. It was freeing for both of us. Our mutual trust allowed us to completely focus on what we knew. And we felt equally free to admit what we didn’t know.

The job came together beautifully, ahead of schedule and under budget. And it was all because we discarded traditional contractual barriers in favor of valuing open communication. This is the desired norm of great Design-Build practice.

PA Secretary of Education Ron Tomalis speaking at the Tamaqua Area School District.

In my last post I shared the remarkable energy results we achieved through a unique geothermal HVAC application. This week I’ll share some perspectives on how similar results can be expected by employing performance-based contracts.

But first, some reinforcement of the energy results from the school is in order.

Measurement and verification reports at the 40-year-old Tamaqua High School confirmed that trimming energy use by more than 50% resulted in a $250,000 reduction in 2010 utility costs. Capital costs for the upgrade were partially reimbursed through a $149,354 PPL electric utility rebate. The school district secured very low-cost financing for installing the efficiency measures, which was only made possible by their lender through a Guaranteed Energy Savings contract.

In the words of school superintendent Carol Makuta, “This project gives us money that otherwise would have been spent in energy costs to use for educational programs.” The success of the program prompted a visit from PA Secretary of Education Ron Tomalis. In a prepared speech he stated, “We talk a lot about what we as public officials and as government officials feel about the tax burden. We are always looking to get that extra drop from that dollar. We will be using this initiative as an example to other school districts.”

I contend that clear, tangible financial and environmental benefits of this program were achieved because we employed a performance-based, rather than a traditional, multiple price,and prescriptive-basedcontract. The contractor (McClure Company) and owner (Tamaqua Area School District) agreed to very distinct, measurable, outcome-based objectives. Our marching orders were clear.

How did this performance-based contract differ from a traditional, low-bid prescriptive contract? In three ways:

1. Penalty for non-performance. Since predicted energy savings were guaranteed by contract, we (as the performance contractor) will have to pay the difference between the guaranteed and actual savings if real-life performance falls short of expectations. We would owe that differential in each year of our multiple-year contract. Twentyyears in this case.
2. Fixed price tied to performance. The fixed price of the contract is tied directly to energy performance, with annual lease payments from capital upgrades being offset by budgeted energy savings. Since those savings have to be guaranteed and later verified, there’s inherent downward price pressure on the proposed upgrades.*
3. Nobody to blame except ourselves.As engineer, constructor, and commissioning agent ,there was no convenient way of escaping design, construction, or performance issues. We couldn’t blame cost or operational issues on someone else. We had no latitude for issuing change orders or assessing blame for construction delays.

From a technical perspective, this project was the first of its kind. The equipment manufacturer had never attempted our energy saving operational strategy. Getting the system running properly took a lot of patience, requiring months of tweaking and countless hours communicating with the factory. It was the contractually obligated performance goal that kept us engaged. Now, after cutting our teeth and carrying those initial lessons forward, we’ve adjusted our approach and have successfully implemented the concept in four additional facilities. Performance-based contracting has revealed our biggest asset-engineering innovation with an endgame of guaranteed energy savings.

Would we have had comparable financial and environmental results if we would have divided the engineering from multiple construction contracts, and enlisted the help of a third party commissioning agent? What do you think?

*The turn-key price for the complete geothermal HVAC retrofit amounted to $28.11 per square foot.