# Presentation: 679568

## UESC Project Implementation

- Construction & Installation

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

- Stop and $

- Engineering & Design Package

**CO issues TO**
**Review E&D Package**
**CO negotiates final price proposal **

*Decision Go/*
*No go*

- The Payment Period

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

## Engineering and Design

**CO issues TO**
**Review E&D Package**
**CO negotiates final price proposal **

*Decision Go/*
*No go*

## 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

**Notes:**
We’ll refer to the appendix which will include a sample 

## When You Review the Package

- Look for consistency with the feasibility study in engineering drawings and design specifications
- This should be 100%, you shouldn’t 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

**Notes:**
For text: address iterations in the design process and how they impact the project dollars. 

## Reviewing the E&D Package

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

**Notes:**
In manual text, include site inspection personnel with this section.

## 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

## Start Planning for Installation

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

*You’ll want to have this set up so you can *
*move once you see the final construction schedule*

## 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

## 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

**Notes:**
Note:  Feasibility Study and E&D costs shouldn’t exceed more than 6% of project cost.

## 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).

## 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/](http://www.bloomberg.com/)_

## Components of the Interest Rate

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

## Adders

- Basis points added as a result of financiers perception of project’s risk
- Basis point =  1/100% or .01%
- Contributing elements:
- Utility’s credit rating
- Loan amount
- Loan term
- Project’s technical risk

## 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

## Hedge

- Basis points that protect the financier’s risk of interest rate fluctuations during project implementation
- A typical hedge is 3-5 basis points per month
- 12 months @ 3 basis points per = 36 basis points or .36%

**Notes:**
Bring up the options again and say whether or not you’d want a hedge....

## Sources of Financing

- Utility: internal financing is not usually competitive due to internal rate of return requirement (>10%)
- Consider some form of “competition” for third part financiers

**Notes:**
Linda says bullet two should be required not considered

## 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

**Notes:**
FAR 15.404-4 profit– in ( 4) (1) (b).....should not exceed 6% on utility services

Checking on a cap for OH

## Go or No Go?

- Will you continue the process?
- No? Pay for the E&DS.
- Yes. CO finalizes the contract, move to construction and installation

## Construction and Installation

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

## Initiate Project Construction and Installation

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

## 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 D&E)
- Check to see that appropriate permits have been acquired

## Construction

- The agency monitors the utility’s and subcontractor’s progress throughout the installation period to assure work is proceeding as planned

**Notes:**
Animated slide– view in slide show and click

Reminder to whoever presents this section–  COTR doesn't like something the sub is doing, they go through he utility

## Project Documents (Deliverables)

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

**Notes:**
Review this is Section F of uniform Contract Format

## 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.

## 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.

## 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

## The Payment Period

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

## 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)

## 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

## Post-Installation

- Conduct periodic performance verification
- Receive M&V 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.

## 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

## 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.

## Performance Acceptance

-  Important in ensuring the effective, ongoing functioning of a facility’s 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.

## 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.

## Wrap UpQuestion and Answers