Schools turn to performance contracting for help

Engineered Systems, March, 2001 by Joanna R. Turpin

"A critical component of the performance contract is the support services," says Morecz. "Performance assurances and preventive and predictive maintenance services protect the integrity of the new equipment that has been installed and maximizes the investment for the district. Johnson Controls believes support services are the key to a successful partnership."

Then there are times when an extensive study has been done, and the proper maintenance has been performed, and the energy savings just don't come through.

"If the systems aren't capable of performing as expected, then it's a financial obligation for NORESCO. If we say that a project will save 50% of their lighting bill and at the end of the day it only saves 40%, then we're going to be writing them a check. We have done that. So on an annual basis, we will true up the savings and make sure that they're there. If, on the other hand, there is a savings shortfall because of an operating change (e.g., the district never had a night school program before and now it does), then the district and NORESCO will negotiate an equitable solution," says Rowland.

NORESCO monitors its performance contracts in a variety of ways, as many providers do. They review utility bills monthly, quarterly, or annually, depending on the contract, and in some instances, they are tied into a school's energy management system to check on operations. What they don't want to be seen as is a "Big Brother" looking over the shoulders of their clients. That just doesn't work, says Rowland.

In the end, a relationship between a performance contractor and a school is like a marriage: Both sides need to know a lot about the other and be comfortable with each other if it's going to be successful. It can definitely happen, as evidenced by the many schools who have taken advantage of performance contracts -- the key is to do the necessary research before signing on the dotted line.