[Bldg-sim] Costs of energy modeling for compliance

[Pasha Korber-Gonzalez]

Hi All---I've gotten in on the latter part of the convos and know that it
has somewhat shifted to an EUI discussion.   I would like to offer a a
couple things for discussion regarding the costs of simulation for
compliance and how I've been successful with some pricing and unsuccessful
in other ways...


   1. FYI---the average amount of hours that I price for all my energy
   models is a min of 120 hours to get the models completed and another 20-30
   hours for completing the LEED docs and then there is more time to account
   for when you have to spend time responding to the LEED comments and
   remodeling what they want you to change....this is another 20-40 hours of
   work depending on the number of comments and the things that have to be
   remodeled.  So now we are looking at 180-200 hours for a standard LEED model
   fee.   BUT this is not the final answer for fees because we still have the
   factor of "how big is the building", a 5,000ft2 model versus a 150,000ft2
   model will be priced more on a scale of $/ft2 and then hopefully it also
   translates into a nice hourly rate for the services and hours....
      - on an hourly fee basis the simulation fee should come in around
      $20,000 for 200 hours @ $100 per hour.
      - on a cost per area fee basis the simulation fee should range from
      $0.50 to 0.10 per ft2.  This would yield a fee range of $2500 (for the
      5000ft2 building) to $15,000 (for the 150,000 ft2 building).
If you can
      get a 150,000 ft2 building at a higher fee then I would say your an even
      BIGGER winner...my experience has shown that the market fees for our
      complicated services are bottoming out around $15,000-20,000 per
model for
      larger models of significant complexity with HVAC systems.
      - NOW---I have also seen and succussfully bid for fees higher than
      $20,000 for large models, BUT there is always some other
signficant factor
      or complication that affords the higher fee (as a one-time outlier
      project.)   These factors may be client relations, grant/incentive funds,
      lucky day, etc. but it goes to stand that the higher simulation fees for
      individual projects usually have a "sweet spot" that is being
acknowledged
      when that happens.--by my simulation consulting experiences.
      - As someone who agrees with those that spoke of "educate the client"
      I always go in the bid with a higher fee (i.e. $32,500 fixed
fee) and then
      will leave myself some room to oblige a discount (which is
*always*asked for) and then still not cut my own throat for the sake
of thier larger
      corporation & construction budget...at this fee I can offer up to a 25%
      discount and still come in at $24,375---This fee translates to
$0.16/ft2.
      I started the bid at $0.21/ft2.
      - Looking at this same fee from from a $/hour basis, for 200 hours at
      $24,375 = $122/hour.    I started the bid at $162.50/hour knowing that I
      would have to come in with a discount to the client...BUT REMEMBER  my
      client has been educated on the *REAL* amount of time and experience
      needed to provide them with a professional and a quality model.   Even
      though I'm an independent modeler I still submit all of my reports on my
      company letterhead and formal report format.  My professional
logo graces my
      client correspondence so that I am providing the most
professional services
      that my client can justify paying for the scope of work he/she is
      receiving.  How can a client feel good about paying over $10,000 (or even
      $5000) for a Word document they couldv'e produced
themselves...really, show
      some professionalism and SKILL and make your reports and energy
results look
      good and "feel good" for your client.  That is part of what they
are paying
      for in your services, and if you give good services you can receive good
      fees for those services.

......So if the end of the fee calculations shows an acceptable fee for both
parties (i.e. $122/hour, or fixed fee of $25,000 for the 150,000 Green
Compliance model) then go ahead and ask for this fee.   We have to ask for
the right fees in order for our market to understand and respect the true
work and time that is needed for every model.  If you have more room to
wiggle, maybe wiggle a little bit, but don't disrespect the real effort and
value of these services.  Why don't we get paid as a percentage of the
annual energy savings that we are intstrumental in estimating and
implementing??    I'd love a fee of .5% of a large construction budget for
my energy modeling services

I did a pricing presentation for one of my clients who asked me one time,
"How is the best way to price or value the cost of energy simulations?"   I
asked them if they had ever showed a profit on any of thier energy models
and they told me NO.   As I suspected because I remember those
experiences.   Our industry does need to develop some costing "rules of
thumb" to value our services and skills by.   We also really need to find
more SUPPORT FROM GBCI & USGBC for the cost of simulation LEED Compliance
models because as my experience has shown since working on LEED version 2.0
up until this new version of LEED for EAp2 & EAc1...they are asking for WAY
more documentation and copy work and modeling detail than in the
beginning--yet the market fees have not moved an inch in 10-15 years.  I
don't think many people can actualy average more than $100 per hour on any
project scope when the invoice is actually sent to the client.--which means
there is no profit to be made if you are coming in at your costs.

On at least 85% of my projects there is always "something" that happens to
extend or request 'just a few more hours' of work to keep the client
happy.    Those 'few more hours' *always always always* come out of
someone's pocket...and now as a business owner they are always coming out of
my pocket--such is the nature of being a business owner, but the point is
that the client and simulator/project mgr need to be able to mange the
projects so that they don't run over what the buget has been set
for.    More industry support for both education and cost increases of
modeling fees would be helpful to all businesses offering compliance
simulation services.

okay--I'll take a breath and step off the box.  Thanks,
Oh--if anyone wants to see a copy of my pricing presentation contact me
308-763-1593.  I'm happy to share all the info I've gathered on simulation
pricing & fees.

Cheers,
Pasha

Korber Energy Consultants
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