This month’s discussion is on the fifth project delivery method (PDM) with the first performance contracting (PC) method being the traditional approach of completing a financial and engineering evaluation to reduce annual utility and operation costs (labor) and improve energy equipment/system performance. Based on a positive financial and engineering evaluation outcome, the PC firm will propose a single-source, multi-year contract to design, retrofit, operate, and maintain the facility for a period of time.
The PC firm will provide the upfront costs, complete the engineering and construction, and then operate and maintain the facility. This agreement of reduced operating cost and guaranteed savings/return on investment results in the client saving money while paying the PC firm monthly for its performance. Thus, we have “performance contracting.”