The Power of Performance-based HVAC Contracting
Operational guarantees build trust and confidence in prospective and existing clients
Don’t just say it — prove it.
The National Comfort Institute (NCI) refers to HVAC work in this vein as performance-based contracting — the science of how contractors manage their businesses through accountability and measurable results. The process involves HVAC professionals measuring the live, installed field performance of systems to ensure customers are getting what they’ve invested in. The field-performance measurements obtained by an HVAC professional are then used to rate the operating efficiency of the installed system.
“This is the ultimate verification process,” said David Richardson, curriculum developer and instructor for NCI. “The HVAC professional can assure the system is operating as designed, and customers gain extra assurance they’re actually getting what they’ve invested in.”
TOOLS OF THE TRADE
There are a variety of test instruments used to gather the field measurements necessary to verify performance.
For example, manometers are often used to verify total external static pressure and component pressure drops, and to approximate fan airflow.
“Whenever possible, I run existing supply and return Delta T checks,” said Paul Ainsworth, owner of M.L. Building Technologies, Millsboro, Delaware. “I check supply air temperatures for heat and a/c at the registers and record the readings. I also check airflow amounts and speeds at registers and duct static before and after the filter.”
Other common tools, such as air balancing hoods, combustion analyzers, duct blowers, gauges, thermometers, and more, are often used to define comfort efficiency.
“Air balancing hoods verify the proper amount of airflow is delivered and returned through the appropriate registers and grilles, and thermometers and hygrometers measure temperature, and enthalpy values of the equipment and system assure they’re within the appropriate ranges,” said Richardson. “Combustion analyzers are used to verify safe and efficient operation of any fuel-fired equipment, duct tightness is determined through the use of a duct blower, and proper refrigerant charge may be verified with various gauges and thermometers.”
Ainsworth noted ACCA’s Manual J and D calculations are important tools to use when sizing systems. “On gas furnaces, I always perform a before-and-after flue gas/combustion analysis and print the results with the date and time to show the homeowners.”
Ellis Guiles, director of building services at H.T. Lyons in Allentown, Pennsylvania, said things differ on the commercial side of the business.
“In order to secure financing, based upon a guarantee, an investment-grade audit is typically required by the lender and the building owner,” he said. “This involves engaging engineers or other technical individuals who have backgrounds in building auditing and understand the complexities of interlocking/interacting systems within buildings, identifying energy conservation measures, and properly analyzing the interaction of energy conservation measures with each other.”
H.T. Lyons is capable of performing these audits in-house due to its engineering department, but Guiles acknowledges having such resources is often an exception rather than the rule.
“For most of our energy services work, we’re acting as a subcontractor to an ESCO [energy service company], just as most other mechanical contracting firms do.”
THE POWER OF A GUARANTEE
An HVAC system’s properties are largely invisible to homeowners. Performance testing helps reveal those attributes to the individuals paying the bills.
“The trust that is instilled to a customer by measuring the true performance of a system is second to none, as everything is laid out on the table with nothing to hide behind,” said Richardson. “If the system doesn’t perform as designed, corrections are made to make it perform. If the system does perform as designed, then it’s a job well done and another happy customer.”
Ainsworth guarantees customers their new system will be up to code and perform better than the prior equipment.
“I also guarantee that they’ll be happy or I will take all steps necessary to fix whatever they’re unhappy with, even if I have to offer an upgraded system,” he said. “Proven before and after results of airflow, temperature differential, and room-to-room comfort are what I concentrate on. I really think homeowners appreciate the additional work I put into making sure they’re happy with the new equipment, and that translates into additional referrals.”
In a commercial context, guarantees are useful because they may help a contracting firm secure financing or convince the financial decision-maker that investing in efficiency, demand-response, or on-site generation is a wise use of capital.
“The process creates a sense of partnership that isn’t typical in most other types of transactions,” said Guiles. “In some cases, energy conservation measures to be implemented are directly related to human behavior within the facility and, therefore, fall under the responsibility of the building owner. The dynamic created by everyone understanding they’re dependent on all of the partners to achieve success — such as meeting the performance guarantee criteria — creates trust and interdependence that simply doesn’t exist in a normal equipment replacement or installation scenario.”
Trust is an important element in a contracting business, as customers who believe in a business are likely to continue that partnership — and tell others about your exceptional work, as well.
“I’ve had several people tell me they can definitely tell the difference between someone who is just a sales person and someone who actually has the hands-on experience with installing and servicing equipment,” said Ainsworth. “I think if the consumer can see a real effort to prove the increased performance of a system, the more inclined they are to trust that it was installed correctly. It adds an additional level of transparency to the contractor.”
HVAC systems are major purchases for a family, and, as a contractor, it’s important your company is the one customers call when their comfort is interrupted, added Richardson.
“Guarantees remove many risk factors that are associated with such a large and confusing purchase,” said Richardson. “The right questions and solutions that go beyond the traditional swap-the-box thinking build confidence and emphasize this isn’t your everyday HVAC contractor — it’s someone who truly understands the environment he’s conditioning.”
SIDEBAR: RESIDENTIAL ENERGY GUARANTEE
Bonded Builders Warranty Group (BBWG), a subsidiary of Bankers Financial Corp., launched its Residential Energy Guarantee (REG) at the Residential Energy Services Network (RESNET) conference in Orlando.
BBWG’s guarantee is based on RESNET’s Home Energy Rating System (HERS) index, a building industry standard measuring home energy efficiency. Through its REG, BBWG will reimburse homeowners for energy costs that exceed 115 percent of the annual energy consumption benchmark as indicated through a HERS index score.
BBWG has been a third-party new-home warranty business for 26 years and, after a year and a half of research and development, became a strategic partner with RESNET. The company launched the Residential Energy Guarantee about 1 ½ years ago.
“As energy efficiency continues to gain momentum and interest, a group of national builders came to us and asked if we could come up with a program that guarantees the performance of the whole home,” said Roger Lange, vice president, BBWG. “They wanted something that was simpler to talk about, determine, explain, and understand. And, with the REG, we’ve developed a great marketing tool that allows a builder to guarantee the efficiency of his homes.”
Homes are built using highly efficient methods and systems, which make BBWG officials feel confident in guaranteeing such performance.
“We have a 15 percent cushion to account for different lifestyles and living elements, and if a homeowner exceeds that 115 percent mark, we reimburse them the cost,” said Lange. “The calculations are based directly on utility usage, and there’s very little fine print. Though, for example, if someone elects to operate a business out of the residence, adds conditioned space, finishes a basement that wasn’t originally included, or adds a pool or hot tub, those are all instances that may void the guarantee.”
Currently, there are 54 home-building companies in 13 states participating in the REG.
“Builders are adding this as a feature of their homes and are having great success,” said Ken Podlin, national sales and marketing manager, BBWG. “We’re adding new builders all over the country, every day.”
As the HVAC system plays a significant role in energy consumption, it’s obviously a critical part of the guarantee.
“The HERS test examines duct leakage, sizing, how efficient the system is as a whole, and more,” said Podlin. “We’re making sure the systems are efficient, and, so far, the homes we’ve guaranteed are exceeding our expectations.”
Prior to launching the product, BBWG reps did their homework on consumer interest.
“Before launching the product, we surveyed new-home buyers and asked, ‘If you had a guarantee, would it increase your confidence in a home builder,’ and they overwhelmingly said, ‘Yes, it makes them feel more confident and they’d be more willing to recommend builders who guarantee a home’s efficiency,’” said Tim Rosario, marketing coordinator, BBWG. “Homeowners are getting the performance they expect. We feel it’s an effective way to market homes as higher buyer confidence equals more home sales.”
REGs are available in two-, three, or five-year terms. For more information on the BBWG REG, visit http://bondedbuilders.com.
Publication date: 9/28/2015