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Stipulations in Performance Contracting M&V: the Good, the Bad, and the Ugly
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Performance contractors (PC) often use stipulations for part or all of their measurement & verification (M&V) efforts. The value of stipulations are low cost and easy implementation (good). Disadvantages include uncertain savings estimates (bad) and potential for disputes and lawsuits (ugly). PCs and customers sometimes misuse or abuse stipulations either by stipulating the savings directly or stipulating parameters based on limited or unreliable information. The purpose of M&V is to provide assurance that project savings exist. Improper and excessive reliance on stipulations may effectively nullify savings guarantees and also miss opportunities to assure measure performance by using verification data for feedback. A review of PCs in the federal sector shows significant reliance on stipulations; private-sector PCs are presumed similar. Recognized M&V guidelines such as ASHRAE 14-P, IPMVP, and FEMP discuss the use of stipulations. Recent changes to the IPMVP and FEMP guidelines resulted in diverging attitudes towards stipulations with the IPMVP now requiring some measurements. In response, FEMP is developing guidelines for using stipulations in federal-sector performance contracts that can be applied to privatesector PCs as well. Proper use of stipulations requires balancing costs with savings uncertainty.
Stetz, M.; Webster, L.; Bradford, J. (2001). Stipulations in Performance Contracting M&V: the Good, the Bad, and the Ugly. Energy Systems Laboratory (http://esl.tamu.edu); Texas A&M University (http://www.tamu.edu). Available electronically from