Commercial Development in California: Mitigating Energy Compliance Risks

Commercial Development in California_Mitigating Energy Compliance Risks.jpg

Commercial development projects are complex and unique in many ways. Like any project, they have their own risks. Add to it the need to comply with California Energy Code (referred to as Title 24), and many questions come up fast. How can you be sure the project is fully compliant? Have you been up to the challenge, and reached the best energy configuration? Are you making the best decisions in terms of energy efficiency planning?

Hey! We’ve come to the end of our blog series on how to avoid and mitigate development risks through energy planning. Follow the shortcuts to catch the whole series from the beginning:

  1. How Energy Planning Impacts the Cost and Value of a Development Project
  2. 4 Critical Phases for a Successful Development Project in California
  3. The 3 Top Energy Compliance Risks in Commercial Development across California
  4. 5 Energy Compliance Mistakes that Will Kill the Bottom Line of a Development Project
  5. How to Be Energy Compliant Without Impacting Your Development Timeline
  6. Commercial Development in California: Mitigating Energy Compliance Risks
      

Mitigating development risks is akin to optimizing

There is no doubt that you must focus on mitigating risks and avoiding errors from the onset of a project. It is the best way to assure that the workflow is adequate, and the results are optimal. In other words, the objective of mitigating and avoiding risks, is optimizing the process and results altogether.

Like a defense, you must close the angles to the attacker instead of waiting, and that is the core of the four recommendations that we offer here.

The first thing you should do is to bring in an energy consultant at the outset of the project. Expert help is definitively a need when we are talking about commercial projects, in part because of size and complexity. Energy consultants bring a higher-level vision, and are prepared to identify a variety of issues that you may not be able to pinpoint at your firm’s level.

Energy consultants have a deep knowledge of regulations and codes, certifications, permitting and approval time limits, energy modeling and materials, among other things. They are also able to configure alternative proposals for your project. Key recommendation: Integrate the energy consultant from the very first meetings or working sessions.

The second measure to be taken in order to minimize risk, is to leverage energy modeling before constructionImagine you just use the same energy measures for all your projects. Some will be missing key equipment efficiencies and solutions, and some will have measures that may not be needed. What is the optimal estimate of energy usage for a particular building? What would be the best technological approach to it? 

In short, you have to create an optimal energy strategy before the construction phase starts.. You will have to run a few modeling iterations to establish that line, and be aware that although it can look too high or too low, a solid analysis will provide the best leverage point. Key recommendation: When looking for an energy consultant, make sure that energy modeling is among her or his strengths.
 

Your third action must be to budget appropriately for soft costs such as energy planning, certifications, permitting and inspection. This is something most developers tend to neglect because somehow, they do not see it related to the world of construction. But there is no way to finish or operate a building in California without these. So, pay attention to soft costs. They must not be dismissed or seen as a nuisance. Key recommendation: Understand that soft costs are a real and integral part of your commercial project from start to operation.
 

The last recommendation is that you must plan for contingencies. Sometimes, changes need to be made based on energy modeling iterations and energy consultant recommendations. Contingencies must be taken as real possibilities. Besides, all companies make errors, and what separates success from failure is how they manage it.

So, you should be prepared to deal with errors and negative events. We are not talking about psychological preparedness here, which must never be underestimated, but about actual processes that may change and impact your construction process. Other conditions around your energy plan can change, like prices, technological features, or code changes. Key recommendation: A contingency plan can be seen as an additional cost, but only if you have a short-term vision.
 

In closing

Mitigating and avoiding risk is better done by taking preventive measures. They allow you to foresee, prepare, and create internal processes that given due attention, will be ingrained in your firm’s culture. 

All four measures recommended here should be a solid feature of your business model, and your daily practice. Risk might not always be there, but from now on, you are prepared to deal with it.

 

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