BPI is pleased to announce that a red-lined version of its BPI-1100-T-201x: Home Energy Auditing Standard is now available for public comment. The public comment period will end on November 19, 2012. The Home Energy Auditing Standard will standardize and clarify what is included in whole-building, science-based energy audits of existing homes.

The red-lined version of the Home Energy Auditing Standard is currently undergoing American National Standards Institute (ANSI) review, which requires a 45-day public comment period as defined under BPI's standards development process. Comments on the red-lined sections only are being solicited from stakeholders and the general public.

The Home Energy Auditing Standard provides the requirements for a building science-based evaluation of existing detached single-family dwellings and townhouses. The evaluation will address energy usage in conjunction with limited aspects of building durability and occupant health and safety. It will also provide a comprehensive scope of work focused on improving the home - including a cost-benefit analysis.

The Home Energy Auditing Standard was developed by a BPI Standards Technical Committee working group comprised of subject matter experts from a variety of interest groups and geographical locations. Significant interest has been shown in this standard, which has gone through multiple rounds of review, including a previous ANSI review.

To view the standard and submit comments on the red-lined sections, please visit: Formal Public Comment Process.

BPI Accepting Applications for Standards Technical Committees

BPI is now accepting applications from individuals interested in serving on BPI's Standards Technical Committees (STCs). BPI's STCs develop technical standards in an open and fair manner in accordance with American National Standards Institute (ANSI) approved BPI standards development procedures. Interested parties should submit an application by November 15, 2012.

The STCs are appointed to review and take action on proposals and comments from the general public and industry members, to develop new standards and update existing standards on a regular basis. Each year, BPI seeks applications from experienced technical personnel willing to take on the responsibilities of developing the technical standards on which our industry depends. Prospective nominees' applications will be assessed by BPI's Standards Management Board (SMB) to ensure a diverse representation by technical expertise, geographic location, and experience in the building sciences. The SMB will appoint up to five members to the Single Family STC, and three members to the Multifamily STC, each to serve a term of three years, beginning January 1, 2013. Appointments to the STC will be announced in mid-December 2012.

If you would like to apply for one of BPI's Standards Technical Committees and help craft the standards used by the residential energy retrofit community, please fill out the Application for Membership on Standards Technical Committee form and submit it electronically by November 15, 2012, in accordance with the instructions on the form.

For more information about how BPI standards are developed, visit BPI's Standards Development Procedures webpage.

Visit Standards Technical Committee for details about the STCs.

Home Energy Magazine and BPI Launch HVAC-2-HP

Home Energy magazine (HEM) and BPI are proud to announce the launch of HVAC-2-HP, a joint e-newsletter on home performance contracting for the HVAC community.

Home performance is the fastest growing segment of the HVAC industry, and there is a shortage of heating and cooling contractors skilled in the whole-house approach. This free quarterly e-newsletter will combine the whole house expertise of BPI with the journalistic authority of HEM, providing HVAC contractors with the guidance and information they need to succeed in whole-house home performance contracting.

"Expanding from HVAC into home performance contracting provides opportunities for increasing revenues and job scopes," said Tom White, Publisher of Home Energy magazine. "We're honored to tell the stories of HVAC contractors who successfully add whole-house performance to their businesses."

Inside HVAC-2-HP you'll find technical articles on the diagnostic and installation skills needed to tackle whole-house problems. Articles will also focus on the business planning and marketing principles needed to successfully reach homeowners. The goal is to help HVAC firms succeed with technical skills plus added value tips and tools - such as in estimating job costs, setting hourly rates, using your website effectively, and more.

"As every HVAC contractor knows, you need more than technical skills to succeed. You also need business planning savvy and marketing tools that work to successfully reach the homeowner market," says Larry Zarker, BPI CEO. "This newsletter provides that."

Click here to read HEM/BPI's first issue.

To sign up for the quarterly e-newsletter, click here. Send this link to HVAC colleagues that have been thinking about getting in to home performance.

Energy efficiency, embraced and resisted

Fall brings a stream of legislative skirmishes involving energy efficiency codes and directives. Germany has taken the boldest step forward. In the first week of October, Angela Merkel's government announced intentions to at least double free efficiency "consulting" to low-income households, starting next year. By 2020, the incentives will be extended to every household, up from about 10 percent currently. More at Bloomberg BusinessWeek.

Here in the U.S., at the federal level, bipartisan backers of Senate bill S.1000, the Energy Savings and Industrial Competitiveness Act, moved their legislation through the Senate as an amendment to a previously passed House bill, H.R. 4850, the Enabling Energy Saving Innovations Act. Follow this story on The Hill's Energy & Environment blog.

At the state, county and city levels, legislators and businesses are moving step-by-step to implement efficiency initiatives. In California, 14 counties and 126 cities launched the nation's largest finance program for commercial building upgrades using the PACE financing model. In Northern Indiana, energy-efficiency code requirements have had the effect of raising home prices by thousands of dollars. In Mesquite, Nevada, council members "erupted" over plans to bring the city into compliance with the 2009 edition of the International Energy Conservation Code.

It's not the product, it's the process

That theme resonated through online discussions of building performance professionals in September and early October. On his Energy Vanguard blog, Allison Bailes acknowledged the usual "favorite" products -- solar panels, tankless water heaters, etc. -- but noted the overriding importance of proper sizing and installation. "I've seen 20 SEER air conditioners installed on crappy duct systems that probably negate all the extra efficiency in the box (i.e., the equipment). I've seen spray foam insulation that wasn't installed properly so the homeowners weren't getting anywhere near what they paid."

Along similar lines, several home-performance professionals contributed to a discussion on daily5REMODEL about green building myths and realities. Echoing Bailes, Alabama remodeler Sean Lintow wrote, "green building has never been about products, but about the systems and the people doing the work." Michigan remodeler Doug Selby wrote, "focus on quality insulation and air-sealing. Remodelers sometimes think they should go with the cheapest price for things the customer doesn't see. There's a world of difference between average insulation jobs and great ones. Never go by price alone."

Another popular "energy-efficient" product that often overshadows process: windows. "Replace your windows last," chimed in Carl Seville on his blog. "Most wood windows can be repaired and storm windows added at a lower cost than replacement, and you'll save almost as much energy. If you go this route, you can fix the windows then spend all the extra money you saved to improve insulation, air sealing, HVAC systems, and come out way ahead."

Other online discussions:

• Why is there such a bias against fiberglass insulation? (via Green Building Advisor)
• Winter condensation on windows on a well-insulated house (via Home Energy Pros)

Understanding your numbers is the key to profitability – period.

This article will help you develop a foundation for profitable growth by determining what makes up a company's hourly rate. It will discuss the differences between fixed and variable overhead; and projected "billed" hours to the customer.

Part 2 will be an eye-opener. It will clearly show the increase in profitability that occurs once the company's breakeven is exceeded. The goal of every company should be to exceed its breakeven point, each month.

Let's begin by discussing the two most common categories of costs your business is likely to experience.

• Fixed Overhead - Fixed overhead costs are expenses that remain basically the same no matter how much work is done. Fixed overhead costs include rent, utilities, telephone, insurance, and loan payments. Each of these items will remain generally unchanged if you doubled sales, tripled sales, or didn't sell anything at all.
• Variable Overhead Costs - Variable overhead, by definition, is directly tied to productivity. Variable costs go up when you do more work and go down when you do less work. There are relatively few of these, at least in relationship to fixed costs. Variable overhead costs are things like gasoline, vehicle maintenance, credit card charges, and miscellaneous
supplies.

Why did we separate costs into fixed and variable? If the company bills out as many hours as they projected to bill for the year, the fixed overhead is fully covered. Any additional work billed over and above the budgeted amount can be very profitable. The variable overhead costs, however, continue no matter how much work you do, because they are tied to productivity.

Another key to our breakeven discussion deals with the hours actually billed to the customer. As we all know, we pay installers and service techs from the time they clock-in until they clock-out. The question is, "how many hours can actually be billed to the customer?"

When talking about billed hours in the area of service, we are talking about the hours the tech can actually charge the customer each day. Non-billable time includes shop time, travel between jobs, sick, vacation, holidays, company meetings, call-backs, warranty work, and customer no-shows. When looking at an entire year, most service techs average about 50 percent non-billable time. In other words, a full-time service tech usually bills about four hours a day to the customer. If they work a 40-hour week, that means an average of 20 hours a week, or roughly 1,000 hours a year. That's our goal.

When talking about billed hours for an installer, the numbers are a lot higher. Let's use an example: A very simple job that will take one installer two days to complete. The installer may sit in the office for 20 minutes both days, or may have to go to the shop or distributor a few times to pick up parts. But, if the installer completes the job in two days (16 hours), all their time is considered billable because that is the amount of time for which the job was bid. Therefore, non-billable time for an installer is traditionally low. Non-billable time for an installer normally includes sick, vacation, and holiday time, plus perhaps 2-3 hours a week that cannot be charged directly to the job. That means a full-time installer can average billing 35 hours a week to the customer, depending on how much PTO and holiday time there is.

To play with the numbers, we need to create a Sample Company. Let's say our Sample Company employs one service tech and two installers. That means the company has roughly 1,000 billable service hours per year, and approximately 3,600 billed hours within the installation department. Now that our hours are set, we need to go back to our fixed and variable overhead costs.

Keep in mind, overhead includes more than the typical rent, utilities, office supplies, insurances, etc. It also includes the two largest (but often overlooked) costs of doing business.

The number one cost of doing business is non-billable time. Our Sample Company has one service tech with approximately 1,000 non-billable hours a year. We pay our service tech $18/hour, so the Sample Company's cost of non-billable time for our service tech is $18,000/year (yes, the company has matching taxes, but let's keep it simple). Our two installers are making $16/hour, and each have five non-billable hours a week. That means our cost of non-billable time for our two installers is $8,320/year (5 hours/week x 52 weeks x $16 per hour x 2 installers).

The second highest cost of doing business is equipment replacement costs (replaces depreciation from a cash flow perspective). Our service tech is driving a 2010 van that is estimated to last another three years, but will then cost the company $30,000 to replace it. That means our cost of equipment replacement for our service department is $10,000 per year ($30,000/3 years = $10,000/year).

Our install team is driving a 2011 vehicle that is estimated to last six more years, and will cost the company $30,000 to replace. That means the cost of equipment replacement for our install department will be $5,000/year ($30,000/6 years = $5,000/year).

Non billable time and equipment replacement costs are two huge items often totally overlooked when most companies are calculating their hourly rates.

Now we could do an entire series of articles on how to create profitable hourly rates for our service and installation departments. However, let's assume we have done our homework and the finalized hourly rates for each department are as follows:

Q: If we bill out less than 1,000 hours in service and/or 3,600 hours in the installation department, will the company cover all of its fixed overhead costs?

A: No, each department needs to bill out all of their budgeted hours if they are going to cover all of their fixed overhead.

Q: What drops out of our hourly rate once the 1,000 hours in service and the 3,600 hours in installation are billed out?

A: Once our budgeted hours are billed out, ALL of our fixed overhead is covered meaning the fixed overhead costs of $64.23 in service, and $21.87 in installation, will drop out of our hourly rate.

Guess what happens when all of our budgeted hours are billed to the customer? Right again, profit skyrockets!

Do you KNOW what your breakeven point is in each department? If not, you might want to purchase our industry-acclaimed Labor Pricing software. It is fully guaranteed. If you are not 100% satisfied, send it back for a full refund, no questions asked.

This Month's Stumper

This month's stumper comes from a chump who's actually stumped! Ed Revers of Michell Timperman Ritz Architects in New Albany, Indiana has been scratching his head about this one and is wondering if you can help.

Ed explains that he has been working on a 50 year old house that has a four ton top-of-the-line Florida Heat pump system, with all the energy saving bells and whistles (hot water de-super heater, four-zone stats on Arzel control board, etc). After 2 years of utility bills, the energy savings are nowhere near what the geothermal manufacturers claim they should be. The new energy bills (gas and electric combined) are the same as the past 20 years, during which an old forced-air conventional gas furnace was used. The mechanical contractor has come out several times to check things and reports that it is working fine. The house was super-insulated when the new geothermal system was made operational. It isn't easy to compare old to new systems equally, because an addition of about 25 percent was added to the house when the new system was installed.

Background: The house is in the Louisville, Kentucky area and is now a 2850 sq. ft. ranch with a basement. Mechanical installation costs exceeded $30K, with four grouted wells at 150' depth each. At the recommendation of the mechanical contractor, the house was zoned because the existing house limited duct work configuration options and R-values weren't equal everywhere. The new system performs well (70 in the summer and 68 in the winter), but the energy savings are disappointing. The weather has actually been pretty mild the past few years too. As a newly accredited BPI Building Analyst, Ed considers the house to be tight and well insulated; although no blower door test or duct efficiency test has been performed to verify this. Gas and electric usage is probably below average for a family of four. Any clue as to what would help lower the utility bills and make the system less expensive to operate?

Ed Revers is an Architect Intern and Construction Project Manager with Michell Timperman Ritz Architects in New Albany, Indiana, and has been with the company for over 17 years. Ed manages a variety of construction projects, ranging from initial concept to final build. This year, Ed became BPI Building Analyst and Envelope Shell certified, while also becoming a LEED Green Associate.

Think you know what the problem is, as well as the solution? Send it to us at mkandel@bpi.org.