October 2012
BPI NEWS
Photo by Salvatore Vuono

BPI's Home Energy Auditing Standard Released for Public Comment

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.

INDUSTRY NEWS
Photo by: Renjith Krishnan

Leah Thayer
Leah Thayer
News Flashback: Building Performance News, Developments & Discussions

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:

About The Author
Leah Thayer is the founder and producer of daily5Remodel, a weekday news and business intelligence feed for remodeling professionals. She was a senior editor at Hanley Wood's Remodeling magazine from 2004 – 2010, and has 20 years of experience as an award-winning business writer, editor and content producer.
QMS TOOLBOX
Photo by: Stuart Miles

Tom Grandy
Tom Grandy
Strive to Exceed Breakeven: Part 1

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:


  Service rate Installation rate
Average Hourly Rate Paid the Techs $18.00 $16.00
Fixed Overhead Rate per Hour $64.23 $21.87
Variable overhead Rate per Hour $16.23 $12.85
Net Profit Per Hour $17.37 $5.63
Hourly Rate $115.83 $56.35

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.

About The Author
Tom Grandy is the Founder and President of Grandy & Associates. Grandy & Associates has created 24 Key Performance Indicators (KPIs) that apply throughout the HVAC industry. Click here for a full description of the 24 KPIs. The KPIs are the basic measuring tools utilized in the performance-based software called ProfitMaxx. ProfitMaxx puts systems in place to measure every aspect of the service technician's productivity and profitability. For more suggestions on how to run a profitable business, you might want to consider attending Grandy & Associates' three-day "Basic Business Boot Camp" . No time to attend class? Then consider online training by clicking here.
SO YOU THINK YOU KNOW HOME PERFORMANCE
Photo by Renjith Krishnan

Let's Play Stump the Chump!

Congratulations to Sarah Carter of Green Opportunities in Asheville, North Carolina for being the first person to submit a correct answer to September's Stump the Chump!

As a reminder, Troy Tanner of The Home Energy Detective Inc. in Manassas, VA provided us with a story about a homeowner living in a well-kept apartment complex, with a Home Owner's Association that is greatly impassioned about the look of the community's landscaping.

Troy was stumped when the homeowner, who lived on the second floor of the apartment, noticed water damage halfway up the interior wall of an exterior closet on the balcony. The homeowner on the first floor noticed that their closet was completely saturated with water. Troy's team inspected the closets and noticed that each had a low and high vent to the outside but the upper closet's high vent was 75 percent blocked.

Where was the moisture coming from?

Sarah to the rescue! She explains that the moisture's original source was from the new landscaping - either from excessive watering of the new plants and/or drainage issues created by the landscaping. The blockage in the high vent of the second floor closet causes the HVAC unit to draw more air from the bottom vent, and possibly the wall system itself, drawing the moisture up the wall from where it is exposed on the first floor, up to the second story wall. By removing the blockage, the HVAC unit can function properly, without sucking in the excess moisture.

About The Author
Sarah Carter is a HERS Rater and BPI Building Analyst with Green Opportunities in Asheville, North Carolina. Green Opportunities is a training institute for the growing green-collar jobs sector that targets participants who face challenges such as being low income, having a criminal record, facing homelessness or lacking a driver's license.

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.

JOIN THE DISCUSSION! Each month's Stump the Chump challenge will be featured as a topic on BPI's discussion page on Home Energy Pros, the home performance industry's very own social networking site. To send your answer there, and discuss with other Stump the Chump fans, simply visit BPI's discussion page and click on the right-hand 'Sign Up' box to create a profile, then add your comment. Don't forget to ALSO send your answer to mkandel@bpi.org to enter to win the contest, and be featured in the next issue of Performance Matters!

back to top

In This Issue

BPI Webinar

The Price is Right! How to Set Profitable Hourly Rates

Wednesday, October 24 @ 1pm EST/10am PST

Approved for up to 1.5 BPI CEUs

Attend this FREE webinar to learn how to set proper hourly rates based on your real cost of doing business, while generating a reasonable profit.

This webinar will be hosted by BPI, and will feature Tom Grandy, President of Grandy & Associates.

Click here to register for FREE

HVAC 2 HP Newsletter

Check out the very first issue of HVAC-2-HP, a Home Energy Magazine and BPI joint e-newsletter on home performance contracting for the HVAC community.

ACI EVENTS

Upcoming ACI Events

ACI New England Home Performance Conference 2012
Springfield, MA - October 15-17, 2012

ACI National Home Performance Conference 2013
Denver, CO - April 29 - May 3, 2013

Efficiency First Webinars

When 2+2 Does Not Equal 4: The Bad Math of Energy Efficiency Cost-Effectiveness Tests

October 23 @ 12:30pm EST/ 9:30am PST

BPI CEUs Pending

During this session, attendees will learn:

  • Current cost-effectiveness test initiatives
  • How various cost-effectiveness tests relate to on-the-ground home performance companies and programs
  • How to learn more about cost-effectiveness tests in your area and how they impact your company's bottom line

Members click here for further details

Non-members click here for further details

Innovations in Air Sealing: New Techniques to Seal the House and Help Seal the Deal

October 30 @ 12:30pm EST/9:30am PST

Approved for up to 1.5 BPI CEUs

During this session, attendees will learn:

  • How contractors can use Aeroseal air sealing techniques to improve the energy performance of a home
  • Aeroseal air sealing technology and ways that contractors are applying this technology in today's market
  • Strategies to avoid pitfalls and address challenges that contractors may come across when adding air sealing to their suite of services

Members click here for further details

Non-members click here for further details

Grandy & Associates Monthly Audio Series
Think You Can Stump the Chump?

You know - that problem house, symptom or combination of symptoms that confounded the homeowner and challenged all your building science savvy to solve. Send us a description of the problem – and the solution, which we'll keep a secret. If it's a genuine stumper, we'll publish it in the next Performance Matters e-newsletter. Send to mkandel@bpi.org and we'll write it up.

Are you a Home Energy Pro?

Join the BPI discussion group on Home Energy Pros, the home performance industry's very own social networking site. Get technical, business and marketing advice from your peers, and show what you know from your years on the job! Visit BPI's page and click on the right-hand 'Sign Up' box to create a profile, then join BPI's discussion group.