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Performance contracts in FMon Jan 4, 2013
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Today, with intense competition, high costs of operation and still-struggling economies, businesses are seeking ways to become leaner, more agile and increase operational efficiencies.
Concentrating efforts on cutting costs makes sound business sense, and that is where the importance of energy performance contracting comes in, making it a viable financial strategy.
In fact, a properly executed performance contract can become a core component of business sustainability alongside traditional components of revenue generation such as finance, research & development, manufacturing & marketing.
As more businesses prioritise the search for new energy savings solutions, innovative financing is often required to make the vision of energy efficiency a reality.
Energy performance contracting puts this ideal within the reach of organisations of any size. An energy-saving performance contract guarantees improvements to a building will deliver a certain amount of water and energy savings over a fixed period of time.
The costs of facility and infrastructure retrofits or renewal projects can be offset by the energy and operational savings that are achieved as a result, helping organisations from schools to governments to hospitals and shopping malls maintain cash flow, and focus on its core businesses.
A well-executed performance contract enables you to transform a building into a productivity hub making it more sustainable, healthy and efficient. Buildings then serve a bigger purpose — that of helping people achieve and businesses create. They provide safety and comfort, protect assets and foster productivity.
In the absence of an effective performance contract, asset life is reduced, there is increased equipment downtime, systems fail and people under-deliver, putting businesses at risk. Therefore, when buildings work better, people work better and businesses perform better.
The benefits of guaranteed performance and resulting savings are manifold. Savings from reduced utility bills and increased efficiency are guaranteed and in several cases, the return on investment is under five years.
In addition, the client gets the advantage of comprehensive 24/7 technical support, stable supplier work force, lower procurement costs and committed supplier partnerships.
A long-term relationship depends on the supplier’s willingness to adjust service levels and scope to support the client’s dynamic business needs.
In the Middle East, our client base is diverse and includes buildings that serve as universities and shopping malls. We help our clients save millions of dollars every year by making their buildings more efficient.
I have mentioned this not to showcase our credentials but to emphasise that this is serious business. When strategically planned and implemented, performance contracts lead to business improvements that measurably reduce costs, increase customer satisfaction and enhance the shareholder value.
The performance contracting partner should have 360 degrees expertise to keep every aspect of the client’s portfolio running smoothly — from critical environments, where minor errors cause major disruptions to leisure and retail destinations where visitor comfort is of prime importance.
The performance contracting partner should have industry-specific expertise to optimise performance while reducing risk and ensuring compliance with applicable regulations.
At the end of the day, a performance management partner should be able to speak your language and understand local regulations and needs. They need to work with integrity and passion to provide an excellent brand experience for your customers and a place where your people can reach their full potential.
The end result is to have an efficient, reliable, safe and productive environment where people achieve more and businesses prosper.
About the author
Azzam Messaykeh is regional executive director, Aftermarket, Middle East; Building Efficiency, for Johnson Controls
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