Wednesday, July 16, 2008

Energy Solutions: In-House or Outsource?

When seeking ways to reduce energy costs, where do business organizations go for help? For many, the choice boils down to in-house versus outsourced expertise. The issues here are many: Who provides the best outcome? Who brings truly valuable expertise to the task? Who has ulterior motives or hidden agendas that may lead to a less-than optimal solution from a business standpoint? Let’s take a look at the risks involved with using in-house OR outsourced expertise.

Facilities may outsource energy performance analysis, system design and engineering, retrofits, construction, and energy management strategy development. By outsourcing, one takes advantage of the depth of expertise that an energy expert provides. Well-seasoned energy experts see the best and worst of many facilities, bringing a wealth of knowledge to the client. However, this expertise costs money, and there are many facility managers who cringe at the thought of writing a check to pay for a service that maybe—just maybe—could have been accomplished with in-house resources. The cost of outsourced help may be higher because of the profit margin reflected in the vendor’s cost. The expert may cost more, but he might also make the solution (and therefore the savings) available more quickly. Then there may be some risk, real or perceived, that the vendor will make prescriptions that benefit equipment suppliers more than the customer who purchases the solutions. Facility managers are all wary of the “snake oil” that has been hustled by more than one energy solution provider over the years.

There may be a sense of pride in ownership, articulated as “this is our plant, we’ve operated it for years and no outsider can know any better than us how to run it.” A grey-beard supervisor may be the best source of cumulative knowledge about a facility, its design, and it standard operating procedures. You cannot seek or implement energy improvements without the input of such talent. On the other hand, a reliance on in-house expertise has risks of its own. Keep in mind that in today’s economic environment, facility staff are usually trimmed to the bone. People “wear many hats,” scrambling to keep up with multiple tasks while not mastering any one very well. They see the same workplace each and every day, not getting exposure to the lessons-learned from a variety of facilities. Unfortunately, in-house staff can offer up just as much “snake oil” as an outside vendor. All too often, in-house staff resist help from outside sources, primarily out of fear of embarrassment, or worse. Controlling energy costs usually involves some kind of change. Facility workers are prone to resist the "extra work" that energy optimization may entail, especially when their paycheck stays the same, regardless of energy performance. Rather than risk the exposure of waste attributable to “the way we’ve always done it,” many in-house staff can and do advise their management not to seek outside help. Many top managers lack the technical credentials to appropriately judge such opportunities. When this happens, organizations continue to waste energy—and pay dearly for fear and misplaced pride.

THE BIGGEST COST may be the cost of doing nothing. This is the very common result when organizations lack clear lines of “ownership” and accountability for energy issues. Unless someone is directly accountable for energy cost control, waste can go unchecked, with losses accruing not to any one department, but to the organizational bottom line.



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