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Pm 592 Course Project 1

In: Business and Management

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PM 592 COURSE PROJECT

John Lawson,
Mathew Freeman
ENERGY EFFICIENCY INSTALLATION BUSINESS VENTURE PILOT PROJECT

TABLE OF CONTENTS:

Item | Page | 1.0 Executive Summary | 2 | 2.0 Project Description | 2 | 2.1 Major Activities | 3 | 2.2 Resources | 3 | 2.3 Project Milestone | 4 | 2.4 Assumptions | 4 | 2.5 Project Deliverables | 4 | 2.6 Constraints | 4 | 2.7 Risk Management | 5 | 3.0 Work Breakdown Structure | 6 | 4.0 Cost Estimates | 8 | 4.1 Cost Estimation Assumptions | 8 | 4.2 Cost & Contingency Estimation | 9 | 5.0 Financial Analysis | 11 | 6.0 Project Schedule | 12 | 7.0 References | 12 |

1.0 Executive Summary

This project is a pilot project for the development of a business venture to promote the installation of energy efficiency and conservation features into homes to save home owners money through the reduction of monthly energy bill. The objective of the project is to install energy efficiency features into a home of about 2500 square feet in Atlanta, Georgia and expected to be completed within 5 months at an estimated cost of $96,558.21, using a three point estimation; and achieve about 50% savings in energy usage.
The expected benefits include: * Reduced utility and maintenance costs * Increased home comfort * A healthier and safer indoor environment * Improved building durability * Ultimate increase in home value
The project will begin on April 16, 2013 and be completed on November 20, 2013. A Financial Analysis on the cost and potential energy savings shows a positive net present value (NPV) of $49,889.24. The project is therefore financially viable and should be approved for bank financing.

2.0 Project Description
ATL Energy Inc. is a business venture firm that undertakes entrepreneurial projects in the Energy Sector worldwide. Environmental concerns on global warming, increasing energy costs, as well as recent advances in technological innovation, in the area of energy efficiency and conservation, has created an opportunity to exploit gains in savings that can be realized when energy efficient and conservation features are introduced into homes. ATL Energy has decided to promote the installation of energy efficiency features in homes in the North American Market by being venders of energy efficiency packages customized to suit individual homes to achieve savings in energy costs to home owners.
A home owner in Atlanta, Georgia has decided to purchase the services of ATL Energy to install energy efficient and conservation features in his house as a pilot project for the business venture. ATL Energy is submitting a business plan to the bank to provide financing for the project. This project is for the installation of energy efficiency features into the Victorian style home, of about 2500 square feet, located in the Atlanta Metropolis of Georgia, that will save money by reducing monthly energy consumption, and ultimately increase the home value.
The specific objective is to undertake a pilot project to install energy efficiency features in the home in Georgia with a target to reduce annual energy cost by 50 percent through a total home improvement/ energy efficiency & conservation project to be completed in 5 months within a budget of $96,588.21
ATL Energy is securing a credit line financing from the bank to implement the project and expects to repay the loan through a monthly payment by the home owner, which will be a percentage of the expected annual energy savings that the project will generate. Thus a portion of the energy savings becomes a benefit to the homeowner, and the remaining portion is used to service the repayment of the cost of investment plus markup to the venture capitalist.
The business idea is to promote the project to other home owners who see the energy saving opportunities, and thus undertake to purchase the service/products from the promoters. As economies of scale are achieved with more home owners buying ATL Energy’s product, the marginal cost to future home owners is expected to decrease, and profitability of the business venture is also expected to improve over time.
The existing building, which was built about 8 years ago, shows some structural damages due to wear and tear, and thus compromises on its energy conservation characteristics. The energy bill per month is a huge percentage of the monthly mortgage payment. The house isn’t energy efficient based upon the year it was built and lack of cost effectiveness of energy efficiency technology available at that time.
Appliances in the home are not in their optimal levels of performance and the project seeks to introduce more efficient appliances through replacement of parts or whole units to improve their energy efficiency in order to accomplish the project objectives.
A whole-house systems approach is adopted to do a preliminary assessment and the planning for the project. To achieve maximum energy efficiency the following key components of the home are taken into account: * Insulation and air sealing * Appliances and home electronics * Lighting and Day-lighting * Space heating and cooling * Water heating, and * Windows, doors, and skylight.

2.1 Major ActivitiesAudit and Cost EstimateFinancing ApprovalMeeting with General ContractorSelection and purchase of materialsRemoval of old materials and appliancesRoof installation (including solar panels installation)HVAC DuctworkElectrical wiring and PlumbingInsulation and SealingWalls and Flooring upgrade | Windows and DoorsFine carpentryInterior Painting, Wallpaper and other finishesBathroom upgradeAppliancesHeating System InstallationCooling System InstallationWiringLighting | 2.2 ResourcesGeneral ContractorRooferCarpenter 1Carpenter 2Carpenter 3Inspector 1Appliance Salesman(HHGreg) | Inspector 2Inspector 3HVAC TechnicianElectricianPainterPlumberHome InspectorWindow Installer |

2.3 Project Milestones Project Start-OffCompletion of Audit/Initial Inspection.Completion of RoofingInspection of completed work (HVAC Ductwork/ Electricals/Plumbing)Final Inspection/Project Completion | April 16, 2013April 17, 2013June 21, 2013October 3, 2013November 20, 2013 |
2.4 Assumptions
It is assumed that the house already exists and is in a livable state and the homeowner has already obtained permission from the HOA to undertake the project.
The house is in the state of Georgia, so project will adapt to Georgia climatic conditions. It was originally constructed from wood and brick, and this would not be significantly changed during the project.

2.5 Project Deliverables
Project must demonstrate at completion the following basic elements:
- A tightly sealed foundation that shields the home from the outside
- A controlled ventilation system
- The proper installation of a highly efficient lighting, heating and cooling system
- The proper installation of energy efficient doors, windows and appliances

2.6 Constraints
Scope:
- A poorly designed roof overhang
- A poorly insulated foundation wall(s) and floor(s)
- Improper installation of the vapor retarders against water vapor condensation
Time (Schedule):
- Inclement weather during period of roof replacement
- Materials delivered behind schedule

Budget (Cost):
- Use of expensive materials that were not originally anticipated
- Inflation (causes material prices to go up, high gas prices, etc.)

2.7 Risk Management
Technical:
- Not meeting quality standards or required codes and inspections

Delayed delivery:
- Vendor delay in delivery of critical materials
Adverse Economic Conditions:
- Material costs escalate more than anticipated due to adverse economic conditions (e.g. unanticipated increases in fuel prices)
Manpower / Human Resources:
- May not have hired the most experienced General contractor or one familiar with the specialization in energy efficiency
- Contractors need specialized training
- Contractor out sick unexpectedly
External Factors:
- Inclement weather
- Changes in Energy Efficient regulations

Customer:
- Homeowner unable to obtain approval from Home Owners Association to proceed with renovation on time
- Homeowner unable to secure funding for the project which delays commencement of project starting
- Change in homeowner preference

3.0 Work Breakdown Structure (WBS)

4.0 COST ESTIMATES (3-POINT ESTIMATION & CONTINGENCY ESTIMATION)

4.1 Cost Estimation Assumptions

4.2 Cost & Contingency Estimation

5.0 Financial Analysis

Since the Net Present Value of the Project is +ve $49,889.25 the project is financially viable and makes a strong case for funding approval.

6.0 Project Schedule

7.0 References:

i. Energy Star Web Site: http://www.energystar.gov/index.cfm?c=bldrs_lenders_raters.nh_features

ii. http://www.energystar.gov/ iii. http://www.efficientwindows.org/ iv. http://www.eren.doe.gov/buildings/building_america/ v. http://eetd.lbl.gov/coolroof/ vi. http://www.ehow.com/how_2016290_energy-efficient-house.html vii http://www.allrenovationllc.com/services/energy-efficient-home-renovations viii. http://homerenovations.about.com/od/planningtorenovate/a/artremodelproce.htm ix. Project Management For Business, Engineering, and Technology, By John M. Nicholas, Herman Steyn.

x. Course Materials from PM 586 (Project Management Systems), and PM 592 (Project Cost & Schedule Control)

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