Energy-efficient home renovation proposal for Mr. Fung

Home Building Proposal

bEfficiency, Safety, Comfort

Energy Efficient Home Building Proposal for Mr. Fung

The approved scope of this home improvement project includes the following:

Inspecting and re-piping the heating system to fix circulation problem and improve energy consumption.

Installing a new air conditioning system.

Improving insulation to meet energy saving standard.

Adding living space by adding an extension or a simple remodeling.

Expanding parking space by building a semi-covered parking lot (asphalt, concrete, pavers, or stucco).

The stakeholders involved in this project include:

The homeowner and his family members.

Construction contractors, project teams from XYZ SERVICE LTD.

Inspection Service Divisions and Building Policy Office at City of Vancouver.

Thus far, only the budget for installing new air conditioning system has been approved:

A. 4 x Mitsubishi Air-Conditioner with Heat, each in 4 bedrooms upstairs, total = $7,400

B. 2 x Mitsubishi Air-Conditioner w/o Heat, on downstairs main floor, total = $3,900

C. Installation Labor Fee, Total = $6,400

Preliminary Budget Estimate for Renovation:

$17,700

This customized project plan has been prepared exclusively for the Fung's family located in Vancouver, B.C.

2. Business Issues

There are a number of business issues, and costs associated with them, that must be considered for this project. Fixing the heating system, installing a new air conditioning system, improving insulation to meet energy savings standards, adding living space, and expanding parking space all come with labor and materials costs. (See estimates, below.) There is also the cost of doing business with the Vancouver, B.C. building inspections department, permitting costs for construction, and costs which may be incurred if new zoning variances are required from the city in order to accomplish the ideal renovation.

According to the American Council for an Energy-Efficient Economy (ACEEE), homes use almost 25% of the energy consumed in Canada and the U.S. alike. About 80% of that energy is used in single-family homes, 15% in multi-family homes (apartments and condos), and 5% in prefabricated homes. Although residential energy use has steadily increased over the past 25 years, it has increased at a slower rate than the rate of population increase. Nonetheless, many efficiency gains are being offset by increases in the number of electronics and consumer appliances in the average home. There are still many large opportunities for improvement, especially in areas such as whole-home performance and systems, however.

Let's examine the major areas of expenditures contemplated for this project

1. Inspecting and re-piping the heating system to fix circulation problem and improve energy consumption.

Tweaking one's heating equipping, and putting it on a regular, yearly or bi-yearly, maintenance schedule, will increase energy efficiency, improve cost effectiveness, and make the home more comfortable to live in. Making upgrades to the heating system with energy-efficient technologies will save the homeowner on wasted energy costs.

Maintaining the heating system includes insulating heating ducts, which helps eliminate condensation issues in humid areas. We recommend, additionally: cleaning ducts and warm-air registers; cleaning baseboard heaters and radiators. We also recommend minor home redesign -- i.e. making sure that furniture, drapes or carpeting are not blocking grills and baseboard heaters and even home radiators. That's because limited air circulation decreases energy efficiency. We also recommend sealing the home's heating ducts, and assessing air leaking from the duct system. Generally, leakage is found near air registers, grills and duct systems.

These ducts can be sealed -- i.e. An efficient way to 'repipe' the home -- with vinyl or foil sheets which reduce moisture issues.

We also recommend cleaning the furnace. A dirty furnace delivers less air than it otherwise could. Cleaning the furnace filter is also a requirement here. Clogged filters force the heater to work harder, and use more energy. Disposable furnace filters should be changed at least monthly, on an ongoing basis. We recommend that the homeowner do this himself going forward.

We also recommend installation of ceiling fans, which can affect indoor air temperature by as much as 10% per year.

Source: http://www.bchydro.com/guides_tips/green-your-home/heating_guide/Maintain_Your_Heating_System.html

We are making these recommendations with an eye to cost savings. If the homeowner wants to replace his heater, and make other, bold new technology purchases, we recommend that he explore the Canada Energy Efficiency Savings Program offered by Genworth Capital.

Genworth Financial Canada is supporting consumers as they make environmentally friendly choices. Through the bank's Energy-Efficient Housing Program, home buyers purchasing an energy-efficient home or refinancing an existing home to make energy-saving renovations are now eligible for significant premium savings.

Benefits include the following:

A 10% refund of the Genworth mortgage insurance premium

Refund of any extended amortization insurance premium surcharge (Loans with amortizations >25-years)

Access to Genworth's Homebuyer Privileges, an exclusive online discount program for commonly purchased household items

Enhanced qualifying: Debt Servicing Ratios can be calculated using the estimated reduced heating costs as per the energy efficiency evaluation report

Available on all Genworth mortgage insurance products

Source: http://www.genworth.ca/content/genworth/ca/en/products/features/energy_efficient_housing.htm

These financial savings can be used to purchase other, energy-efficient equipment in the home.

2. Installing a new air conditioning system.

We endorse the already-approved plan to install the Mitsubishi air conditioners, as these devices are ENERGY STAR® certified. ENERGY STAR room air conditioners are approximately 10% more efficient than other models and their central air conditioning systems are about 8% more efficient. Combined with so-called passive cooling techniques, such as insulation, landscaping and window shades, this will reduce the energy required to meet the homeowner's cooling needs.

ENERGY STAR-certified air conditioners are comparably priced to standard models and they tend to be high quality as well as energy efficient to save you money in the long-term.

The homeowner can set his air conditioner to 25.5°C (78°F) or higher, and still save between 3% and 5% in home cooling costs.

We also recommend that the homeowner install a programmable thermostat. With that, he can set the timer to have his house cool when he arrives home from work. This costs between $25 and $100 and can reduce his cooling bills up to 10% a year.

We also recommend that the homeowner regularly check the filter in his air conditioner to ensure it is clean. Filters need to be replaced every one or two months for efficiency.

3. Improving insulation to meet energy saving standards.

Upgrading a heating system may make a home warmer, but if the home can't hold the heat in, it is a waste of energy. Homeowners can upgrade the insulation in many of the key heat loss areas of an existing house -- i.e. The attic, the basement, etc. -- without too much expense. We recommend the purchase of insulation with the Look for insulation with the appropriate R. Or RSI factor.

The attic is usually the most cost-effective place to add insulation. A well-insulated attic can reduce year-round energy use by 20-60%, savings.

A well-insulated house is a generally a more comfortable one. The insulation holds in heat during cold weather and keeps the house cool when the weather is hot.

The energy savings from upgrading home insulation definitely help the environment.

4. Adding living space by adding an extension or a simple remodeling.

A garage conversion project is a simple way to add 200 to 400 square feet of new living space to the Fungs' home. Often, garages are converted into bedrooms, bathrooms, and even family rooms. Remember, the garage already consists of a foundation, four walls and a roof. So it's a relatively inexpensive solution to adding living space to the Fung's home, when contrasted with the cost of building a new home addition.

A garage conversion project has some of the same concerns and issues as one sees when finishing a basement. This includes cold concrete floors and obstructions that must be creatively worked around.

We will need to work extensively with the local building inspector to look at local code requirements to see if this is feasible in Vancouver, B.C., or if another, more expensive solution is required.

5. Expanding parking space by building a semi-covered parking lot (asphalt, concrete, pavers, or stucco).

There are several considerations when examining the question of adding a new, covered parking space. If one wants to add a solid-surfaced parking space alongside a concrete driveway, with one end adjoining the street, there are certain issues. For example, the space probably isn't level, and likely rolls into a downslope away from the street.

The homeowner would probably like to avoid gravel due to the slope and the fact that he will be parking a car on the proposed space.

We recommend a semi-cantilever style parking cover to meet the customer's desires for a semi-covered parking lot.

6. Project Constraints

The project is constrained by financial considerations. As we do not know how much more Mr. Fung and family are willing to invest in this renovation project, we have recommended that they pursue the energy efficient mortgage financing option. This will enable them to finance the renovation and home expansion. If the Fung family provides us with additional financial/budgetary information, we can make additional recommendation as to constraints and project assumptions.

7.Critical Success Factor

The critical success factor here will be determined by the financial considerations. As we do not know how much more Mr. Fung and family are willing to invest in this renovation project, we have recommended that they pursue the energy efficient mortgage financing option. This will enable them to finance the renovation and home expansion. If the Fung family provides us with additional financial/budgetary information, we can make additional recommendation as to constraints and project assumptions.

We are comfortable with installing the Mitsubishi air conditioning systems now, as outlined above, and revisiting this overall project again when the finance picture is clearer.

8. Risk Analysis

Everything one does in today's business environment entails a risk of some sort: customer habits change, new competitors emerge, factors outside one's control could delay the project. Formal risk analysis and risk management can help us assess these risks and decide what actions to take to minimize disruptions to these plans.

We define risk here as "the perceived extent of possible loss." Different businessmen will have different views of the impact of a particular risk -- what may be a small risk for one business may destroy the livelihood of another entrepreneur.

A way of putting figures to risk is to calculate a value for it as:

risk = probability of event x cost of event

As outlined above throughout this proposal, have already identified many risks:

Human Risk: Individuals or organizations, illness, death, etc.

Operational Risk: Disruption to supplies and operations, loss of access to essential assets, failures in distribution..

Reputational Risk: From loss of business partner or employee confidence, or damage to reputation in the market.

Procedural Risk: -- Failures of accountability, internal systems and controls.

Project Risks: Risks of cost over-runs, jobs taking too long, of insufficient product or service.

Financial Risks: From business failure, stock market, interest rates, unemployment.

Technical Risks: From advances in technology, technical failure, etc.

Natural Risks: Threats from weather, natural disaster, accident, disease, etc.

Political Risks: From changes in tax regimes, public opinion, government policy, foreign influence, etc.

As we have repeatedly stated, the major risk here is the financial risk of not being able to finance the project. Mr. Fung will have to address this upon receipt of this proposal, at which point we can tease out the extra costs of the requested items in further detail. We need to know how much Mr. Fung is willing to spend to achieve his dream of remodeling this home.

9. Scope:

The scope of this project is a remodeling for energy efficiency and increased living space in Vancover, B.C.

9a) In Scope:

All in-scope factors have been addressed above.

9b) Out of Scope:

No out of scope elements have been proposed for this project.

10. Stakeholder Analysis:

The stakeholders involved in this project include:

i. The homeowner and his family members.

ii. Construction contractors, project teams from XYZ SERVICE LTD.

iii. Inspection Service Divisions and Building Policy Office at City of Vancouver.

11a) Critical Stakeholders

The critical stakeholders are all of the stakeholders.

11b) Non-Critical Stakeholders

A possible stakeholder is Genworth Capital Canada -- but at this time they are non-critical.

12. Budget

Thus far, only the budget for installing new air conditioning system has been approved:

A. 4 x Mitsubishi Air-Conditioner with Heat, each in 4 bedrooms upstairs, total = $7,400

B. 2 x Mitsubishi Air-Conditioner w/o Heat, on downstairs main floor, total = $3,900

C. Installation Labor Fee, Total = $6,400

Preliminary Budget Estimate for Renovation:

$17,700

13. Summary

The approved scope of this home improvement project includes the following:

1. Inspecting and re-piping the heating system to fix circulation problem and improve energy consumption.

2. Installing a new air conditioning system.

3. Improving insulation to meet energy saving standard.

4. Adding living space by adding an extension or a simple remodeling.

5. Expanding parking space by building a semi-covered parking lot (asphalt, concrete, pavers, or stucco).

The stakeholders involved in this project include:

i. The homeowner and his family members.

ii. Construction contractors, project teams from XYZ SERVICE LTD.

iii. Inspection Service Divisions and Building Policy Office at City of Vancouver.

Thus far, only the budget for installing new air conditioning system has been approved:

An energy efficient house stays cool in summer and warm in winter. The house will be more comfortable if the occupants perform simple maintenance, as outlined above. This enables the homeowners to maintain comfortable conditions in the house, without the excessive use of heaters and air conditioners. This reduces the energy consumption of the building. Reducing energy consumption means less burning of fossil fuel, less general pollution. That gives the occupants the opportunity to have a healthier and more comfortable home that costs less to heat and cool and also reduces the impact of energy consumption on Canada's environment.