Financial Decision Making Tool
To determine the relative financial impacts of implementing individual measures and packages of measures, the team developed a decision making spreadsheet tool. Unlike the widely used energy modeling software, the financial modeling tool was developed specifically for this project.
The financial model calculates the net present value of the incremental cash flows over a 15-year period (2008 to 2023) resulting from the proposed energy efficiency measures. The financial model provides net present value figures that reflect the approximate project impact for ESB. The study timeline is intended to reflect the typical financing period for projects of this nature. The incremental cash flows are the difference in cash flows between executing the Empire State Building`s original capital budget (or an appropriate industry standard) and executing the proposed energy efficiency measures. While energy efficiency projects are often evaluated simply by comparing capital costs with utility expense savings, the team sought to create a more comprehensive and accurate story by incorporating other relevant incremental cash flows including repair and maintenance impacts, revenues, and rebates; based in part, on inputs from ownership.
Tenant Financial Decision Making Tool
The Tenant Design Assistance Feedback Tool is intended to help tenants in the Empire State Building easily and quickly understand the economic impact of incorporating energy efficiency measures into fit-out designs. If tenants understand the financial benefit, they are more likely to make the added capital investment. The Excel based tool (currently a beta version requiring refinement of assumptions) includes three key input steps.
Once the input information is complete, tenants are provided with a cash flow chart showing the expected additional capital expenditure in year one (e.g. additional costs during fit-out) and the expected savings each year thereafter for the life of the lease. The tenant is also provided with a net present value of the capital costs and energy savings. These calculations do not include any other financial impacts besides capital costs and energy savings.
Integrated Design Checklist
Because the integrated design process allows for the introduction of more variables and "what-if's" than a conventional value engineering process, design decisions can become more complex; and, there is no form or questionnaire that determines the best outcome.
Decisions are based on a variety of factors ranging from benefits (energy reduction, cost reduction, LEED points, aesthetics, comfort), to upstream and downstream impacts on other building systems and infrastructure, to the degree to which certain measures achieve overall project goals. To determine the viability of various design solutions, several levels of inquiry can be explored. Answers to these questions can supplant typical value engineering (where design decisions are based primarily on cost per unit of energy reduction for individual measures without accounting for interaction between systems) and help a design team understand how well a particular design measure meets the ultimate needs of the project across a range of topics and metrics. The checklist below can help ensure the right questions are asked during the project development process.