PBC market development in the CR

PBC (Performance Based Contracting) is the project method used for energy efficiency renovation of buildings or energy efficient construction of buildings focusing on minimizing of overall lifecycle costs of the buildings. The PBC is performed by methodology called Design&Build&Operate (DBO). DBO is suitable for new buildings or for deep renovation and modernization of existing buildings as administrative buildings, sport facilities, schools, hospitals, shopping malls, industrial buildings.

DBO is a method of construction projects characterized by the transfer of the responsibility for the processing of the project documentation and for the overall project quality to the contractor (partially or entirely). The PBC Client usually specifies in its assignment only the purpose, standards, scope and performance indicator of the planned/renovated building.

Main features of DBO project are as follows:

• responsibility for the project documentation and execution of the work has been partially or entirely transferred to the Contractor
• the PBC client  does not have to be experienced in implementation of DBO projects (it is necessary to prepare the PBC project assignment in cooperation with experienced advisory)
• higher assurance of compliance to the bid price, which will not be affected by changes in the project documentation made by the contractor during the implementation of the work
• lower risk of discriminatory assignment of the work (requirement for specific products, solutions, etc.)
• it is possible to start implementation faster with the possibility of overlapping of the design and implementation phases, i.e. faster commissioning
• bigger opportunity for using the innovative potential of the contractor
• space for reasonable transfer of risks and responsibility for achieving the required performance parameters during building operation to the contractor

Higher requirements for the building function and extensive technological equipment of the building create more potential for the use of a comprehensive operating model, according to which the contractor will perform other activities related to the operation of the building after completion of the construction of the building or its modernization. With respect to the time and cost demanding project preparation stage, the DBO project methodology is used for projects with minimal investment of CZK 50 M.

PBC Pilot projects

Renovation of buildings by using PBC has been in initial stage in the CR. Currently one of the first PBC project is being developed by using DBO methodology in the Czech Republic. It is a new health care centre for children in Ostrov at Macocha. The owner of the facility is South Moravian Region. The investment is about CZK 150 mil and loan from EIB will be used for financing. Central Bohemian Region plans the bridge renovation by the use of DBO methodology. The construction will be commissioned in 2022.

Existing support of PBC market

The support of PBC projects in CR has been mostly on the theoretical level. Practically the contracting authorities and private investors face a lack of experience of advisors and also implementers of complex PBC projects.

The methodology providing guidance for the contracting authority how to proceed in procurement for DBO provider (PBC provider) in accordance with the Public Procurement Act was developed by Association of Energy Service Providers and the Czech Green Building Council and has been widely promoted on websites of energy efficiency market players  - Ministry of Industry and Trade – EFEKT, Ministry of Environment, Operational Programme Environment, Portal of cities and municipalities,  Association of Energy Service Providers, Czech Green Building Council and many others.

Energy efficiency experts on the platform of the Association of Energy Service Providers set up working tables for promoting and discussing the DBO projects options in the Czech market.

DBO methods can be used in the implementation of projects supported from the OPE for energy savings – PO 5.

The potential PBC providers can be big ESCOs or interested construction companies employing designers, or consortiums of such companies where construction companies has sufficient capacities for extensive projects and ESCOs are interested in building operating.

Summary

The PBC projects development turns out as a promising project format for the extensive volume projects which are focused on energy efficiency. Although experience in implementation of PBC projects has not been wide, the market seems to be in a stage of preparation for PBC projects start. The procurement methodology is prepared. Since today 2 projects were launched, these projects have not been focused on energy efficiency.

Currently as a main barrier for the start of PBC projects development is lack of awareness about the benefits of DBO projects among the potential clients. To prepare the PBC project of quality, the client needs an experienced and educated PBC project advisor in preparation stage of the project. The lack of experienced project advisors at the market is seen as the other significant barrier.