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Design Brief: Performance-Based Compensation

April 2, 2002
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Table of ContentsDesigning highly energyefficient buildings may require more time and money up front than designing structures that merely meet Title 24 energy requirements, but the resulting energy efficient structures generally cost much less over their lifetimes. Unfortunately, conventional fee structures paid to designers and contractors tend to provide economic incentives to minimize building costs, without regard for strategies that reduce lifetime operational and energy costs. This raises an interesting hypothesis: If fees were adjusted to reward design professionals for the amount an energy efficient facility would save the owners in the future-instead of the amount they spend today-the economic interests of the design team and the owner would be more closely aligned, and the result should be more efficient buildings. 

Toward testing this concept, several buildings have been constructed with the intention to reward the design team if measured energy use after project completion falls below an agreed-upon target, and to penalize designers if it is above a certain threshold. Initial experiments demonstrate that all parties need to reach agreement as quickly as possible about two key issues: specifying performance thresholds and measuring the actual energy use of the finished building. Additionally, designers emphasize the importance of collaboration within the project team, the members of which should be united in their enthusiasm for achieving a high-quality product.

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