Building the Business Case of Energy Efficiency

Doug Binns, AE Smith Service General Manager Business Development is uniquely qualified to help AE Smith customers build a business case that speaks in their CFO’s language

9 Jul 2014
 

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Every CFO wants to make the best decision on how they invest their money

The first 20 years of Doug Binns’ career was spent in banking and finance. Notably, Doug was part of Westpac’s management team during their successful restructure in the early 90’s.

Doug joined Honeywell in the mid 90’s to pioneer energy performance contracts and manage the underwriting of operational risk for large social infrastructure projects.

In 2008 Doug was approached to join AE Smith to help build business capability around energy efficiency.

Cool Breeze spoke with Doug Binns to understand the value his financial expertise brings to AE Smith customers in helping them find the right outcome.

How does your expertise change the way AE Smith approaches a project?

It goes without saying that it’s vital to understand what is important to customers. How they generate value and how they keep their company successful.

More often than not, particularly when we’re talking with financially astute customers, “cash” is the ultimate, and so the focus is always on how their business is earning and spending their cash.

Often the technical reasons for implementing a HVAC project aren’t enough by themself to justify the spend.

It’s important to translate the technical implications of any project into meaningful financial terms. How much cost will it save? How much value will it add? Critically, is it an effective use of capital? This is very important, because there are always competing uses for capital within a company.

How can your expertise help AE Smith’s customer gain internal approval?

Every proposal we put forward, we are solving a problem and there must be a financial benefit for that solution that can be measured.

Often our customer needs to justify expenditure internally. My background helps our customer create a business case that talks in their CFO’s language.

It’s also about looking into the future. Is there a business case to do something smarter now that will deliver greater returns in the long-term? For instance, a clear link between NABERS ratings and the value of commercial buildings has been established – so intelligent building technologies that provide predictive energy optimisation, like BuildingIQ may help to future proof financial return in this sector.

When has your expertise helped to secure a project?

We completed a $1.8 million energy retrofit for Challenger, a Fund Management company. For this level of spend to be signed off we needed to produce a strong financial business case, including discounted cash flow analysis with an Internal Rate of Return (IRR). It was all about increased returns we could provide for that specific building to benefit the Fund.

How does your financial approach differentiate AE Smith?

As well as my direct involvement developing project proposals, we’ve implemented financial training for our staff. Our goal is to broaden awareness and understanding of the financial implications of HVAC spending to better help our customers.

As a result, many of our staff are capable of identifying a financial problem – not just a technical one – to better help our customers get the right outcome they’re looking for.