The thing about data...
When it comes to defining normal, the more contemporary the data, the better. The more like assets to compare against, the better. The better the data, the better the decisions.
Sometimes what we see in the mirror isn’t what we actually look like. We lose objectivity. We introduce our own prejudices; we sometimes see things that aren’t really there. This isn’t just when we look at ourselves; the same thing happens when we look at data around our portfolios’ consumption of utilities.
When it comes to understanding if our building’s use of utilities is higher or lower than normal, the definition of normal becomes very important. A friend often uses that analogy of looking in a mirror. I have heard her on many occasions pull up a picture of a cat looking in a mirror and say, “this is what you think your behind looks like,” and then puts up a picture of an elephant’s behind up and says, “but how do you know this is not what it really looks like.” I adore how she pulls in an analogy that is so familiar and so relevant - thank you, Mary Nitschke.
Mary’s comparison is precisely why it is so important to understand what normal is. Without a reference point, our buildings may be consuming much more than other buildings of the same size, build, age, and climate.
Many organizations use a historical comparison of consumption as their “mirror,” in that they look at the individual property and compare utility consumption against itself. This will potentially identify new issues and a valid evaluation of data, but only if you know its limitations. That limitation is that if the property is already inefficient when the first benchmark value is used, you will continue wasting energy and/or water at the property because the waste is included in your definition of “normal.” That is just the amount of energy and/or water property uses.
The trash doesn’t escape this criticism, and in fact, it is likely worse because the data is often based on estimates and not on actual use. This is an area that we tend just to set up service and pay the bill, with little additional attention paid unless there is an issue. We get a fine for contamination, overage fees, or a complaint. Until then, we write the check and assume that is the cost of trash. So that the half-full container gets tipped and charged, the same as the full container; the three trips made a week when you only need two still happen, and the charge stays the same.
These examples all point to one thing - WE MUST UNDERSTAND WHAT IS NORMAL. Without an external benchmark to compare against, we really don’t have any idea if our consumption is good or bad. We just know it didn’t change.
If you have a large enough portfolio, access to BI software, and good data flow, you may be able to compare internally against the rest of your portfolio. The issue with this approach is the size of your portfolio in most cases won’t contain enough buildings in the same climate zone, enough buildings of the same age, construction type, garden vs. mid-rise vs. high rise, central systems vs. unitized systems. I can only think of one company with literally thousands of buildings in their portfolio, and even that is pushing having enough variety to truly benchmark internally.
Without a large set of buildings, and the BI resources, in addition to inhouse energy analysts to interpret the results, the next best option is to look externally. The first stop nearly everyone looks at is ENERGY STAR Portfolio Manager. It is a free tool, and it is how most benchmarking ordinances are reported, but when it comes to multi-family, it has the same limitations in that the data set to compare against is small, and the data is old. What Energy Star does excel in is acting as a common platform for your energy, water, and waste data. The single platform provides advantages for reporting purposes, and energy analysts can evaluate the data and develop insight into performance. But if you are using this as your sole measuring stick, you will need to do additional analysis to realize your opportunities.
It is important to realize how benchmarking works within the ENERGY STAR platform; this seems to be an area of misunderstanding in our industry. When you input the data into ENERGY STAR, the benchmark score produced is not using the data we input and comparing that against other buildings that also input their data into ENERGY STAR. Instead, for multi-family properties, the data your building’s consumption is compared against is from a 2011 Fannie Mae Report, Multifamily Energy and Water Market Research Survey. This database contains the Energy and Water Data for 672 buildings, in addition, 278 buildings provided energy only, and 64 provided water only. When you consider the different configurations of multi-family properties, the different types of HVAC systems, and various climates that assets are located, you can quickly see that your “normal” is pretty limited. Think about how much efficiency standards have changed in the last decade. An example is the amount of installed LED lights that has dramatically increased since 2010. That score of 65 is based on a score of 0-100 against that decade-old data set with only 1,000 buildings. A lot has changed over the last decade. While the benchmark ability of Energy Star Portfolio Manager is better than historical analysis alone, you will miss opportunities if this is your benchmark to define “normal.”
The difference between best-in-class opportunity identification and “what everyone else is doing” (of those even doing it) lies in the database being used for benchmarking. To move to a more robust dataset, most likely, it will be necessary to contract with a private database provider. When doing so, it is important to do your research. Ask questions and ask to see a demo. Look at multiple providers and evaluate at minimum the following questions:
How easy is the benchmarking tool to use? How is it accessed, and is the navigation intuitive?
Does the provider simply provide you access, or do they employ energy analysts and engineers to help you interpret the results? Unless you have in-house resources, having someone who understands the data and can help you understand the data can be a game-changer.
How large is the dataset used for benchmarking, and how often is it updated? What kinds of properties does it contain, are they multi-family? Do they track different attributes of multifamily such as garden-style separate from high rise? How often is data uploaded?
How is data obtained? If you have submeters, can they be loaded in real-time? Is it bill data? If bill data, how is the data obtained? Does the service interface with bill pay providers, if so, who, and is it the bill pay provider you use?
How does the service handle tenant data? Can they obtain it in non-benchmarking jurisdictions, and if so, how?
Does the database allow for the ability to evaluate common area or owner-paid expenses both separately and in aggregate? Both are important, but one hits the bottom line to a larger degree.
Does the service interface with ENERGY STAR? Do they load the profile data and populate the meters? Do they show you both how the property compares in their program and how it compares in ENERGY STAR? This can be important in mandatory benchmarking and performance ordinance jurisdictions.
Does the provider handle all compliance reporting for ordinances and loan performance reporting requirements, if applicable? Are they familiar with the ever-changing landscape? How do they keep up? What is their experience?
Does the provider have the resources to show you where opportunities are and what they are, and can they turnkey auditing services to further identify the actual measures that will most effectively address the energy or water being wasted at a given property? Can they also certify the properties that are performing well through ENERGY STAR?
Does the provider have the resources to turnkey apply the energy efficiency measure to fix the issue causing wasted energy or water and apply any utility incentive programs to maximize ROI?
That is a pretty long list, but if you are truly going to use data to make decisions, the better the data, the better the decision. The stronger the benchmark, the stronger the identification of opportunities. The more capable the provider in solving the issue from start to finish, the more likely you will be able to address issues at scale. It only makes sense that comparing your property against 1 property is inferior to comparing it against 1,000, which is inferior to comparing it against 100,000. Size does matter, after all.
While much of this post has focused on energy and water opportunity identification, the same questions can be asked about waste as well. The only difference is you likely do not have a true initial measurement or meter, to begin with. To overcome this, talk to your providers and challenge them on their ability to provide actual data. Data based on an estimated usage is not as powerful as data that is based on actual measurement; however, it is better than no data.
In the world of waste, the nuances multiply as the service differs even more greatly from property to property. There are more ordinances and service fee factors, such as the impact of contamination and overages. There are strategies to address these, and often, these strategies can be realized by coordinating with a portfolio-level service provider. While it is true, there are franchise markets where you may not have the option to select your service provider; you may still be able to have the data collected through a national or portfolio level program.
If your waste provider is talking to you only in terms of price, then you likely do not have sustainability built into your waste program; it is a purchasing exercise. This is the norm for this particular utility, but such an approach reduces opportunities to divert waste and expense. It seems counterintuitive initially, but just like energy and water, it is always less costly to not waste in the first place instead of paying for service you do not need. Optimization requires a holistic view of the waste stream, beginning with surprise - “what is normal.” What is currently being actually used, and of that waste stream does all of it have to go to landfill. The key is reducing trips to your property, the right size container, serviced the right number of times.
The right size container means only things that need to be in the container are in it, and the container is sized to match the frequency of service. If there are items that can provide value to someone else to be reused or recycled, you are not capturing that value if it goes to a landfill. This means recycling and reuse strategies can divert items from the dumpster resulting in a smaller dumpster or fewer times it needs to be picked up. There is real value in only servicing the container when it is full with the fewest number of pickups.
As I said earlier, trash is more nuanced in that there are layers of optimization opportunities, and those are very dependent on the resources available at the local level. No different from having turnkey energy and water partners to help provide insight into each market helps understand what is required in each market and what optimization opportunities are available; the same is true of turnkey waste providers.
This means in addition to asking for a price; you need to be asking a few more questions:
How does the provider track your trash, recycling, and, if available composting? Do they benchmark it - and if so, how? What insights do they provide, and how are those insights delivered?
Does the provider roll up services into one platform and provide portfolio-level reviews, or do you have different levels and platforms in different markets?
What is the provider’s view of optimization? This speaks to their motivation, are they incentivized to reduce your landfill waste, or do they realize their biggest income opportunity by increasing your landfill waste?
Does the provider advise you of optimization opportunities? If so, how? If it is only at bid time, they are not watching it while under contract. Unless you have in-house resources to identify opportunities, the provider should be a resource to help you understand what can be done, where it can be done, and the resulting reduction in impact if done. They should also be able to execute it; what are their resources like to actually optimize?
Beware of providers whose initial strategy is to rebid everything. It is not a bad thing to get competitive pricing, but you have to ask what are you losing? Service? Responsiveness? How are they making up the price decrease - fines? The initial step should understand what you use and if that is optimized fully? Simply beating up someone over price doesn’t create diversion and may actually work against increasing diversion.
How is data reported to me? Does the provider import directly into ENERGY STAR Portfolio Manager? Do they even know what ENERGY STAR Portfolio Manager is and that it can be used to track waste?
Have they ever done a waste audit? A big sign if they only negotiate on price is a lack of optimization ability.
How is technology being used and plan to be used to improve insight?
Once again, size matters. Some brokers are one-person operations, who literally work from their home and have never visited a property, who focus exclusively on price and calling haulers to see who can get the lowest price. This is not creating diversion; this is not optimizing; this accepts the inefficiency in your process and simply sees who is willing to service it as is, at the lowest cost. That lowest cost typically comes with some consequences. That may mean when service is missed, you are missed - your dumpster overflows, and because there aren’t margins to make an extra run, your just dealing with the consequences. It also most certainly means there will be no effort to reduce landfill waste and the costs of landfill waste.
Choose your dance partner wisely. To truly make an impact, these need to be relationships in which your provider tries to understand and meet your goals. If that is waste, water, or energy, it needs to be a win-win-win relationship in which investors realize the performance they expect, residents realize the experience they expect, and employees realize the service they expect.
So why is all of this benchmarking insight important?
Has your organization made commitments to reduce your energy, water, waste, or carbon? Do you have external stakeholders or internal stakeholders interested in your responsible management of expenses and resources? Are your residents asking about their impact and want to align those interests with where they live? Do you have properties located in jurisdictions with building performance energy use requirements?
If the answer to any of these questions is yes, then understanding how you will effectively satisfy those questions relies on your ability to identify where waste is occurring and eliminate it. The result is reduced operational expense, reduced environmental impact, and the ability to report back that you met those reduction goals.
Without a data-driven approach, your ability to meet those goals relies on luck. Hoping you hit the right property with the right measure. You may get it right once in a while, but you may also miss the best opportunities to make a real impact. To find the biggest bang for the buck, you need to know that your decision is based on knowledge.
You can help reduce the impact of the built environment by sharing this blog with your peers. Together we can impact the 39% of greenhouse gasses attributed to the built environment. It starts with awareness, and we succeed with teamwork.
Stay well!
Chris Laughman is the ThirtyNine Blog author, a blog dedicated to reducing the built environment's impact. When not blogging, Chris is helping multifamily properties reduce their energy and water impact. This is done by using data as a foundation to recognize risks and opportunities. Innovation is leveraged along with experience to ignite solutions that have real impacts. Performance is then tracked to ensure the trendline stays laser-focused on the goal. To get there, we must build relationships within our organizations and outside of our organizations to build the critical mass needed to truly make a difference. We have before us a tremendous opportunity. Standing shoulder to shoulder, we will get this done.