One of the biggest obstacles to the uptake of low carbon is the production of a poor business case. The Dragons’ Den scenario holds up in that, unless the business case stacks up and can survive close scrutiny, the idea will be thrown out, no matter how good it is, explained Andy Lewry.

As with the Dragons’ Den programmes, excellent presentational skills are needed to capture the audience immediately, get a strong concise message over initially, and then have background facts strong enough to withstand intense scrutiny.

THE IMPORTANCE OF THE BUSINESS CASE

There are a number of key reasons to reduce energy costs:

•               to save costs;

•               to comply with legislation;

•               to manage risk.

In addressing risk to the business, first consider the ‘do nothing’ scenario, but, in a world of increasing energy prices and security of supply issues, this is not a realistic option. Increased prices can have a dramatic effect on the cost base of organisations, leading to reduced competitiveness and a need for a drive for greater efficiency. Security of supply issues requires the protection of essential services, for example, installing on-site generation for computer servers to prevent the potential loss of data. To mitigate these risks, organisations now need to understand how they use their energy, manage it and then invest in its reduction.

GETTING THE FACTS RIGHT

When managing energy one has to overcome the false perception that it is a fixed cost to business and can be reduced only by tariff negotiation. Considering energy as a variable and controllable cost to a business provides the opportunity to discover the size of the potential savings.

The energy budget has four main component variables each of which is manageable. Transparency of these components is essential as it allows decision makers to make informed decisions.

The first step in producing a business case is to “baseline” your organisation and the following aspects should be investigated:

•       Energy management – is there a system?

•       Monitoring and Targeting (M&T) – if the underlying data cannot be trusted, nor will the business case.

•       Energy audits – these address “energy wastage” and “what can be done about it”.

•       The Green Deal Tool – can provide a snapshot of a building’s quality and how well it is operated; it then produces a report that reflects the potential savings and the measures needed to realise them.

•       Other factors – timing, marginal costs, reduced maintenance and increased productivity.

PRODUCING THE BUSINESS CASE

In producing the business case the technical staff must understand their financial counterparts and take into account the following:

•               Management risk

•               The “do nothing” scenario – what are the consequences?

•               Financial metrics –which ones are used

•      Know the rules of the game – What type of projects are acceptable to the organisation? And How are projects assessed?

•               KISS – Keep It Short and Simple – limit the proposal and business case to one page of A4

•               What are the benefits and quantify them

•               Present options including the do nothing scenario –have more than one!

THE PITCH

Good presentation skills are essential because in general you have a minute to make a sale and three minutes for an effective pitch, so do the following:

•               Simple messaging

•               Know the audience

•               Pick the appropriate media

•               Make it sharp and to the point

•               Remember the “punch line”

•               Success stories

•               Know your stuff

In conclusion

Like Dragons Den you:

  • get only one chance;
  • you must talk their language;
  • use their currency;
  • produce a transparent case that stacks up including a “do-nothing” scenario;
  • be ready to answer questions on the spot – do your homework!
  • have more than one option with reasons for the preferred option.  

Dr Andy Lewry is a principal consultant at the Building Research Establishment and author of its new guide, “Producing the business case for investment in energy efficiency” on which this article is based. The full publication is available from http://www.brebookshop.com/details.jsp?id=327507 quoting reference IP2/15 and code “PerfGap” for a 20% discount.