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Achieving near Zero and Positive Energy Settlements in Europe using

Advanced Energy Technology H2020 - 678407

D8.2 ANALYSIS OF THE BUSINESS

CASE FOR THE APPLICATION OF THE

TECHNOLOGIES AND PROCESSES

DEVELOPED IN THE PROJECT

Authors: Luciano Pana Tronca, Morna Isaac (E Co.)

Contributing authors: Marion Denantes, Grant Ballard-Tremeer (E Co.)

D 8.2 Analysis of the business case for the application of the technologies and processes developed in the project.

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Deliverable nature: Report

Dissemination level: Public

Contractual delivery date: May 2017

Delivery date: June 2017

Version: 1.1

Number of pages: 110

Keywords: Business case, NZEB, attractiveness and achievability

Lead beneficiary 12 - ECO

Participating beneficiaries: 1 – UoA 2 – TUM 3 – BGU

4 – UNIPG 5 – OBU 6 – CYI 7 – TUC 8 – ABB

9 – ANERDGY 10 – FIBRAN 11 – ARCA 12 – ECO

13 – OPAC38 14 – VASSILIOU 15 – CONTEDIL

16 - JRHT


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History of changes

Version Date Change Page

1.0 19.05.2017

1.1 14.06.2017 Formatting and layout changes All


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Executive Summary

This report is the deliverable of Task 8.2 of the ZERO-PLUS Project, titled “Analysis of the

business case for the application of the technologies and processes developed in the project”.

The aim of Work Package 8 is to contribute to accelerating the take-up of Near Zero Energy

Buildings (NZEBs) and their systems in the market by developing a model for business growth.

The business case analysis in the present report is the second stage of support to companies

planning to exploit the project’s outputs to expand their participation in this market, following

the first stage in which a market analysis was performed.

In this report a business case is developed following the steps shown in the figure below:

The outcome of this analysis is a comparison of costs, benefits, risks and deliverability of

selected options.

A business case for a settlement that meets the three ZERO-PLUS performance criteria of

reduced energy consumption, increase in renewable energy production and reduced initial

cost was developed. These criteria are achieved through the use of the ZERO-PLUS

approach, which employs an integrated and iterative design process as shown in the following

figure:

http://www.zero-plus.org/pdf/ZERO%20PLUS_D8.1.pdf


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A number of options for the business case were initially identified and a preliminary

assessment made of the chief characteristics of these options. Based on an estimate of the fit

of each option with the nature of the ZERO-PLUS project, the case for change and the

strategic landscape, four options were selected for further analysis:

Option Name

Description Selected for further analysis

Research unit on energy efficiency in settlements

Involving researchers from the areas of architecture, engineering and environmental design, this unit would investigate how to improve construction processes and how to overcome barriers resulting from the fragmentation of the construction value chain. The unit would focus on applied research with the intention of generating results that could be used to create improved policies relating to sustainable construction.

Settlement Efficiency Standard

This standard could look specifically at settlement level integration of energy production and use. Over time it could evolve into a more comprehensive standard, including other sustainability features.

Joint Venture

To form an independent company between some or all of the members of the consortium, to provide services for different stages in the construction process. It can be one single organisation with different services or various agreements with smaller organisations with specified niche markets.

European Innovation

To develop an organisation that supports innovation in the construction industry by lobbying and networking between


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Option Name

Description Selected for further analysis

Agency for Construction

companies in the sector. The Agency could have as one of its aims to facilitate funding for innovation by SMEs. An example of a similar agency is Innovate UK.

ZERO-PLUS Forum or Fair

A space where supply and demand for innovative technology for the construction of settlements meet, similar to existing events of this nature.

Settlement Passport

Similar to a building passport but distinct from a certificate of sustainable performance of a building such as LEED or BREEAM certificates). Such a passport would facilitate communication between owner, investor, maintenance professionals and tenants.

ZERO-PLUS Contract Template

Develop a contract template for construction developers that can resolve the split incentives problem by engaging the buyer or tenant in a long term obligation to pay for energy efficiency measures.

ZERO-PLUS Toolkit

Create a ZERO-PLUS Toolkit for developers that want to achieve the three ZERO-PLUS objectives in a construction project.

In the option analysis we looked at the benefits, costs, risks and deliverability (implementation

time) of each of the four selected options. The results of this analysis are summarized in the

following figure, in which for each of the four aspects analysed a greater distance from the

center means a more desirable result. The figure illustrates that while the benefits of the

Settlement Efficiency Standard are potentially the greatest, overall the toolkit comes out best.


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Benefits (farther fromcenter - higher benefits)

Costs (farther from center- lower costs)

Risks (farther from center- lower risks)

Deliverability (fartherfrom center - shorter

delivery time)

Settlement Efficiency Standard Joint Venture Settlement Passport Toolkit


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Table of Contents

EXECUTIVE SUMMARY ............................................................................................................ 5

TABLE OF CONTENTS ............................................................................................................ 9

LIST OF FIGURES................................................................................................................... 12

LIST OF TABLES .................................................................................................................... 13

LIST OF ACRONYMS .............................................................................................................. 14

1. INTRODUCTION .................................................................................................................. 15

2. METHODOLOGY FOR THE BUSINESS CASE IN THE ZERO-PLUS PROJECT ............................. 17

2.1 Definition and purpose of a business case ......................................................................................... 17

2.2 Steps in the development of a business case ..................................................................................... 19

2.2.1 Task definition ...................................................................................................................................... 20

2.2.2 Options identification .......................................................................................................................... 25

2.2.3 Options analysis ................................................................................................................................... 25

3. TASK DEFINITION: THE NATURE OF THE PROJECT .............................................................. 27

3.1 The ZERO-PLUS concept ..................................................................................................................... 27

3.2 ZERO-PLUS and the design and construction process ......................................................................... 34

3.3 Key Performance Indicators ............................................................................................................... 37

3.3.1 KPIs for the construction sector: project level. .................................................................................... 37

3.3.2 KPIs for the construction sector: company level ................................................................................. 39

3.3.3 KPIs for the construction sector: environmental impact ..................................................................... 40

3.3.4 KPIs assessing innovation ..................................................................................................................... 40

3.3.5 KPIs for procurement activities ............................................................................................................ 41

3.3.6 Example of KPI matrix in a Sustainable Building Standard................................................................... 42

3.4 Business cases developed in other EU Research Projects ................................................................... 42


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4. TASK DEFINITION: BUILDING THE CASE FOR CHANGE ........................................................ 44

4.1 Barriers and suggested approaches to remove them ......................................................................... 44

4.2 Drivers, Benefits and Constraints ....................................................................................................... 45

4.2.1 Drivers .................................................................................................................................................. 45

4.2.2 Benefits ................................................................................................................................................ 46

4.2.3 Constraints ........................................................................................................................................... 50

5. TASK DEFINITION: STRATEGIC LANDSCAPE OF ZERO-PLUS ................................................. 54

5.1 Stakeholder analysis .......................................................................................................................... 54

5.2 Competitors ....................................................................................................................................... 62

6. DEVELOPING THE BUSINESS CASE: OPTION IDENTIFICATION ............................................. 65

7. DEVELOPING THE BUSINESS CASE: OPTION ANALYSIS........................................................ 71

7.1 Benefits ............................................................................................................................................. 71

7.2 Costs .................................................................................................................................................. 75

7.2.1 Methodology and prior considerations ............................................................................................... 75

7.2.2 Conclusion of the cost analysis ............................................................................................................ 80

7.3 Risks .................................................................................................................................................. 80

7.3.1 Risk Profiles .......................................................................................................................................... 82

7.3.2 Conclusion ............................................................................................................................................ 84

7.4 Deliverability ..................................................................................................................................... 84

7.4.1 Implementation plan profiles .............................................................................................................. 87

8. OPTION ANALYSIS: ATTRACTIVENESS AND ACHIEVABILITY ................................................. 89

8.1 Attractiveness and Achievability Indexes ........................................................................................... 90

8.2 Attractiveness .................................................................................................................................... 91

8.3 Achievability ...................................................................................................................................... 92

9. CONCLUSION: COMPARISON OF THE OPTIONS .................................................................. 93


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10. REFERENCES ................................................................................................................... 95

ANNEX I EU HORIZON 2020 PROJECTS ............................................................................ 96

IDEAS ............................................................................................................................................................ 96

INTREPID ...................................................................................................................................................... 97

ORIGIN .......................................................................................................................................................... 99

ANNEX II SURVEY ................................................................................................................ 102

ANNEX III RISK TABLES ...................................................................................................... 106


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List of figures

Figure 1 Methodological approach for the development of a Business Case. Source: (Gambles,

2009). .................................................................................................................................................... 19

Figure 2 Attractiveness-Achievability chart. (Source: Gambles, 2009). ............................................... 26

Figure 3 Strategies and goals of the ZERO-PLUS project. .................................................................. 29

Figure 4 A conventional design and construction process. .................................................................. 32

Figure 5 ZERO-PLUS approach to construction. .................................................................................. 33

Figure 6 Key project stages. Source: (Constructing Excellence). ......................................................... 39

Figure 7 Top 6 Benefits for Technology Providers according to the survey responses. ...................... 47

Figure 8 Top 6 Benefits for Case Study Partners according to the survey responses. ........................ 47

Figure 9 Top 6 Benefits for Research Institutions according to the survey responses......................... 48

Figure 10 Average, maximum and minimum rating for the importance of benefits according to the

survey responses. ................................................................................................................................. 49

Figure 11 Top 5 Constraints for Case Study Partners. ......................................................................... 51

Figure 12 Top 5 Constraints for Research Institutions. ........................................................................ 51

Figure 13 Top 5 Constraints for Technology Providers. ....................................................................... 52

Figure 14 Average, maximum and minimum rating for the importance of constraints according to the

survey responses .................................................................................................................................. 53

Figure 15 Stakeholders importance/influence diagram ........................................................................ 62

Figure 16 Outputs and benefits Map ..................................................................................................... 73

Figure 17 Implementation timetable ...................................................................................................... 87

Figure 18 Option Analysis summary ..................................................................................................... 90

Figure 19 Attractiveness of the options for the Zero Plus BC. .............................................................. 91

Figure 20 Achievability graph ................................................................................................................ 92

Figure 21 Achievability & Attractiveness Graph. ................................................................................... 93


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List of tables

Table 1 The difference between a business case and a business plan (source: Gambles, 2009). ..... 17

Table 2 Comparative stages in the construction process. .................................................................... 34

Table 3 Barriers identified by ZERO-PLUS partners to the construction of NZEBs and NZESs and

suggested approaches to mitigate these barriers. ................................................................................ 44

Table 4 Strategic landscape. ................................................................................................................ 54

Table 5 Four Suggested options for the business case ........................................................................ 66

Table 6 Benefits and Outputs weighting ............................................................................................... 74

Table 7 Outputs score ........................................................................................................................... 74

Table 8 Option scoring .......................................................................................................................... 75

Table 9 Cost analysis of the selected options....................................................................................... 78

Table 10 Risks areas. Source: (Gambles, 2009) .................................................................................. 80

Table 11 Option analysis summary ....................................................................................................... 89

Table 12 Risk analysis for the Toolkit ................................................................................................. 106

Table 13 Risk analysis for the Settlement Efficiency Standard .......................................................... 107

Table 14 Risk analysis for the Settlement Passport ........................................................................... 108

Table 15 Risk analysis for the Joint Venture ....................................................................................... 109


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List of acronyms

NZEB Near Zero Energy Building

NZES Net Zero Energy Settlement BC Business Case BP Business Plan EU European Union A&A Attractiveness and Achievability KPI Key Performance Indicator AU Available to Use CI Commit to Invest AC Actual Cost TCI Total Cost at Commit to Invest DCC Duration of Design at Commit to Construct DCI Planned Time for Design at Commit to Invest CAU Construction time at Available to Use CCC Expected Construction time at Commit to Construct CO2 Carbon IEC Integrated Energy Contract ROI Return On Investment EPNSP Energy Positive Neighbourhood Service Provider HAN Home Area Network IoT Internet of Things


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1. Introduction

The present report is the output of a project Task on the “Analysis of the business case for the

application of the technologies and processes developed in the project”.

First, we define the methodology for the business case. This includes the definition and

purpose of a business case and the differentiation between the concepts of business case

and business model. Then, we define the steps the business case follows. In the current

business case, E Co. acts as the business case author, while the ZERO-PLUS consortium is

the business case owner.

The following 3 chapters discuss the task definition, starting with a general analysis of the

context and ending with the identification of options for the business case.

In Chapter 3 “Task Definition: The Nature of The Project”, we describe the ZERO-PLUS

concept, as a value proposition for end-users of the technologies and processes to be

developed. We explain the reason for the business case. We also compare the ZERO-PLUS

approach in construction to the traditional construction stages, which can be considered state

of the art for the construction of a settlement. To further develop the understanding of the

nature of the project, we analyse 3 Horizon 2020 Projects’ business cases, as well as key

performance indicators for construction management, innovation and procurement in

the construction industry.

In Chapter 4 “Task Definition: Building the Case for Change”, we analyse the need for change

in energy efficiency in the construction sector. For that, we analyse the barriers to market

penetration described in our previous report, D8.1 Market Analysis of Current Trends in the

Construction of Residential Highly Energy Performing Buildings, and propose approaches

to remove them. We also look at drivers for change, the benefits the project wants to achieve

and the constraints this business case faces. This chapter includes the results from a survey

distributed among the project participants.

In the next chapter, we conclude the Task Definition series with the “Strategic Landscape of

ZERO-PLUS”. This chapter contains a stakeholders’ analysis of the project participants and

other actors in the construction industry. This chapter also includes the outcomes from a

workshop in which the project partners identified the main technologies and processes

used by competitors.


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In Chapter 6 we identify eight business case options for the ZERO-PLUS concept and describe

them. Based on the task definition information, we then select four options for a more

comprehensive analysis.

The option analysis in Chapter 7 is based on the benefits, costs, risks and deliverability of

each option. The analysis is based on five benefits that the ZERO-PLUS business case could

achieve. The cost assessment includes a general overview of the main costs that each option

would incur for its implementation. We identify risk areas and develop risk profiles for each

option, as well as risk mitigation actions to bring the risk scores down. For deliverability, we

choose nine business development activities for each option and estimate the time in

semesters required for these activities until 2022.

In the final chapter, we discuss the analysis in terms of attractiveness (benefits/costs) and

achievability (risk/deliverability), and give alternatives and recommendations to support the

business case owner in choosing an option for the exploitation of the ZERO-PLUS project.


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2. Methodology for the Business Case in the ZERO-PLUS project

2.1 Definition and purpose of a business case

A business case (BC) is a document that is intended to enable and convince a decision maker

to make the right decision. The BC analyses the different opportunities and choices, and the

benefits, costs and risks of an action compared to realistic alternatives, and explains how the

option can best be implemented (Gambles, 2009).

The outcomes of the BC will be a comparative analysis of costs, benefits, and risks of the

different options and the formulation of a recommendation for the decision maker to approve

a specific action for an organisation.

The decision makers are the ultimate owners of the choice between the alternatives provided

by the BC authors.

In contrast to the BC, a business plan (BP) is related to the objectives of the organisation. It is

based on the business model and uses a structure that was determined in prior decisions.

Table 1 summarizes the difference between BC and BP.

Table 1 The difference between a business case and a business plan (source: Gambles, 2009).

A Business Case... A Business Plan...

Is organized

around...

A single action or single decision

and its alternatives.

An organization or the whole enterprise.

The plan may cover a single product or

product line or the whole organization.

Predicts... Cash flow results and important

non-financial impacts that follow

from the action.

Business performance of the

organization, especially in the main

categories of the income statement.

May include projected pro-forma income

statements or balance sheets for future

years.

Focuses on... Business objectives for the action. Business objectives for the

organization.


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A Business Case... A Business Plan...

Is based on ... A cost model and a benefits

rationale, designed for the case and

applied to one or more action

scenarios.

The business model for the

organization (showing where and how

the company makes money, similar to

income statement), as well as expected

trends, competitor actions, etc.

Measures... Financial metrics such as Return on

Investment, or payback period,

based on projected cash flow. Also,

includes important non-financial

impacts.

Business performance in terms such as

sales, margins, profits, and business

"health" by contributions to important

balance sheet categories

In a non-profit or

government

organization...

The scope of the case may include

benefits and costs to the population

served as well as the organization

itself.

May focus on funding needs, budgetary

requirements, and ability to operate

within a budget.

As stated above, the main purpose of the BC is to choose an option from the ones identified.

This option is the course of action to be taken and converted into a project. The BC should:

Enable the right decision based on a comparative analysis of costs, benefits, and risks

of the choices.

Meet compliance requirements (external such as EU regulations or internal such as

governance processes of the organisation)

Identify funding and recommend funds to commit to the recommended option.

Identify and engage with stakeholders to understand their perspectives.

Include an outline implementation plan as well as a risk map.


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Figure 1 Methodological approach for the development of a Business Case. Source: (Gambles, 2009).

2.2 Steps in the development of a business case

In this section, we present a methodology that can be used to develop a BC. As illustrated in

Figure 1, this methodology has four main steps:

1. Task definition: answers the question of what the project aims for.

2. Option identification: several options will be outlined and briefly explained, after

analysing the drivers and barriers of the project.

3. Option analysis: out of the options identified, a few will be selected and analysed in

more depth.

4. Recommendation: the final goal is to recommend the option which would fit best with

the nature of the project and the outcomes the stakeholders are expecting. This is

based on the goals, drivers, barriers and variables taken into account in the

development of the BC.


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2.2.1 Task definition

As seen in Figure 1, the first step for developing a BC is to define the task and answer the

question: what is the BC for?

The task definition includes:

A. The definition of the nature of the project, in our case the ZERO-PLUS project: refers to the question of what the project is about. Based on the characteristics of the project we can infer the needs that need to be solved by the BC.

B. Building the case for change: analysis of drivers and constraints of the project that would limit the availability of the options. The question to be answered is: why should the project be done?

C. The strategic landscape: relates to the context in which the project exists. Who are the stakeholders and how can their drivers for cooperation influence the outcome of the BC?

In the following pages, we describe this methodology in more detail and discuss how we can

apply it to the development of a BC for the exploitation of the technologies and processes

developed in the ZERO-PLUS project.

A. Task definition: The definition of the nature of the ZERO-PLUS project

The ZERO-PLUS project can be defined as a research project that includes a demonstration

of the construction of buildings in different case studies. The project is complex, with a variety

of stakeholders with different objectives. The business case for ZERO-PLUS involves a

settlement that meets the three ZERO-PLUS performance criteria: reduced energy

consumption, increase in renewable energy production and reduced initial cost.

Previous EU-funded projects in related areas (IDEAS, Intrepid and ORIGIN; descriptions

found in Annex I of this document) focused on value creation at a particular point in the

process. In contrast to this, ZERO-PLUS considers the entire construction process and all

aspects where value is created. Therefore, ZERO-PLUS tries to integrate construction, which

will ultimately impact particular markets and products. ZERO-PLUS is not only about the

construction of a settlement, it's about how the construction of a net zero energy settlement

will satisfy the needs of the stakeholders.

Section 3 of this report describes the nature of the project for ZERO-PLUS in detail.


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B. Task definition: Building the case for change

The aim of this phase is to analyse the drivers, constraints and barriers. Drivers are factors

that cause a particular phenomenon to happen or develop (Oxford Dictonaries, 2017). The

drivers are important as they will, later on, be used to understand the benefits the project wants

to achieve. The drivers will be closely related to the barriers identified and the approaches to

mitigate those barriers.

It is also important to analyze the constraints, which are “factors which limit the range of viable

options which can be put forward in the business case” (Gambles, 2009). The constraints will

provide the boundaries of the viable options.

The following is a categorisation of typical constraints faced by businesses:

The size of the market. The extent of the market determines a businesses’ ability to

make sales. You can't make sales if there are no customers out there.

The nature of demand in the market. It is important to identify the nature of your

customers and their requirements through detailed market research.

The availability of supply. A business often depends on supplies. For example, clothes

retailing business needs to acquire garments, in the appropriate quantities, prices and

at the right times.

The nature of the competition. The strength of the competition is a key constraint to

business success. Businesses need to position themselves in such a way as to limit

the effect of the competition.

The availability of finance. Businesses need to have the right quantities of finance at

the right times to match their needs. Liquidity and cash flow are thus very important.

The quality and skills of employees. The human resource is one of the most important

resources of any organisation. It is essential to have the right number of people with

the appropriate skills to enable the business to achieve its business objectives.

The quality of direction and management. Directors and managers of a business need

to have the right skills and abilities e.g. to create well-structured plans, and to motivate

and lead other members of the organisation.” (Business Case Studies, 2017).


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Marketplace constraint. A company may have worked through all of its constraint

issues, in which case obtaining more orders from the market is considered the

constraint.

Paradigm constraint. When employees hold a belief that causes them to act in a certain

way, this is called a paradigm constraint, and can impact a process to such an extent

that the belief is considered a constraint.

Physical constraint. A machine that has a large amount of work-in-process in queue in

front of it is obviously maxed out, and so could be a constraint.

Policy constraint. This is a management-imposed guideline for how a process is to be

conducted. For example, there may be a rule regarding the economic order quantity to

be ordered from a supplier. Unless carefully monitored, these policy constraints can

interfere with the orderly flow of work through a business. Policy constraints are difficult

to find, since you must track backwards to them by observing their effects on the

business. It may be equally difficult to eliminate such a constraint, since it may have

been used by employees for many years (Accounting tools, 2017)”.

The case for change identified in ZERO-PLUS is presented in Section 4.

C. Task definition: Strategic landscape

To identify the options that will be acceptable for the decision makers it is important to

understand the context of prior decisions and competing stakeholder interests at the task-

definition stage.

This step of the task definition needs to answer the following questions:

Who are the stakeholders? And what are the benefits they want to achieve? What are

the constraints?

What are the strategies of the stakeholders? This can be mapped through the KPIs of

the project, to understand how the decision-making process is done.

Who is ordering the BC?


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Who will make the final decision on the action to be taken?

Once the task definition stage is completed, we can assess whether stakeholders have the

power to decide on and commit to an action that will bring the expected benefits. No BC can

be developed for stakeholders that don’t have the right to make the decisions and the power

to commit to an action.

Stakeholder analysis

Stakeholders can be defined as “individuals or organisations that are affected by a project or

that have an effect on a project” (Ballard-Tremeer, 2016) or “individuals, groups of people,

institutions or firms that may have a significant interest in the success or failure or a project”

(European Commission, 2004). Stakeholders’ influence over a project can be positive or

negative, and may be direct or indirect. The basic assumption behind stakeholder analysis is

that different actors have different interests. Different stakeholder interests need to be

understood and recognised to obtain a better problem identification, clear objectives and

proper strategies to address them.

Stakeholder analysis involves identifying stakeholders and then exploring how we should and

can work with them. For example, in ZERO-PLUS, the case study partners might want to

reduce construction costs and improve energy efficiency, thus allowing them to reduce costs

for customers while increasing sales. For technology innovators, the research project will

allow the technology to complete the readiness level scale, as well as providing a case to

show to potential buyers. Then, innovators can start marketing their products. For universities,

research is related to their core competence of creating applied knowledge. For the European

Commission, who provided the funds for the project, ZERO-PLUS will contribute to compliance

with its own policies on innovation and energy efficiency in construction.

In a stakeholder analysis, the following information should be collected about each

stakeholder:

Name

Association with the project:

o Internal: people and departments within the organisation, in this case the ZERO-

PLUS partners There is interdependence between the work these partners do.


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o External: people and organisations outside our organisation or project. They

may be customers, clients, suppliers and other key individuals or organisations

who take an interest in or are affected by ZERO-PLUS (Rawlins, 2006).

Type:

o Public: Organisations or actors that come from the public sector. They provide

public services or goods.

o Private: organisations or actors that operate with a profit framework or market

oriented.

o Public-Private: organisations that have both types of actors or mixed objectives.

Interests and how is the stakeholder affected by the problem the project wants to

address

Capacity and motivation of the stakeholder to bring about change

Possible actions to address the interests of this stakeholder

Influence/Importance:

o Influence: the power that stakeholders have over a project - to control what

decisions are made, facilitate implementation, or exert influence that affects the

project positively or negatively. It is the extent to which the stakeholder is able

to persuade or coerce others into making decisions, and following a certain

course of action.

o Importance: the extent to which stakeholder's needs and interest will be

influenced by the planned project. In other words, this is about how important

or essential is it that certain stakeholders are involved. Stakeholders may be

important because their involvement will lead to successful outcomes, or

stakeholders may be important because their involvement may lead to failure

(Ballard-Tremeer, 2016).

Section 5 of this report describes the strategic landscape for the ZERO-PLUS project in detail.


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2.2.2 Options identification

A major part of the business case is to identify the options for the business case and compare

them, in order to provide the information needed by the business case owner to make a

decision.

The following questions provide a framework within which possible options can be identified

and compared:

What: within the agreed framework or task definition, are there different options for

what the project is going to deliver?

Where: Is location one of the constraints or are there options?

Who: Who is going to deliver the project or the service?

How: How should the objectives be achieved?

A review of the initial list of options identified is conducted in order to choose a limited number

of options for which a fuller analysis will be conducted in preparation for the final choice of an

option with which to proceed.

The options identified for the ZERO-PLUS business case are presented in Section 6 of this

report.

2.2.3 Options analysis

Once a shortlist of the most promising options has been selected, their attractiveness (benefits

vs. cost) and their achievability (deliverability vs. risk) is analysed:

Attractiveness:

o Benefits: the positive outcomes that decision makers want. They are related to the case for change and the drivers.

o Costs: To identify the cost look at costs, savings and revenue streams: IT, staff, procurement, estate, project management, training, and contingency. Also relevant are tax, inflation, overseas transactions, and overheads.

Achievability:

o Deliverability: Includes a timeline for decision makers to know when the project will deliver and benefits be realised.


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o Risks: In this context, the purpose of assessing risks is not to manage them, but to factor them into the assessment of achievability. Risks are related to each option, and not to the benefits.

The result of this analysis can then be presented in a diagram (see Figure 2).

Figure 2 Attractiveness-Achievability chart. (Source: Gambles, 2009).

Options are placed on the chart by measuring attractiveness on the y-axis and their

achievability on the x-axis to give each option a unique set of coordinates. In the example from

Figure 2, option A was seen as the most attractive, while option D was seen as more

achievable. Options B and C would be discarded as they are below the attractiveness-

achievability frontier, which means neither of those reach the maximum level of efficiency, or

at least the levels options A and D have.

The attractiveness-achievability frontier is an efficiency frontier, which means that there is a

set of optimal portfolios that offers the highest expected return for a defined level of risk, or

the lowest risk for a given level of expected return (Investopedia, 2017). Options with high

benefits and lower costs will be higher in the chart, while options with quicker implementation

plans and lower risks will be on the right.

The option analysis for the ZERO-PLUS business case is presented in Section 7 of this report.


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3. Task definition: the nature of the project

ZERO-PLUS is part of an age of innovation in the construction industry, which is being driven

by the need to reduce energy consumption and emissions, and the resulting changes in public

policy.

The ZERO-PLUS concept is a design and construction management approach for the

construction of Net Zero Energy Settlements.

3.1 The ZERO-PLUS concept

The principle: the ZERO-PLUS concept uses collaboration between stakeholders to work at

the settlement level.

ZERO-PLUS is a collaborative approach to the design and construction of settlements,

involving technology suppliers, energy efficiency and renewable energy experts and

developers who work together from the earliest stages of project conception. The benefits of

settlement level planning of energy use that involves all stakeholders can include a higher

potential for renewable energy production, a reduction in energy consumption and cost

reduction of the measures required to achieve this. Achievement of these goals is ensured by

consistent collaboration between stakeholders, from the planning stage through to use of the

buildings.

The benefits of the analysis at the settlement level arise not only from the larger scale

compared to single buildings, but also, importantly, from looking at a system of houses with

their interactions. This means, for instance, cost reduction through the deployment of

renewable energy technologies at the settlement level instead of individually in each building.

The ZERO-PLUS approach means more opportunities in planning the entire settlement to

achieve energy saving goals. For example, to improve the microclimate and use systems such

as smart street lighting is only the start. The concept can expand to aspects such as efficient

water systems, electric mobility, etc.

Performance goals

The ZERO-PLUS concept includes three main performance goals:


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1. Operational energy usage in residential buildings in a ZERO-PLUS settlement is reduced

to an average of 0-20 kWh/m2 per year, compared with the current average of 70-230 kWh/m2

energy per year.

2. The settlement generates a minimum of 50 kWh/m2 of renewable energy per year. This is

possible through the integration in the settlement of innovative energy production

technologies.

3. The cost of NZE settlements is reduced by at least 16%, compared with current costs.

Strategies

The ZERO-PLUS concept covers the whole life of the settlement, from the design-planning

interface to the monitoring of performance, and is intended to accommodate continuous

improvement of the technologies and processes that reduce energy use, generate renewable

energy and reduce costs. As illustrated in Figure 3, the ZERO-PLUS concept uses three

strategies to achieve the performance goals:

Increasing the efficiency of the components that provide energy conservation and

energy generation in the settlement: Innovative technologies are developed and

applied to increase the efficiency of components providing energy conservation and

energy production in the NZE buildings and districts. This reduces costs, by allowing,

for example, less material and space to be used for these purposes.

Reducing the "balance of system" costs through efficient production and installation

processes: These costs encompass all the components other than those directly

providing energy conservation and generation, such as components for the storage,

distribution and management of the energy.

Reducing operational costs through better management of the loads and resources,

made possible by operating at a district scale rather than at the scale of a single

building. Operational costs are reduced through the optimal management of dynamic

energy loads and resources at the building and district level. This is done by using

innovative energy management technologies for the entire settlement.


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Figure 3 Strategies and goals of the ZERO-PLUS project.

Implementation

ZERO-PLUS settlements exceed the state of the art by setting performance objectives

requiring improvement relative to other energy efficient buildings. During the design of the

settlement, the energy production and the energy use for heating, cooling and lighting

(regulated energy) are estimated using advanced simulation techniques. The information from

the simulation results is used to optimize the technological innovations that are integrated in

the settlements.

The main components of the ZERO-PLUS approach can be summarized as follows:

1. Initial integrated design: Energy and initial cost analysis contribute to integrated design

of the settlement. A comparison of initial costs of the technologies used in the ZERO-

PLUS settlements with that of a reference building with the same energy and

environmental performance determines that the initial cost of the ZERO-PLUS building

is lower1.

2. Integrated optimization:

1 The cost reduction is calculated in comparison to a Zero Energy Reference building that has the

same energy and environmental performance but does not benefit from: energy reduction from advanced building envelope components; energy reduction from the use of advanced energy management systems; and energy production by settlement RES.


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2.1. Design, optimisation and integration at the building level: the energy and financial

performance of the settlement design is ensured through an iterative optimisation

process. A life-cycle cost analysis (LCCA) is used to determine the life cycle costs

of the innovative energy and environmental systems and techniques used in the

ZERO-PLUS settlement. The technological innovations used are optimised

according to the LCCA and energy requirements.

2.2. Settlement level optimisation: at the settlement level, renewable energy production

technology as well as settlement servicing technology (such as public lighting) is

modelled along with simulations of microclimatic conditions. This also provides

inputs for the design of outdoor common spaces.

3. Construction Management and Cost Control:

3.1. During construction, management and cost control tools are used to verify that

everything is going according to plan. All changes needed in the processes or

technologies deployed at the building or settlement level will be evaluated using

the change management tool, to determine the final savings compared to business

as usual.

3.2. As construction at the settlement level is more complex than the already complex

construction of energy efficient buildings, construction management tools and

processes are used to avoid clashes and delays. The coordination seen in

previous steps including the choice of the technology is monitored centrally to

ensure delivery of the settlement as designed, including the site planning.

4. Building Performance and Monitoring:

4.1. ZERO-PLUS has developed tools and protocols to monitor the performance of the

settlement as regards the targets for energy use.

4.2. Each building and settlement includes sensors to obtain monitoring data to check

on the targets that ZERO-PLUS aims for. The data collected includes: thermal

comfort, visual comfort, and indoor air quality for the building level.

4.3. At the settlement level an integrated resources management system and

dashboard enable verification of the energy demand and production. With this

information in hand, it is possible to control and manage the energy load.


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Impacts

ZERO-PLUS aims to overcome barriers such as the fragmentation of the supply side of

construction by integrating design and delivery of construction and by strengthening key

partnerships.

The expected impacts of the application of the ZERO-PLUS concept are an improved energy

and environmental performance at the building and settlement level, including improved

comfort and a lower financial burden on all the actors involved in the process. It will also

improve innovation capacity and the integration of new knowledge of cutting edge technology.

For specific stakeholder types, the main driver for application of the concept will vary. For a

social housing company, for example, the main driver could be the reduction of the financial

burden for residents while for settlements aimed at higher income brackets the main driver

could be increased comfort.

What would it mean to live in a ZERO-PLUS settlement?

Living in a ZERO-PLUS settlement would mean a more comfortable experience due to the

improvements in insulation and home energy management, with residents having access to

real and useful monitoring information. The ZERO-PLUS approach would benefit the residents

by lowering energy costs, as the buildings will have reduced energy consumption and most of

the energy required for the functioning of the house would be produced either in the building

or in the settlement.

The developer will be in charge of the servicing the system, with no need for the resident to

contact external advisors or consultants. Living in a ZERO-PLUS settlement will contribute to

increased sustainability through reduced energy consumption and CO2 emission reduction.

ZERO-PLUS and the Construction Industry

The ZERO-PLUS approach will help the private sector to comply with national and EU level

legislation, as well as increasing profitability by reducing construction and maintenance costs.

This will ultimately generate employment opportunities in the sector. The homes in this type

of settlements will be easily marketed due to their reduced price and the increased comfort

they will provide to residents.


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Given how risky real estate development is, encouraging innovation in a conservative market

like this is a difficult task. Industry leaders identified resistance to change as one of the main

barriers to innovation in the construction industry (Isaac, Pana Tronca, & Gajsak, 2016). That

is why in the development of the ZERO-PLUS concept emphasis is put on the promotion of a

new way of thinking. We aim to provide the market with strategies that can be employed to

reduce the resistance to change, and make it easier for the construction industry to quickly

adopt technologies and processes that are necessary to increase the energy efficiency of its

products.

ZERO-PLUS and the design and construction process

Table 2 provides an overview of a typical conventional design and construction process and

the main activities required to implement the ZERO-PLUS concept at each stage. To facilitate

creation of the overview, in the table the conventional stages are presented sequentially. In

reality, there can be significant overlap between the stages, for example before finalizing the

feasibility studies, the master planning stage can already begin (as illustrated in Figure 4).

Figure 4 A conventional design and construction process.


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In contrast to the linear conventional process (Figure 4), the ZERO-PLUS approach employs

an integrated and iterative design process (Figure 5). The purpose of this document is to

assess how the ZERO-PLUS approach could be implemented commercially. While containing

iterative elements, such an implementation would have to fit in with established practices in

the construction industry. In order to stimulate thinking about how the ZERO-PLUS approach

could be implemented in a way that is consistent with established practices, we present in the

following Section an overview of which ZERO-PLUS activities need to happen at which stage

in the conventional construction process. Iteration would still be a crucial element of the ZERO-

PLUS approach, since activities such as the design, simulation and optimization of the

technology at the building level would still involve iterations between designers and simulation

expertise. The degree of iteration that is feasible in a commercial implementation is, however,

still to be determined.

Figure 5 ZERO-PLUS approach to construction.


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3.2 ZERO-PLUS and the design and construction process

The following table (Table 2) provides an overview of a conventional design and construction process and

the activities required to implement the ZERO-PLUS concept at each stage.

Table 2 Comparative stages in the construction process.

Stage in design and construction process

Activities in design and construction process

ZERO-PLUS main components and detailed activities

Design: Feasibility Studies

The purpose of feasibility studies is to:

Establish whether the project is viable.

Help identify feasible options.

Assist in the development of other project documentation such as the business case, project execution plan, and strategic brief.

Preparatory activities:

Collection of the necessary data (wind maps and irradiation data) to plan the use of materials and technologies for outdoors such as renewable energy production, energy management, and environmental control to be implemented in common areas of the settlement.

Predict expected performance of technologies for energy management and production.

Customization of monitoring protocols and procedures to control and optimize environmental conditions of projected NZE settlement.

Design: Master Planning

Project masterplans tend to be focused on a specific site with definable boundaries. Masterplanning includes both an analysis process and the preparation of the spatial masterplan document, setting out proposals for buildings, spaces, movement strategy and land use in three dimensions. A complete masterplan is supported by financial, economic and social policy documents and delivery mechanisms (CABE, 2004). Hence, the main activities during masterplanning include:

Determining the size and scope of a development

Determining need for construction, land issues, risk assessment and environmental impact.

Settlement level optimization:

Design of the outdoor commons spaces in order to optimize outdoor local climate conditions in the settlement areas.

Improve the performance of outdoor renewable energy systems and technologies by considering local climate boundary conditions and constraints.

Customization of protocols to measure the actual in situ energy needs, savings and generation through technologies in the settlement common spaces.

Simulation of energy systems at the NZE settlement level.

For any new technologies for which such an analysis has not already been done: perform a comparative analysis of the materials and technologies from a life cycle impact point of view to be implemented in the outdoor environment.

Initial integrated design:

Selection of the combination of technologies to be implemented in the project at the settlement level.


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Approval of the Master Plan by planning authority.

Outline Building Design (1:100) (Concept design)

The concept design represents the design team's initial response to the project brief. During the concept design stage, the consultant team will develop:

The design concept

Outline specifications

Schedules of accommodation

A planning strategy

The cost plan

Procurement options

Programme and phasing strategy

Buildability and construction logistics

Design, optimization and integration:

Design coordination: including interface checking and clash detection

Design, simulate and optimize the technology of the building level: This includes energy producing energy technology and home energy management and control system.

Technical and financial optimization of the integrated design.

Conservative preliminary cost assessment and appropriate budget reserves

Creation of a detailed site plans including the work breakdown structure and a location based schedule.

Quality control and verification of the design.

Design of the monitoring and performance analysis platform.

Development of the performance analysis platform and its implementation for data gathering.

Optional: Perform an environmental assessment of the building based on an international standard (LEED or BREEAM).

Approval of the Outline Building Design

Detailed Building Design (1:50)

Detailed design should provide sufficient information for applications for statutory approval to be made. Detailed design should include:

Correct dimensional design of all building components and how they fit together

Overall layout

Road layouts and landscape

Operational flows and departmental operational policies

Horizontal and vertical circulation routes, including accessibility requirements

Identification of standard and non-standard room layouts

Building dimensions and gridlines

Architectural plans sections and elevations of buildings, parts of buildings and components


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Approval of the Detailed Design

The technical design may continue through the preparation of production information and tender documentation and even during construction itself, particularly where aspects of the technical design are undertaken by specialist subcontractors.

Start of construction2

Construction management:

Monitoring and Verification: Keep track of documentation in order to compare as designed with as built and to evaluate how and why there might be differences.

Selection of the monitoring and verification devices to be installed in the buildings.

The design of the building commissioning plan and implementation to verify the performance of the installed technology

Change management process

Completion Building performance and monitoring:

Co-heating test. In situ U-value measurements. Air-permeability test. Infra-red thermography. To get data to compare for monitoring and verification purposes

For settlements that will be maintained by maintenance companies, once these have been identified, awareness raising of their role in helping to achieve the impacts

Occupancy Collection and analysis of essential background information. Continuous monitoring. Walkthrough evaluation of all elements from systems to controls, to occupant behavior. Analysis.

End-users (residents and maintenance companies) take part in the monitoring and help to achieve the impacts by keeping an eye out for malfunctioning of systems and identifying potential improvements.

Post occupancy evaluation.

2 Construction can start before the detailed design has been completed, but will usually start only afterwards. The first

option is called "concurrent engineering". It has its advantages (such as reduced project duration) but also risks (such as the possible need for rework following later changes in the design). A major difference is that with concurrent engineering you will not have a single main contractor (since you cannot issue a tender that includes all the works), unless it is a "design-build" project (where a single company designs and constructs the entire project). You therefore have to use "construction management" (when a single construction manager has to coordinate the work of different contractors), with each one of the contractors who are responsible for different parts of the project (e.g. structure and M&E) selected through a specific tender.


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3.3 Key Performance Indicators

The use of Key Performance Indicators (KPIs) in management is crucial for decision making and is strongly

linked with the goals of an organisation. The specific KPIs used will depend on the level being looked at and

on the focus of a company or project. Recommendations on Key Performance Indicators that could be used

by companies that adopt the ZERO-PLUS concept will be made once a choice has been made for a business

case. During the development of the business plan such KPIs can be selected and defined.

The basic KPIs for ZERO-PLUS are those related to the three main performance goals (see Section 3.1):

1. Operational energy usage in residential buildings in ZERO-PLUS settlements (kWh/m2)

2. Renewable energy generated at the settlement level (kWh/m2)

3. Cost

In addition to these basic KPIs, other indicators may be developed or selected from existing typical KPIs.

Below we present a list of KPIs used in construction projects and companies, as well as general indicators

for business, innovation and sustainability (Constructing Excellence). These are examples of typical KPIs,

individual projects and companies will use some of the KPIs presented but may also have identified other

KPIs that are of particular importance to them.

3.3.1 KPIs for the construction sector: project level.

Client satisfaction (Product): How satisfied was the client with the finished product or a service (can

be measured for consultants’ or contractors’ services from the building’s owner’s perspective, and it

would be an internal KPI. This means it is a performance measure for supply). This can be measured

using a 1 to 10 scale, where 1 means totally dissatisfied and 10 totally satisfied.

Defects: measures the condition of the product at the time of handover to the client. This KPI can be

seen from the customers’ perspective using a scale from “defect free” to “totally defective” for the

impact on the client.

Predictability of cost: different KPIs for predictability depend on the procurement of the construction

process that is being implemented. In this case, the KPIs are created for a normal design and build

contract.3 Types of KPIs for predictability include:

3 Design and build is a type of procurement path for construction where both activities are performed by the same

stakeholder. A detailed evaluation of design and build can be found in the ZERO-PLUS report output”Analysis of the market potential within the EU 28 for ‘nearly-zero-energy’ buildings constructed using concepts developed in the project”.


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o Design cost: the cost of design at the ‘available to use’ (AU) (for a visual representation and

definitions please look at Figure 6) stage minus the expected design cost at the ‘commit to

invest’ (CI) stage, shown as a percentage:

(AU-CI)/CI

The ‘available to use’ (AU) stage is when residents can use the building. ‘Commit to invest’

(CI) refers to the stage where the design is presented to the finance office, but prior to signing

a contract.

o Construction cost: the cost at the available to use stage, minus the cost at the commit to

construct (CC) stage, represented as a percentage.

(AU-CC)/CC

Commit to construct is the phase where the contract has already been signed, and a bill of

quantities has been produced.

o Project cost: the actual cost of the combined design and construction process (AC) at AU,

minus the sum of total cost at the CI stage (TCI), represented as a percentage of CI.

AC-TCI/CI

The combined cost of design and construction (AC) is the total cost at the available for use

stage (AU). Total cost at the CI stage (TCI) is the total cost at the commit to invest stage.

Predictability of time:

o Design time: Duration of the design process at the ‘Commit to Construct’ stage (DCC), minus

the planned duration of the design at the ‘Commit to Invest’ stage (DCI), expressed as a

percentage of the duration at the CI stage:

(DCC-DCI)/DCI

The duration of the design process at the commit to construct stage (DCC) is the duration in

time for design and DCI is the planned time for design allocated at the commit to invest stage,

which is an earlier stage than commit to construct.


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o Construction time: the duration of construction at the AU stage (CAU) minus the anticipated

duration at the CC stage (CCC), as a percentage of the planned duration at the CC stage.

CAU-CCC/CCC

The duration of the construction at the available for use stage is the real time that passes from

construction until the residents use the building. CCC is the expected construction time at the

commit to construct stage.

Figure 6 Key project stages. Source: (Constructing Excellence).

3.3.2 KPIs for the construction sector: company level

Profitability: the company`s profit before tax and interest payments as a percentage of sales.

Productivity: company value added per employee.

Safety: accidents per number of employees per year.


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Employee satisfaction: can be measured according to different parameters, including influence over

their jobs, pay, work conditions, and a sense of respect from management. Can be measured on a

scale from 1 to 10, 1 being completely dissatisfied and 10 being completely satisfied.

3.3.3 KPIs for the construction sector: environmental impact

Impact on the environment. In this example, the impact on the environment is not measured from an

environmental point of view, but from a client satisfaction point of view. It is a complex indicator as it

has two variables, on one side the environmental management and on the other hand the

communication of it to the customer and their expectations.

o Product: customer satisfaction with the environmental impact of the process and the final

product on a scale from 1 to 10. This means that it is important that communication about how

the product was created is available to the customer.

Energy use:

o Product: amount of CO2 emissions caused by the energy use of the completed product or

facility per gross floor area (kg CO2/100m2/yr).

o Process: amount of CO2 emissions during the construction process per $ of project value (kg

CO2/$).

Water use: amount of water used to finalise the product, or used in the construction process (m3/yr).

3.3.4 KPIs assessing innovation

Innovation, too, must be defined so that it can be measured appropriately. The organisation also needs to

know what innovation means to their customers, and how to use internal processes to create value from

innovative products or services (Bearing Point).

Some KPIs can be measured in each step of the innovation process. These KPIs are measured as a division.

In the list below, first item should be divided by the second item. These items are separated by a colon.4

Ideas: Ideation campaigns

Ideas that reach concept design / Ideas

Implemented designs / Concept designs

4 For example, ideas/ideation campaigns show if the ideation campaigns brought up ideas that later can be

developed into innovative products. The goal of this section is to show that there are several KPIs that can be implemented. Later in the business plan, some of these KPIs will be selected and explained in detail.


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Ideas that sell / Implemented ideas

Ideas that make a profit / Ideas that sell

Sales leads / Target customer base

Sales / Sales leads

KPIs that measure financial and market measures of innovation:

Revenue from new products or services

Profit from new products or services

New customers from new products or services

New segments and sector entries from new products and services

KPIs that measure profitability from innovation:

How much have your customers increased their success (in terms of quality, sales, revenue…) or

reduced their cost due to use of your products and services

Rate of return on innovation investment (how sustainable is your innovation)

Market share growth from new products & services

Brand awareness and stickiness (those who stay with the new product / those who leave)

Patents created per year / Market share protected by patents

Revenue protected by patents / Revenue generated from licensing patents

3.3.5 KPIs for procurement activities

The following KPIs were identified for procurement activities (Proactis, 2017):

Internal:

o Multiple pockets of supplier information: this KPI measures the efficiency of procurement

management. Supplier data should be managed centrally to simplify the process of finding the

right supplier.

o Procurement team productivity: Productivity can be measured according to different

parameters, and it is up to the Procurement manager to determine which one is crucial or if it

is a mix of various variables. The main parameter is the time of a sourcing event.

External (Suppliers)


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o On-time delivery: amount of deliveries on time

o Supplier scorecards: each organisation can perform an analysis of their supply base. This may

include sub KPIs like quality, risk, compliance, delivery, cost and customer service.

3.3.6 Example of KPI matrix in a Sustainable Building Standard

Active house (Active House, 2013) is a standard for new construction. It has certain performance parameters

to certify whether a house meets their standard. The main factors considered are quantitative and they are

divided into comfort, environment and energy.5

To measure the active house standard about comfort, they measure:

Daylight: measured by the average daylight factor level

Thermal comfort: minimum and maximum indoor temperature levels

Air quality: concentration of CO2 at room level during occupancy.

Energy: Active house looks at primary energy performance, which is described as the difference between a

reduced energy demand and a renewable energy supply.

Concerning the environmental leg of the standard, performance is determined based on two factors:

freshwater consumption during construction and sustainable construction. The last one includes recyclable

content and responsible sourcing.

3.4 Business cases developed in other EU Research Projects

ZERO-PLUS is funded by the EU under the Horizon 2020 Framework Programme. Under this research

umbrella, some other projects within the energy efficiency and construction sector have developed Business

Cases and Business Models for products and services.

Although ZERO-PLUS is unique in its kind due to the challenging objectives it proposes, it is important to

look at what other EU funded projects achieved. A glance to the type of products and services created by

5 For further information: https://www.activehouse.info/


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these EU projects gives us the opportunity to understand what an EU project can achieve and also to see

what those BC authors and stakeholders thought that the market would need.

A summary of three Horizon 2020 projects and the business cases developed for those projects can be found

in ANNEX I.

All three projects are related to energy generation and management, and at some point include a notion of

settlement or at least a broader spatial dimension than a building. The business cases that came out from

these projects were:

Establishing a joint venture for energy management services for predicting renewable energy

generation, organisation of community demand, and optimisation to deliver control actions for the

system (ORIGIN project).

Technology that enable energy optimisation of residential buildings, focusing on the optimal control

of internal sub-systems within the Home Area Network (INTREPID project).

Service to existing companies with energy expertise to evolve into a new type of service provider,

“Energy Positive Neighbourhood Service Provider”. The IDEAS project also developed an Integrated

Energy Contract (IEC), which combines energy efficiency and renewable energy supply and

management in large buildings or group of buildings.


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4. Task definition: Building the case for change

This stage in the task definition focuses on identifying the drivers and constraints for the business case.

4.1 Barriers and suggested approaches to remove them

Previously, we asked the ZERO-PLUS project partners about the drivers and barriers for them to innovate in

the Near Zero Energy Building (NZEB) industry and for Net Zero Energy Settlements (NZES) to develop

(Isaac, Pana Tronca, & Gajsak, 2016)6.The analysis in this section is based on the barriers identified by our

partners in this survey. Below we suggest approaches to remove or mitigate the barriers. The identification

of the barriers and of possible approaches to mitigate them provides us with information on the problems that

the ZERO-PLUS concept will need to solve in order to be accepted in the market (see Table 3).

Table 3 Barriers identified by ZERO-PLUS partners to the construction of NZEBs and NZESs and suggested approaches to mitigate these barriers.

Technical barriers Mitigation approach

Uneven implementation of regulations in the EU

market that limits the capacity of greater economies

of scale by homogenizing the products and

processes.

Standardize and homogenize national regulations to

incentivise economies of scale as regards the minimum

required performance for near zero energy technology.

Standards and energy labelling haven’t yet

integrated enough the technology innovations.

Seek for a greater integration of innovative technology in

standards and energy labelling codes.

As a consequence of the low stage of development

of new technology, single sourcing is a risk in most

entrepreneurship.

Promote strategies for start up technology innovators for a

better sourcing base, reducing the risk of single sourcing.

More work needs to be done in the design and

optimisation of the technology on the building.

Promote integration of energy producing technology to the

building design.

Planning process is longer and more expensive than

normal construction.

Reduce the time for planning and optimisation of settlement

construction.

Economic barriers Mitigation approach

6 The report can be found in the following link: http://www.ZERO-PLUS.org/pdf/ZERO%20PLUS_D8.1.pdf


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It is difficult to calculate ROI in NZEBs due to user

behaviour, specially with energy management, it is

also not certain in sustainable construction in

general.

Research the causes for a weak ROI calculation in the

sustainable construction industry. Produce methodologies

to improve the calculations of Return on Investment based

on user behaviour.

Split incentives. Solve the dilemma between those who benefit from the

reduced energy costs and those who have to invest.

New technology experiences higher costs for the

market uptake, they also face cash flow issues when

they are subcontracted.

Improve financing for start ups in the energy efficiency

sector.

Behavioural barriers Mitigation approach

Construction industry is conservative, they won’t

change easily and they don’t have the skills and

proper information to make a conscious change.

Promote the skills (Training) and information necessary as

regards the use of innovative materials and technologies.

The advantages of NZEB are not know by the

general public well enough.

Promote the advantages of NZEB and NZES to the general

public in order to continue increasing the demand.

4.2 Drivers, Benefits and Constraints

To identify benefits and constraints affecting the business case, an online survey was sent to the ZERO-

PLUS consortium partners between the 16th of February and the 9th of March of 2017. There were 14

respondents, out of which 4 were case studies owners, 6 were research partners and 4 technology providers.

The survey questions can be found in ANNEX II.

4.2.1 Drivers

As regards drivers for the market to develop in the NZEB sector, in a previous report (Isaac, Pana Tronca, &

Gajsak, 2016) we found the following:

Demand:

o There is an increased demand for energy efficient buildings due to an increase of awareness

of sustainability. This is related with an increase in digitalisation and availability of information.

o Energy savings are seen from the consumers as a driver to buy or rent a sustainable house,

but also for social housing associations as something positive as increases the available

income for residents.

Public sector: Increased energy security.


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Legislation: regulations, in particular those that define goals while leaving space for innovation in how

to achieve them, and also soft norms such as ISO.

Awareness and knowledge: NZEBs also is something that increases the social image of companies.

Financial: Grants and soft loans from governments.

4.2.2 Benefits

In the survey that was conducted to obtain input for the business case, the participants were asked to consider

products or services that could grow out of the ZERO-PLUS project. Then they were asked to rate how

important the potential benefits of such a product or service are for their organisation

The list of benefits that was presented to the participants was as follows:

Contributing to high quality research, innovation and constant improvement of processes in the

construction industry.

Increased sales of energy efficiency products or services, through reducing costs for end users

(economies of scale)

Demonstrate the readiness of products and processes that are part of the ZERO-PLUS concept.

Enhance the reputation of participants.

Provide a clear roadmap for achieving compliance with European regulations for energy efficiency in

buildings.

Improve the quality of service to customers that would use or buy a ZERO-PLUS service or product.

Integration of the construction supply chain.

Increase awareness of sustainability in the construction industry.

Energy savings by users of the final product or service.

Energy security of users of the final product or service.

We also asked participants to add any benefits that they thought important to the list. The individual responses

here were:

Data availability for scientific purposes.

Networking, collaborating with partners for potential future joint projects (ranked with a 4).


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Collaboration with start-ups and improvement of the products (ranked with a 5).

In Figure 7 we find the top 6 benefits for technology providers, in Figure 8 for case study partners and in

Figure 9 for research institutions. We divided the analysis in these three groups who share similar

organizational characteristics and goals, as grouped in the stakeholders` analysis. An overall analysis is

found in Figure 10.

Figure 7 Top 6 Benefits for Technology Providers according to the survey responses.

Figure 8 Top 6 Benefits for Case Study Partners according to the survey responses.

0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5

Increased sales of energy efficient products or services, throughreducing costs for end users (economies of scale)

Demonstrate the readiness of products and processes that are partof the Zero Plus concept

Enhance the reputation of participants

Provide a clear roadmap for achieving compliance with Europeanregulation for energy efficiency in buildings

Energy savings by users of the final product or service

Energy security of users of the final product or service

Importance

0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5

Increased sales of energy efficient products or services, through…


Provide a clear roadmap for achieving compliance with European…

Improve the quality of service to customers that would use or buy a…

Integration of the Construction Supply Chain


Importance


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Figure 9 Top 6 Benefits for Research Institutions according to the survey responses.

0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5

Contributing to high quality research, innovation and constant…

Demonstrate the readiness of products and processes that are part…


Increase Awareness on sustainability in the construction industry


Energy security of users of the final product or service

Importance

Top 6 Benefits for Research Institutions


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Figure 10 Average, maximum and minimum rating for the importance of benefits according to the survey responses.


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4.2.3 Constraints

Survey participants were asked for their opinion on constraints in the following question:

What factors (constraints) might prevent the service or product that might come out of the ZERO-PLUS

concept from achieving its goals? Please rate the following constraints from 1 to 5, with 1 not being important

at all and 5 being very important.

Eight constraints were proposed, and participants were also given the opportunity to add any constraints that

they thought important to the list. The presented constraints were the following:

Availability of finance

Availability of skills and labour

The market is saturated

Materials of supply limitations

Internal limitations to collaboration between the ZERO-PLUS partners

Legal constraints such as labour law, industry regulations or intellectual property

Lack of demand for the products or services

Time constraints such as delays in the implementation

Constraints identified by individual respondents are:

Market issues compromising the construction work

Products need to achieve more than existing products or cost less.

Lack of flexibility to allow sufficient adjustment to local requirements

Public awareness

Following the stakeholder analysis, with our three types of Project partners, in Figure 11 we find the top 5

constraints for case study partners, in Figure 12 for research institutions and in Figure 13 also the top 5 for

technology providers. Finally, in Figure 14 we present a graph with the average, maximum and minimum

rating for the importance of the constraints in general.


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Figure 11 Top 5 Constraints for Case Study Partners.

Figure 12 Top 5 Constraints for Research Institutions.

0 1 2 3 4 5



Legal constraints such as labour law, industry regulations orintellectual propierty


Time constraints, such as delays in the implementation

Importance

0 1 2 3 4 5



Internal limitations to collaboration between the Zero Pluspartners

Legal constraints such as labour law, industry regulations orintellectual propierty


Importance


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Figure 13 Top 5 Constraints for Technology Providers.

0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5


Materials or supply limitations

Internal limitations to collaboration between the Zero Pluspartners


Time constraints, such as delays in the implementation

Importance


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Figure 14 Average, maximum and minimum rating for the importance of constraints according to the survey responses

0

1

2

3

4

5

Availability of finance The market is alreadysaturated

Internal limitations tocollaboration betweenthe Zero Plus partners

Lack of demand for theproducts or services

Imp

ort

ance

Average Max Min


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5. Task definition: Strategic Landscape of ZERO-PLUS

5.1 Stakeholder analysis

The following stakeholder analysis matrix employs the stakeholder analysis methodology described in Section 2.2.1 above to analyse the stakeholders in the

ZERO-PLUS project and in the business case. The table (Table 4) is assessing the stakeholders mainly from the perspective of the business case and their

interest in it. The analysis of influence and importance, however, can only be done for a specific project and is done here looking at ZERO-PLUS.

Table 4 Strategic landscape.

Stakeholder Type

Interests and how the stakeholder is affected by

the problem the project wants to address

Capacity and motivation to bring about change

Possible actions to address stakeholder interests in the selected option for the business

case

Influence/ Importance

on the ZERO-PLUS project

ZERO-PLUS project partners: Technology providers

Internal/ Private

Their main objective is to introduce their innovations in to the market and achieve profitability.

Have the patents for the technology that will make achieve the objectives of the project.

Unknown interest in the future of the concept of ZERO-PLUS.

As guided by economic profit and in the case of start ups low financing capacity.

Ensure that new technologies are incorporated into the designed buildings and that this fact is given sufficient publicity.

Ensure sufficient financing for technology providers

seek for a greater integration of innovative technology in any standards and energy labelling codes developed.

Support start up technology innovators to develop a better sourcing base, reducing the risk of single sourcing.

Ensure integration of energy producing technology from the first stages of building design

Low/High


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Stakeholder Type





case



ZERO-PLUS project partners: Social Housing Developers

Internal/ Public-Private

Deliver affordable housing to low income families. Reduce energy bills for users, and be green champions.

Tend to innovate in building efficiency due to its public leg and because of social pressure or to achieve a green credential. Large developers have the enough funds to support the whole development of a settlement.

They can benefit from the settlement level optimisation.

Reduce the time for planning and optimisation of settlement construction

Produce methodologies to improve the calculations of Return on Investment based on user behaviour.

Reduce investment cost and the split incentives dilemma.

Promote the benefits of NZEB and NZES to the general public in order to continue increasing the demand.

Medium/High

ZERO-PLUS project partners: Construction Developers

Internal/ Private

They will need to get in compliance with the EPBD by 2020.

Address the increased demand for sustainable buildings

Lack of skills in their labour and goal of increasing profit.

They have the infrastructure to develop settlements.

Same actions as those for Social Housing plus,

Promote the skills (training) and information necessary as regards innovative materials and technologies.

Standardize and homogenize national regulations to incentivise economies of scale as regards minimum required performance for near zero energy technology.

Seek for a greater integration of innovative technology in standards and energy labelling codes.

Medium/High

ZERO-PLUS project partners: Universities


Research and expand knowledge

Interested in the application of their research.

Potential to train future students (Architects, Engineers)

Depend financially on research and education services.


Promote the skills (Training) and information necessary as regards innovative materials and technologies.


High/High


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Stakeholder Type





case



External Advisors to the ZERO-PLUS Project + EC

Internal/ Public

Reduce energy consumption

Increase energy independence for residential buildings

Increase innovation and productivity

Create standards to encourage union between the countries and synergies as economies of scale.

Great funding capacity for projects under the Horizon 2020 programme.

Committed to achieve reduction in energy consumption and CO2 emissions.

Reduce energy dependence from external EU countries.




Promote de integration of energy producing technology to the building

Demonstrate how a research project can be applied and achieve benefits for society.

Power of veto

ZERO-PLUS Project Managers

Internal Deliver the project with its goals accomplished.

Management of the project to deliver.

Possible the advocates for change and the business case.

Power of veto

Support Partners: E Co.

Internal/ Private

Business development

Dissemination and support

Assist the consortium with strategies for dissemination and market uptake.

Key business knowledge.

Advocates of application to the market.



Medium/Low


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Stakeholder Type





case



Subcontrators for case study projects


Deliver contract

Provision of certain technology.

Dissemination platform.

Reduce investment cost and solve the split incentives dilemma.




Low/Medium

Local and Regional Authorities

External/ Public

Provide housing that is affordable and sustainable according to regulations.

Reduce pollution as a way to increase the liveability.

Public procurement of materials and Public Buildings regulations.

They are in charge of accepting development plans.


Provide a solution for sustainable construction of settlements

Low/High

National Authorities External/ Public

Produce legislation to comply with EU regulation and climate change objectives.

Create jobs opportunities through an increased productivity of the construction sector

Public procurement of materials and Public Buildings regulations.

Usually have funds for innovation programmes.

National social housing schemes.

Reduce spending in energy and energy subsidies.




Low/Medium


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Stakeholder Type





case



EU Parliament External/ Public

Produce legislation according to the objectives of the EU.

Advocate for standardisation between the countries of the Union.

Support European Innovation through creating opportunities and limiting external risks.

Capacity of passing legislation that supports climate change, labour and construction regulations.

Produce analysis of topics.

Encourages the dialogue of innovation and business competition.

Approves research budget.




Demonstrate how a research project can be applied and achieve benefits for society.

Low/Medium

Wholesalers of technology

External/ Private

Increase profit through increased sales. Improve their market share.

They provide the sales channels and have key information on marketing strategies and the market.

Under BAU scenario, they are the risk takers for innovative technology.




Low/Low


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Stakeholder Type





case



Construction Professionals (Architects + Construction Managers + Engineers + Builders)

External/ Private

Acquire skills and information for innovative technology and processes in their sector.

Continue training.

Know the regulations for construction, as they need to apply for permits.

In charge of the design and planning of buildings and settlements.

Possibly know about the end user comfort and aesthetic taste.

Provide a platform for discussion and networking for professionals to exchange views and get updates on innovative technology and construction processes.






Low/Medium

Utilities External/ Public-Private

Develop new business models that are in line with innovation to keep providing service after the decentralization of the energy supply system.

Reduce cost of operations.

They provide the platform for servicing the settlement from the classic sources.

Provide key information on energy management and energy fees, and user consumption and times.



Low/Medium


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Stakeholder Type





case



Residents of buildings

External/ Private

Reduce energy bills

They want to improve their house comfort.

They want to improve the environment where they live.

Get better jobs.

Not well informed on energy efficiency.

Increased pressure on families budget due to energy bill increased and general economic situation.

Energy poverty.




Low/High

Standarisation / Certification bodies

External/ Public-Private

Foster economy in global trade.

Increase citizen welfare.

Protect the environment.

Remove trade barriers.

Catalyze businesses.

Research and develop standards.

They are funded by public institutions, or they get their revenue streams from certification processes.





Low/Low


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Stakeholder Type





case



Financial Institutions and Investment Funds

External/ Public-Private

If public, possibly interested in solving the financial gap for development and climate change projects as a way to reduce emissions.

If private, get profits from their investments. Possibly interested in sustainable projects as the result of better interests rates or risk.

Great economic influence due to the services and subjects they target.

Some might have interest in the objectives of the project.

Reduce investment cost and solve the split incentives dilemma. Medium/Low


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Figure 15 Stakeholders importance/influence diagram

Summing up the stakeholder analysis, Figure 15 presents the influence and importance of the categories of

stakeholders described above (Red circles represent public sector stake holders, yellow circles are private

sector stakeholders, orange are mixed). The size of the circles represents the participation in the project. Big

circles represent project members while small circles represent stakeholders outside the ZERO-PLUS

project.

The actors in sector A have the greatest importance and influence on the project, and their opinion, comments

and vision would need to be considered. Stakeholders in sector B, although they have a big importance, don’t

have enough power to influence directly the outcome. Stakeholders in sector C, account with a great influence

in the project, although they don’t have the greatest importance as regards the benefits they can get from the

chosen option. Stakeholders in sector D, although actors that we will need to review in order to get the

maximum perspective, don’t have influence on the decision.

5.2 Competitors

As part of the strategic landscape we have previously performed the stakeholder analysis. In this section, we

will look at the competitors in the energy efficiency sector. The information provided here comes from

discussion with ZERO-PLUS consortium, combined with the findings of the literature review performed in the


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ZERO-PLUS report output ”Market analysis of the trends in the construction of residential highly energy

performing buildings” (Isaac, Pana Tronca, & Gajsak, 2016).

In a dedicated workshop the ZERO-PLUS project participants identified key exploitable results (KER). A KER

is a product that fills a specific need or responds to the demand of a defined group of customers/users. There

are two tiers of KERs:

1. Tier 1 KERs are the inputs of the project. In some cases, they have reached a level of readiness that

allows them to be commercialised, such as for example WindRail, Freescoo, Integrated Energy

Resource Management, Insulation materials, FAE HCPV and Solarblock PV.

2. Second-tier KERs are outputs of the project. They come from a unique combination of standalone

solutions provided by the consortium partners. These include the Zero Energy Settlement, Zero

Energy Settlement optimisation methodology and a Zero Energy Settlement web platform.

Due to time constraints, only three KERs went through a deeper analysis: Integrated Energy Resources

Management, Zero Energy Settlement optimisation methodology, and Zero Energy Settlement web platform.

In this analysis, among others, competitors were looked at.

The integrated energy resource management KER wasn’t expected to have many competitors at the

settlement level. On the building level, some suppliers for energy management services can be found in the

German market. As regards the Zero Energy Settlement optimisation methodology, the competitors

identified were certification programmes like LEED, BREAM, PassivHaus and Active House. They work

mostly on the building level, but some, like LEED Neighbourhood Development and BREEAM Communities,

also work in the settlement level. Still, they focus on different criteria than the ZERO-PLUS approach, which

is mainly about energy generation, energy consumption and reduction of costs. Finally, the Zero Energy

Settlement web platform is thought to have no direct competitors. Still, there are companies that provide

some of the features of the web platform: methodologies for calculations of technology energy efficiency,

settlement microclimate simulations, life cycle assessment and life cycle costing, user feedback interface,

LEED pre-assessment and GIS integration. No other company provides all features of the web platform.

Smart grid software’s focus on reducing electricity consumption was also mentioned as a possible competitor.

On the other hand, based on the literature review carried out in ” Market analysis of the trends in the

construction of residential highly energy performing buildings” (Isaac, Pana Tronca, & Gajsak, 2016), we

have analysed 5 types of possible competitors.

First, new energy efficient settlements, such as BedZED, Solarsiedlung, North West Bicester Eco-Town,

whisper Valley and others. Although performance indicators for energy production and energy consumption


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are in line with the ZERO-PLUS approach, there is a lack of emphasis on reducing costs. Therefore, the

settlements are either marketed to the richer segment of the population, or marketed focusing on reduced

energy bills to increase demand. Performance monitoring has not always resulted in the expected savings,

as in the case of Zac de bonne in France. This type of settlement also includes the construction of commercial

and public services, and not just new housing.

Second, new energy efficient buildings. In this category, there is a mix of pre-fabricated sustainable houses,

commercial buildings and house labs, the latter of which are intended to try out energy efficiency products in

households. They are no direct competitors, as any potential competitors lack the settlement level approach.

Performance monitoring is also an issue for these potential competitors. The construction of energy efficient

buildings usually works with lower performance standards than ZERO-PLUS. For example, Meritage and

Mehrfamiliehaus were constructed with Energy Star and Passivhaus standards that don’t include energy

generation. The case of Zed Factory on the other hand is closer to the ZERO-PLUS approach, but still lacks

the geographical optimisation that ZERO-PLUS proposes, or the optimisation of the architectural design.

Third, we look at competitors in the energy efficiency supply chain, with companies like Wooconnect,

Omnetric or Advanced microgrid solutions among others. These companies could be competitors to the Tier

1 KERs as they are applications, software or addons to the building.

Fourth, examples of community scale refurbishing companies in the energy efficiency market. Here we find

developments for refurbishment of energy producing facilities such as district heating, thermal energy plants,

or offshore wind farms. The ZERO-PLUS concept looks at energy generation at a bigger scale than the

building level and is open for different technologies and ways to achieve this. The analysis of this section of

the market is important, as it shows the variety of ways that the energy production leg of the ZERO-PLUS

approach can work. The type of energy generated will also depend on the optimisation of the building to the

environment where it is placed.

Finally, examples of companies in the energy efficient refurbishment of buildings market. This includes

companies like Reimarkt and Energiesprong. The latter is a good example of a project that was expanded

from the Netherlands to other EU countries. The refurbishment market is also different from new housing.

ZERO-PLUS looks at reducing costs in construction, using an optimised design for the most effective

technology. So, in principle both sectors look at the building and/or the settlement but from two different

(building?) time perspectives. Ultimately, it would be good to expand the BC for ZERO-PLUS to include

refurbishment.


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6. Developing the business case: Option identification

As described in Section 2, in option identification we look at a number of options for the business case that

we have identified and make preliminary suggestions for the what, who and where of implementing these

options (see Table 5). We also look at how each option would build on the outcomes of the ZERO-PLUS

project. Based on this estimate of the fit of each option with the nature of the ZERO-PLUS project, the case

for change and the strategic landscape, four options were selected for further analysis in the next section of

this document.


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Table 5Four Suggested options for the business case

Option Name

What Who Where How: Relation with ZERO-PLUS Discarded or

chosen for

further analysis

Research unit on energy efficiency in settlements

Involving researchers from the areas of architecture, engineering and environmental design, this unit would investigate how to improve construction processes and how to overcome barriers resulting from the fragmentation of the construction value chain. The unit would focus on applied research with the intention of generating results that could be used to create improved policies relating to sustainable construction.

The project could benefit from coordinating with the TG93 Building Zero Energy Settlements Commission from the International Council for Research and Innovation in Building and Construction. The unit would need to establish constant communication with technology innovators and developers, to incorporate the market perspectives in its research.

The location of the research unit is not as important as the geographical scale of the research the unit will need to conduct. In first instance the unit should focus on the different climate regions that are present in the European continent.

The research unit would continue with the research done in ZERO-PLUS in terms of energy efficiency integration to the building, but its capacities for application would be limited to the partnerships or arrangements with construction projects or technology entrepreneurs.

Discarded


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Option Name


chosen for

further analysis


This standard could look specifically at settlement level integration of energy production and use. Over time it could evolve into a more comprehensive standard, including other sustainability features.

The standard will be supported by a continuous research forum, that will include industry members, academics and public sector to guide innovation in the sector. It will be necessary to train and forge a net of certifiers. (potentially from the LEED ND, BREAAM Communities).

The standard should be done at the European level. National or regional liaison institutions (a single person or organisations that would represent the standard) will need to be deployed in the whole continent to have to guarantee that the concept has a good geographical representation and will achieve the goal of unifying construction procedures.

One of the main outcomes of ZERO-PLUS is the development of guidelines for Net Zero Energy Settlements. The Business Case for it, would be a natural continuation of this WP, that also includes the research and knowledge created in the other WPs.

Chosen

Joint Venture

To form an independent company between some or all of the members of the consortium, to provide services for different stages in the construction process. It can be one single organisation with different services or various agreements with smaller organisations with specified niche markets.

The participants of the new organisation will depend on the type of service they decide to provide. It can be one or several companies that provide different services or products.

The services and products would need to be available in the whole European Union, although to launch it the organisation could decide to focus in specific national markets and later expand.

Following the example of the ORIGIN project (see Annex I), ZERO-PLUS could develop a partnership between Project Participants to provide products or services selected from the many developed in the project, specially about, design, integration optimisation and performance of the energy efficient technology to the building and settlement.

Chosen


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Option Name


chosen for

further analysis

European Innovation Agency for Construction

To develop an organisation that supports innovation in the construction industry by lobbying and networking between companies in the sector. The Agency could have as one of its aims to facilitate funding for innovation by SMEs. An example of a similar agency is Innovate UK.

The agency will need to be staffed with consultants and managers, specially within the area of business development, to identify business opportunities for technology and processes that innovate and provide the market with solutions for the construction of settlements.

While the physical presence of the Agency would need to be in one spot, the activities they perform need to be at the European level. It would be advisable them to work with national innovation agencies in order not to duplicate the work, and use each other capacities to create synergies.

This agency would follow the path for the objective of keeping innovation going on in the area of energy efficiency in construction.

Discarded.

ZERO-PLUS Forum or Fair

A space where supply and demand for innovative technology for the construction of settlements meet, similar to existing events of this nature.

A commission or organisation in charge of organising such Forum or Fair will need to be created with autonomy but it will need to pledge to the ZERO-PLUS concept.

The Forum or Fair can be itinerant and rotate every year from country to country or it can be in the same city, but assuring geographical diversity among the participants.

ZERO-PLUS has an interest in promoting innovative technology and collaboration.

Discarded


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Option Name


chosen for

further analysis

Settlement Passport

Similar to a building passport but distinct from a certificate of sustainable performance of a building such as LEED or BREEAM certificates). Such a passport would facilitate communication between owner, investor, maintenance professionals and tenants.

A consortium would need to be formed to specified the parameters that would be included in such passport and possible recommendations for further improvements. It would be beneficial that this group or organisation could have representatives from the market so as to include innovation and redefine parameters in the short term.

The passport would have to include the analysis of the geographical location of the settlement, as taken into account in the project. Each location would impact differently in the life of the settlement.

The passport would have to be made following the specifications and processes developed by ZERO-PLUS. For example as regards the modelling and optimisation of the technology incorporated.

Chosen


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Option Name


chosen for

further analysis

ZERO-PLUS Contract Template

Develop a contract template for construction developers that can resolve the split incentives problem by engaging the buyer or tenant in a long term obligation to pay for energy efficiency measures..

An organisation would need to be formed that includes lawyers and procurement specialists.

Would be advisable to start by reviewing contracting types in the case studies´ countries and then try to expand them to other EU countries.

In “Analysis of the market potential within the EU 28 for ‘nearly-zero-energy’ buildings constructed using concepts developed in the project”, the special need for innovative contracts that addresses the complexities of energy integration management into the construction industry. ZERO-PLUS aim is to solve this gap that acts as a barrier for greater collaboration. A disadvantage of this option is tat the ZERO-PLUS consortium don’t include lawyers and procurement specialist.

Discarded

ZERO-PLUS Toolkit

Create a ZERO-PLUS Toolkit for developers that would want to achieve the three ZERO-PLUS objectives in a construction project.

ZERO-PLUS participants are able to carry on with this option. A new type of organisation will need to be created. Staff in charge of administration and most important, marketing will be hired. The lead of the new organisation will be a subject open to discussion.

In principle the Toolkit would be useful for the 4 types of climatic conditions developed in ZERO-PLUS. But as ZERO-PLUS includes optimisation, it is possible to expand this to other climate types.

ZERO-PLUS wants to improve the energy building integration. A number of deliverables of the project include tools that, with some adaptation, could be made useful for more general application.

Chosen


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7. Developing the business case: Option Analysis

7.1 Benefits

To identify the benefits the Business Case should achieve with the implementation of

one of the choices we reviewed the ZERO-PLUS Project Proposal and the interviews

with the Project Partners included in ” Market analysis of the trends in the construction

of residential highly energy performing buildings” (Isaac, Pana Tronca, & Gajsak,

2016) (Isaac, Pana Tronca, & Gajsak, 2016) and added to this the information collected

in the Survey conducted in February 2017, also with Project Participants. The survey

can be found in ANNEX II.

The identified benefits were grouped in 5 general benefits types. These are:

Social Progress and Reduced Environmental Impacts, including the reduction

of GHG emissions, the right to a clean environment and social housing.

Cost reduction of Energy Efficient Settlements, included in the project proposal

as one of the three performance goals.

Increased Innovation Capacity, including the capacity of technology

innovations to access the market and to continue developing processes that

pursue the goal of improving energy efficiency.

Integration of the Supply Chain in the Construction Sector, including the

integration of the construction process, from design to construction and

monitoring, as well as the procurement choices, linking suppliers with

developers.

Harmonisation of National Implementation, including the compatibility of

national and local legislation to EU legislation.

For each business case option, at least four outputs were identified that are possible

results after the implementation of that option. These outputs are the following:

Settlement Efficiency Standard:

Improved Communication between Stakeholders

Increased Sustainability awareness

Reduce cost in construction due to economies of scale

Harmonisation of practices in the construction industry at the EU level


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Increased Energy Efficiency in the houses that are constructed according to the standard.

Joint Venture:

Integration of Design and Performance Monitoring in the Construction Process

Integration of Technology Innovations

Constant improvement of Construction Processes

Help to close the Performance Gap Settlement Passport:

Increased Sustainability Awareness

Enable New Forms of Finance

Unification of Parameters at the EU level

Improved Communications ZERO-PLUS Toolkit:

Encourage Market Entry of New Actors

Improve Energy Performance in the Building

Simplifying Energy Integration to the Building

Reduce Cost of Construction The most significant outputs were selected for further use in the analysis. The outputs

selected were then linked to the benefits they might generate as seen in Figure 16 .

Each benefit gets a weighting according to the importance it has for the project. Then

each output is given also a percentage that it contributes to each benefit. Then the

percentage is multiplied by the benefit weighting to get the output score per benefit, as

seen in Table 6.

The final output score is determined by the sum of the benefits in which those outputs

appear as seen in Table 7.

Finally, each business case option is graded according to the contribution it could make

to each output (Table 8). That grade is then multiplied by the score of the output. By

summing up the results of all the outputs of each option we obtain the total benefit

points for that option. The maximum possible score for an option is 1000.

The benefits analysis results show that the Settlement Efficiency Standard and the

ZERO-PLUS Toolkit could bring the most benefits the Stakeholders want the Project

to achieve.


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Figure 16 Outputs and benefits Map

Social Progress and

Environmental

Regeneration

(including GHG)

Cost Reduction of EE

Settlements

Increased Innovation

Capacity in the

Construction Sector

Integration of the

Construction Supply

Chain

Harmonisation of

National

Implementation

Reduction in

Construction CostsX X

Harmonisation of

practicesX X X

Take innovation to

the marketX X

Increased Energy

EfficiencyX X

Improved

communication and

awarenessX X X

Simplify energy

efficiency

integrationX X X

Benefits

O

u

t

p

u

t

s


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Table 6 Benefits and Outputs weighting

Table 7 Outputs score

Output Benefit Number Score

Reduction of Construction Cost

for Energy Efficient Settlements 1+2 33.0

Harmonisation of practices 2+4+5 14.5

Take innovation to the market 2+3 10.5

Increased Energy Efficiency 1+2 12.0

Improved Communication and

Awareness 1+2+3+4 19.5

Simplify Energy Efficiency

Integration 2+4+5 10.5

Benefit Number

Benefit Weighting (out of

100 pts) Output % contribution

Output score per benefit

1

Social Progress and Reduced Environmental Impacts (including GHG

emissions)

30

Reduction of Construction Cost for Energy Efficient

Settlements 35% 10.5

Increased Energy Efficiency 35% 10.5

Improved Communication and awareness

30% 9.0

2 Cost Reduction of Energy

Efficient Settlements 30

Reduction of Construction Cost for Energy Efficient

Settlements 75% 22.5

Harmonisation of practices 5% 1.5

Take innovation to the market

5% 1.5

Increased Energy Efficiency 5% 1.5

Improved Communication and Awareness

5% 1.5

Simplify Energy Efficiency Integration

5% 1.5

3 Increased Innovation

Capacity in the Construction Sector

15

Take innovation to the market

60% 9.0


40% 6.0

4 Integration of the

Construction Supply Chain

15



20% 3.0


40% 6.0

5 Harmonisation of

National Implementation 10



30% 3.0


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Table 8 Option scoring

Option

Outputs

Reduction of

Construction

Cost for

Energy

Efficient

Settlements

Harmonisation

of practices

Take

innovation

to the

market

Increased

Energy

Efficiency

Improved

Communication

and Awareness

Simplify

Energy

Efficiency

Integration

Total

Settlement

Efficiency

Standard

Grade 6 10 5 6 9 7

Result 198 145 52.5 72 175.5 73.5 716.5

Joint

Venture

Grade 5 1 8 8 5 8

Result 165 14.5 84 96 97.5 84 541

Settlement

Passport

Grade 2 9 6 5 8 5

Result 66 130.5 63 60 156 52.5 528

ZERO-PLUS

Toolkit

Grade 6 6 8 7 8 9

Result 198 87 84 84 156 94.5 703.5

7.2 Costs

7.2.1 Methodology and prior considerations

The cost assessment was done considering a three-year timeframe7.

7 This timeframe was chosen based on the stakeholder analysis. The analysis showed a variation of

stakeholder incentives to participate in the project. Investment costs tend to be the highest costs in

setting up a project. It was decided to consider the shortest time frame that would reflect the financing

need of the project, but also the stakeholder’s possibilities to fund it. The other thing that was considered


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We performed a qualitative assessment of cost by using different categories (Box 1).

The cost categories considered are defined in

Box 1. In

Table 9, each cost category is given a value ranging from low to high for each option,

and the reasons for the value given are explained (Since the functional cost categories

of IT costs, staffing and management are closely related to the other cost categories a

separate explanation is not provided for them).

For each option, we have determined whether the costs in each category would be

high, medium or low8. The ranking of the options, from least to most costly, is as

follows:

1. ZERO-PLUS toolkit

2. Joint venture

3. Settlement passport

4. Settlement efficiency standard

was the shortest possible time for getting revenue for the Business Case owner (ZERO-PLUS

consortium), and not for individual companies or organisations included in the Business Case owner.

8 For more information about the cost index please see Section 8.1.


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Establishment: these are the costs that are needed as a first investment to start the business. They include the goods, services and knowledge needed

to start running operations. They usually include opening stock, initial rent, licenses, permits, tools, stationery, and staff payment for work carried out

before the start of operations.

Maintenance: Costs of day-to-day operation of the business. They usually include administration, supervision, operation, maintenance, preservation

and marketing of the selected option.

Procurement: Procurement costs are the costs of contracting. In this case, they include some transaction costs. Those costs are needed for the company

or organisation to do business but they might not be written in a contract. A more detailed explanation of Procurement and transaction costs can be

found in the ZERO-PLUS report output “Analysis of the market potential within the EU 28 for ‘nearly-zero-energy’ buildings constructed using concepts

developed in the project”.

Revenue: the opposite of costs, the amount of money that an organisation receives for doing business.

IT: IT costs include hardware, software licenses, networking, integration and testing.

Staff: Staffing costs include salary payment for the time spent by workers to establish and operate the option that is chosen.

Management: the cost associated with maintaining the option but which does not contribute to the product or service that the organisation aims to

deliver.

Box 1 Definitions of cost categories considered in the analysis


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Table 9 Cost analysis of the selected options

Cost category Settlement Efficiency Standard Joint Venture Settlement Passport ZERO-PLUS Toolkit

Establishment HIGH: The set-up costs for a standard are high due to the intensive work that needs to be done in order to agree on a large quantity of sub items that are meant to be included in such a Standard.

MEDIUM: The establishment costs will depend on the type of company the stakeholders want to establish. Staff, as well as estate, overheads and IT, could be borne by the founder’s companies. The medium classification represents the opportunity costs that the founder companies will incur by reassigning resources.

HIGH: The establishment costs for this option are similar to those for the Standard, although less communication is needed to achieve a consensus.

MEDIUM: Some extra costs related to staff, but mostly for the development of IT support.

Maintenance HIGH: a Standard has to be updated frequently. For this to happen, constant research needs to be done. Also, the communication between the stakeholders has to be frequent. Maintenance costs in this case include high management costs. Also includes the costs to keep the standard in an online database and keep track of the “customers”. Staff costs in the maintenance phase includes the researchers and administrative staff that could either be part of the project or recruited specially for this task.

MEDIUM: as the cost assessment is done with a three-year timeframe in mind, it is reasonable to include the handover of management from the founder companies to the new company. This includes new offices, increasing the maintenance costs considerably. The running operations of the Joint Venture will include the normal staffing and servicing of a company if the handover is done before the 3 years are up. If there is no handover, the maintenance costs will be absorbed by the founder companies.

MEDIUM: Some updates are needed for a passport system. Since a passport is created for communication rather than for continuous improvement, these costs are lower than those for a standard. If the passport needs to be complemented with a research and administrative office, then costs will escalate.

MEDIUM/HIGH: The Toolkit per se will probably need to be updated, and this will require staff and researchers that could be part of the founders’ companies. More marketing services will need to be hired than for the other options considering the newness of the ZERO-PLUS brand.


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Cost category Settlement Efficiency Standard Joint Venture Settlement Passport ZERO-PLUS Toolkit

Procurement MEDIUM: Probably transaction costs will be high due to long negotiations and unexpected variations on the development of the Standard. The costs of contracting for the Business Owners to establish the Standard tend to be low, but establishing contractual relations between the certification network can be tough.

MEDIUM: the cost of contracting first between the stakeholders to create the new Joint Venture, and later between the Joint Venture and its clients are included in procurement costs.

LOW: There is no reason to believe procurement and transaction costs would affect the development of this option, as it will basically be an information tool for developers and users.

LOW: Unless the Toolkit is sold including a performance goal, there is no need to incur higher procurement costs than those from using a template contract between members or the selling of a product.

Revenue UNKNOWN: the savings of a Standard and economic benefits would be felt by developers and technology providers rather than by the consortium of ZERO-PLUS. The Standard will deliver revenue in the form of more investments and savings in the energy bill for entrepreneurs and customers, providing a general economic benefit.

HIGH: Revenue generated from the selling of technology and provision of services, from design to performance monitoring.

UNKNOWN: the revenue stream is unknown and will depend on the marketing strategy and the identification of the use of the passport. Ideally the passport can be use by banks and developers to calculate mortgages, or by developers to market the settlements.

LOW/MEDIUM: Revenue can be generated from training and a subscription to an online platform to use the toolkit.

Functional Costs

IT Costs HIGH LOW MEDIUM HIGH

Staffing HIGH LOW MEDIUM LOW

Management HIGH MEDIUM MEDIUM MEDIUM


7.2.2 Conclusion of the cost analysis

The ZERO-PLUS Toolkit is likely to be the less costly option, while also generating

revenue. The Joint Venture, although it has the possibility of generating more revenue,

also incurs higher costs, especially if the new company is handled as a totally separate

company from its founder’s companies. This will escalate costs. The settlement

passport and Standard are the most costly and would require the development of a

model for revenue generation.

7.3 Risks

Risks were identified following the risk areas described in Table 10 .

Table 10 Risks areas. Source: (Gambles, 2009)

Risk Area Risk to consider

Technology Risk that it will not work, either at all or as well as intended. How complex or novel is the technology involved? Have the required applications run off the planned infrastructure before?

Business Process

Risk that developing new processes will take longer and/or consume more resources than expected. Have the necessary business processes already been developed elsewhere, and is there any access to the relevant expertise?

People

Risks associated with staff retention, recruitment, morale and performance. Does the organisation have the skills it needs to implement the project and realise the benefits? Will there be a dip in business performance as a result of staff changes or loss of focus?

Stakeholders Risk that stakeholders will block or damage this option. What political or industrial relations factors need to be considered? Are there vested interests which may generate active or passive resistance?

Legality Risk of legal challenge. Particularly if options involve closure of facilities, planning applications, redundancy, relocation, or material changes to staff terms and conditions, legal risks should always feature.

Time/Cost Risk of estimating errors or overruns. Particularly in areas which sensitivity analysis suggest are important to business case decision, how likely is that the basis of the decision will turn out to be flawed?

External

Risk of changes in the wider environment for the decision. Consider political, economic, tax, environmental, planning, and security factors. Is the project controversial, and if so does the organisation have the appetite to sustain implementation when the going gets tough?

Market

Consider competitive and market risks, particularly if the project is to create goods or services for sale. Is there a risk that new products or changed market conditions might render your market research invalid by the time your offer is ready?


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For each of these risk areas, we have identified specific concerns for ZERO-PLUS.

Due to the different natures of the options being analysed, different risks are relevant

for each option.

Technology: the main risks that would prevent the options to succeed, from the

technology area identified were first, risks related to the need for integration of

innovative technology to the building, second, the need for the offer to provide

solutions for different climate regions, and lastly finding a suitable online platform

that will be needed for some of the options.

Business Process: In the Business Process area, the main risks identified were the

risk of having to find a suitable methodology for developing a standard, the difficulty

of predicting how long it will take to develop a standard and the related lack of clarity

on costs.

People: In the people’s risk area the uncertainty related to the need for the

development of a certification network is seen as a unavoidable risk. Other risks

identified were the need to take on specialized staff, staff competition between

parent companies and the Joint Venture and awareness of staff dealing with the

innovative concept of ZERO-PLUS.

Legal: All options have the legal challenge of obtaining intellectual rights and

patents for the items developed within ZERO-PLUS by different partners. This issue

needs to be addressed as soon as possible to avoid future problems. Secondly,

procurement policies of the organisations potentially involved need to be examined

for their compatibility withthe creation of the Joint Venture.

Market: The major risks from the market are the uncertainties related to the creation

of a new brand, the need to do market research regarding the interest in the service

or product offered, and most commonly, competitors.

External: The principal risks in the external area are the possibility of EU policy

changing and the non inclusion of national regulations. In some options, national

and local regulations are needed for compliance and for planning permits.

Stakeholders: As regards stakeholders, the risks are lack of interest for the option

as a whole, the possibility of losing the power to take decisions due to lack of


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knowledge9, lack of external validation from stakeholders that are not part of the

ZERO-PLUS project.

Time/Cost: the main risks as regards this category are related to the

mismanagement in economic terms that could led to the shortfall in revenue for the

different stakeholders that conform the organisation that leads the Passport or

Standard. This issue was raised in the cost assessment previously. There is a

general possibility for every business of not achieving revenue generation. The Joint

Venture is not risk free of this possibility. In any case, the Joint Venture option will

need more investment than other options to set it up.

People: in this area, the risks identified are related to staff recruitment, especially

for the development of a certification network. This risk in both, the Settlement

Efficiency Standard and the Settlement Passport is considered as high, and there

are no mitigation actions that could be taken in the short term.

7.3.1 Risk Profiles

In the following paragraphs, we describe the risk profiles of each of the options

analysed. The risk analysis method followed here resulted in each option having a pre-

mitigation and post-mitigation risk score, with a higher score indicating higher risk. All

options have similar total risk scores pre-mitigation, while the post-mitigation score for

the settlement efficiency standard remains higher than that of the others. The complete

risk profiles including the description of each risk, can be seen in Annex IV.

Toolkit

Pre-mitigation score Post mitigation score

109 (60%) 59 (33%)

The main risks identified are a shortage in objectives, national regulations,

shortcoming of benefits and shortfall of revenues. The mitigation strategies almost

9 If there are no professionals to channel the standardisation process, either the standard will follow

ISO or CEN norms or someone will need to be trained.


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halved the risk score. There are no risks that remain unacceptable after the mitigation

strategies.



109 (60%) 82 (45%)

The main risks identified are a delay due to methodology uncertainty, lack of

certification network, lack of market interest and competition. All of the main risks are

able to handle with mitigation actions, except from the lack of a certification network,

that remains as a high risk. This option has the highest post mitigation risk score from

the four options.

Settlement Passport


107 (59%) 64 (35%)

The risk profile of the Settlement Passport is very similar to the Standard. The Passport

option also contains the high risk of lacking a certification network. Other risks are the

uncertainty of revenue streams and competition. For the first risk, an early involvement

of financing institutions such as Banks and Big developers was proposed in order to

link the passport with the possibility of cheaper mortgages or easier loans, and

marketing strategies. As regards competition, one solution might be to target the

market as a B2B.

Joint Venture


109 (60%) 66 (36%)


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This option is somewhat less risky than the others. The main risks identified are the

integration of innovation, procurement policies of the Joint Venture partners, patents,

and the uncertainty of revenue. The last one is considered a normal risks when a

company is created. Mitigation actions were considered for every option, except for

the risk of changes in European Policy, as it represents a very low possibility in the

short term.

7.3.2 Conclusion

While before risk mitigation all options have similar scores, after mitigation only the

standard has a higher score than the others, although the difference is small. This is

because mitigation actions can deal with all risks in the short or medium term, while

establishing a certification network represents a very tough task. Both, the Passport

and the Standard have this problem. The reason why only the standard has a higher

post-mitigation score is because the final score is the sum of the individual scores,

therefore, even the highest single score and still difficult to mitigate, impacts relatively

little in the overall score.

7.4 Deliverability

An implementation timetable for each option is considered in this section (see Figure

17). The time frame chosen was 5 years.

Each option was analysed according to 9 business development activities. These are:

Define scope: this activity refers to the planning of objectives and the

precursory research that is needed to sustain the Business Plan.

Internal Stakeholder Management: this activity encompasses the management

of the stakeholders’ different interests, including pre-procurement discussions

as well as intellectual property.

External Stakeholder Management: this activity contains the discussions

needed for external validation, as well as contacts with the market and

prospective clients.


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Training: the main activities developed under training include staff training, as

well as developing a network of certifiers and an e-learning portal.

Recruitment: Recruitment is the ongoing process of acquiring talent for the

operation of the selected option.

Procurement: Under procurement fall the initial procurement between partners

and how the business relations are established between the option and its

customers.

Establishment: this activity relates to the time taken into account when

analysing costs and considers all those sub activities that need to happen in

order for the company to start operating, for example, internal procedures and

policies.

Operations: Is the proper economic activity, when the service or product is

offered and the option enters the market.

Monitoring: The monitoring activity refers to the monitoring of the performance

of the option according to the parameters that are established between

stakeholders.

In Figure 17, time is divided into semesters. In semester 4 (crosshatched in the Figure)

the Business Plan (BP) will be delivered.

Time in semesters (Up to month)

1

(1/18)

2

(7/18)

3

(1/19)

4

(7/19)

BP

5

(1/20)

6

(7/20)

7

(1/21)

8

(7/21)

9

(1/22)

10

(7/22)

Settlement

Efficiency

Standard

Define Scope

Internal Stakeholder

Management

External

Stakeholder

Management

Training

Recruitment

Procurement


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1

(1/18)

2

(7/18)

3

(1/19)

4

(7/19)

BP

5

(1/20)

6

(7/20)

7

(1/21)

8

(7/21)

9

(1/22)

10

(7/22)

Establishment

Operations

Monitoring

Joint

Venture

Define Scope


Management

External

Stakeholder

Management

Training

Recruitment

Procurement

Establishment

Operations

Monitoring

Settlement

Passport

Define Scope


Management

External

Stakeholder

Management

Training

Recruitment

Procurement

Establishment

Operations

Monitoring

Toolkit

Define Scope


Management

External

Stakeholder

Management

Training

Recruitment


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1

(1/18)

2

(7/18)

3

(1/19)

4

(7/19)

BP

5

(1/20)

6

(7/20)

7

(1/21)

8

(7/21)

9

(1/22)

10

(7/22)

Procurement

Establishment

Operations

Monitoring

Figure 17 Implementation timetable

7.4.1 Implementation plan profiles

Options are ranked from 1 to 4 according to implementation time, 1 being the most

appealing option as regards implementation time.


Rank: 4

The implementation plan for the Settlement Efficiency Standard has the most distant

start of operations, and the most intensive establishment phase. This makes this

implementation plan the least attractive from a time perspective. Moreover, external

stakeholders need to be involved earlier than in the other options, and before the scope

is defined. Estimated start of operations is the end of 2022, with a high probability of

delays.

Joint Venture

Rank: 2

The particularity of the Joint Venture implementation plan is that procurement needs

to be discussed among the partners, before establishment of the joint venture. If

successful, this option could deliver major revenue streams for participants. Therefore,

internal procedures and intellectual rights need to be addressed as soon as possible,

even before the Business Plan is finished. External Stakeholders can be managed


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before the start of operations, using parent organisation channels to start testing the

idea of the new company. Possible start of operations: 2021.

Settlement Passport

Rank: 3

The Passport option follows a similar implementation plan as the Standard, but needs

less time to become established. This is because there is less need to obtain external

validation. The passport option is thought to be less focused on compliance with

policies and regulations, and more related to marketing and finance. For this option,

training would ideally start before the start of operations, so as to have a minimum

number of professionals that know how to fill in the passport. An estimated start of

operations is in 2022.

Toolkit

Rank: 1

The toolkit option has the advantage that it can start with the procurement and

establishment phases before the Business Plan, and as soon as the main components

of the tool, the outcomes of ZERO-PLUS, have been adapted for commercial use. After

that, the main activities needed are more to do with software and its issues, as well as

establishing marketing. Overall, this option has one of the earliest operations start

dates. Training and recruitment activities can also be done in advance, as the

monitoring of business KPIs. The estimated start of operations for this option is the

second half of 2020.


8. Option Analysis: Attractiveness and Achievability

In the previous sections, we have looked separately at each of the main aspects

influencing the attractiveness and achievability of the four options we have chosen to

analyse in depth: benefits, costs, risks and implementation time. In this section, we

analyse the options by comparing the four aspects for each of them. The main results

of the options analysis are summarised in Table 11.

Table 11 Option analysis summary

Attractiveness Achievability

Benefits (%)

Costs Risks (%)

Deliverability (Implementation time)


72% High 45% Long

Joint Venture 54% Medium 36% Medium-low

Settlement Passport 53% Medium-high

35% Medium

Toolkit 70% Low 33% Short

The settlement efficiency standard has high benefits but also high costs, high risks and

would take the longest implementation time.

The joint venture and the settlement passport have relatively low benefits. However,

the joint venture does so with medium costs and medium term implementation time. It

also has a low risk score.The settlement passport, on the other hand, needs medium-

high investment costs and a longer implementation time than the Joint Venture or the

toolkit to start operations.

At last, the toolkit seems to achieve big benefits, in a shorter period of time, with low

risks and low costs.

Figure 18 gives a visual representation of these results, where for each of the four

aspects analysed a greater distance from the center means a more desirable result.

The figure illustrates that while the benefits of the Settlement Efficiency Standard are

potentially the greatest, overall the toolkit comes out best.


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Figure 18 Option Analysis summary

8.1 Attractiveness and Achievability Indexes

The final stage in the option analysis is, as described in Section 2, the creation of an

Attractiveness-Achievability chart. In order to show the results in the Attractiveness -

Achievability graph, we normalised the ratings of each parameter, as described below:

1. Achievability index: the index is formed by the risk index and a deliverability

index, with a weight of 0.5 each sub index.

a. The risk index is formed as follows: The scores shown in

b. Table 9 were normalised to a score out of 5, with 5 being equal to the

maximum possible figure of 180.

c. The deliverability index is a scale from 1 to 5. Each option is given a

score according to if they can deliver before the end of the Project (5).

At the end of the project (4), just after the end of the project (3), within

a year of the project end (2), or more than a year from the project`s end

(1).

Benefits (farther fromcenter - higher benefits)

Costs (farther from center- lower costs)

Risks (farther from center- lower risks)

Deliverability (fartherfrom center - shorter

delivery time)

Settlement Efficiency Standard Joint Venture Settlement Passport Toolkit


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2. The attractiveness index is formed by the cost index and the benefits index

with a weight of 0.5 each.

a. Cost index: each option was given the lowest score from the following

scale:

i. Low- (8-10),

ii. Medium-Low (6-7),

iii. Medium (5),

iv. Medium-High (4-3),

v. High (2-1).

b. Benefit index: The number of benefit points for an option out of a

maximum of 1000

8.2 Attractiveness

Measuring attractiveness means, understanding the relation between benefits and

costs. In the graph below (see Figure 19), the options that are higher and to the right

(i.e. the options that have the highest benefits or the lowest costs) will determine the

attractiveness frontier. In this case, the graph shows that the joint venture and the

0

200

400

600

800

1000

0 1 2 3 4 5 6 7 8 9 10

Ben

efit

s

Cost Indext

Attractiveness

Settlement EfficiencyStandardJoint Venture

Settlement Passport

Toolkit

Figure 19 Attractiveness of the options for the Zero Plus BC.


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settlement standard define the attractiveness frontier. The area up and to the right of

the frontier includes all the options that are attractive. The Settlement Efficiency

Standard, which provides the highest benefits, has also the highest cost of

implementation (represented by a low-cost index). This is why the option is less

attractive than the toolkit and the joint venture. The settlement passport is the only

option that would be discarded for its low attractiveness, since it has low benefits

combined with a relatively high cost.

8.3 Achievability

In the case of achievability, we measure risk and implementation time (deliverability

index). As seen in the graph (see Figure 20), the toolkit and the settlement passport

would be the two more achievable options. We need to understand that, although the

passport looks like one of the options that would define the achievability frontier, the

option has some risks that couldn’t be mitigated. Therefore, the second best option for

risk, the joint venture, replaces the passport as the best option from a risk point of view.

In any case, we decided to drawn a diagonal line to show that the toolkit, amid the risk

issues with the other options, is still the most likeable option to achieve its goals in the

determined period of time.

Figure 20 Achievability graph

0

1

2

3

4

5

6

012345

Del

iver

abili

ty I

nd

ex

Risk index

Achievability


Joint Venture

Settlement Passport

Toolkit


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9. Conclusion: comparison of the options

The graph below (see Figure 21) represents the interaction of the achievability index

and the attractiveness index. The graph shows the four options selected for the

analysis, and how they performed in the two indexes. The graph helps understand

which options would be better to choose to continue with the business case.

Three alternatives are explained for the option analysis in the short term. The first

alternative, shows that the best options are the settlement efficiency standard (the

option with the highest attractiveness index) and the toolkit (the option with the lowest

achievability index) (see Figure 21). The achievability index is most beneficial as low

as it can get. In this case, the toolkit gets a negative score meaning it is the most

achievable.

Figure 21 Achievability & Attractiveness Graph.

1

2

3

4

5

6

7

8

9

10

-2-101234567

Att

ract

iven

ess

Ind

ex

Achievability index

Achievability & Attractiveness


Joint Venture

Settlement Passport

Toolkit

AB

C

D


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The main drawback of this alternative for the selection of the preferred option is that

the Settlement Efficiency Standard (point B) is the least interesting option in terms of

achievability.

In the second alternative, the Settlement Efficiency Standard was excluded due to the

high score in the achievability index. With this option removed, the options from where

to choose, are reduced to the second best in terms of attractiveness. In this case, the

Toolkit (A) is considered the first option in both achievability and attractiveness.

In a quest to give the BC owners with options, a third alternative is analysed to

determine the second-best option after the Toolkit. Between the Settlement Passport

(C) and the Joint Venture (D) there are no big differences in terms of achievability or

attractiveness, as seen in the graph and index performance. Both options are in the

middle range, and perform better than the Standard in terms of achievability.

The Settlement Passport, although, has a major inconvenience that is not reflected in

the index performance. The implementation time for it, may incur delays due to the

unavoidable risk of not being able to develop network for certification.

The Settlement Efficiency Standard and the Settlement Passport, therefore, are

options that will better be considered in the long run. The Toolkit and the Joint Venture,

on the other hand, represent the first and second best options. This means that the

implementation of the latest’s, have the most chances to get the most benefits, with

the less costs, less risks and in the less time frame.


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http://www.accountingtools.com/types-of-constraints

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theory/strategy/constraints.html#axzz4YrHWkWEj

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Isaac, M., Pana Tronca, L., & Gajsak, M. (2016). Market analysis of trends in the contrsution of

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2015/Procurement-Efficiency-%E2%80%93-Top-3-KPIs

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Annex I EU Horizon 2020 Projects

IDEAS10

Objective: The IDEAS project aims to illustrate how communities, public authorities,

and utility companies across the EU can be engaged in the development and operation

of energy positive neighborhoods and the economic and environmental benefits of

doing so. Start of the project: 2007, end of the project: 2013.

Methodology: To this end, IDEAS will demonstrate how energy positive

neighborhoods can be cost effectively and incrementally implemented by designing,

testing and validating:

Products:

a neighborhood energy management tool to optimise energy production and

consumption;

user interfaces that engage communities and individuals in the operation of

energy positive neighbourhoods;

a decision support urban planning tool to optimise the planning of

neighbourhood energy infrastructures;

business models to underpin energy positive neighbourhoods that engage end

users, public authorities, and utility companies.

Business models: The IDEAS project has developed business models to enable

existing companies with expertise in the energy industry to evolve into a new type of

service provider. We called this new type of service provider an Energy Positive

Neighbourhood Service Provider (EPNSP).

Earlier research, conducted as part of the IDEAS project, developed business models

for EPNSPs tailored to the requirements of the key stakeholders at the project pilot

sites in France and Finland. These business models have two key ‘revenue streams’

which represent the source of profits for an EPNSP:

10 http://www.ideasproject.eu/

http://www.ideasproject.eu/


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1. Energy arbitrage and efficiency gains obtained through optimising the production,

storage/retrieval, and selling of local renewable electricity and heat production.

2. Integrated Energy Contracts (IEC) which combine energy efficiency and renewable

energy supply and management in large buildings and groups of buildings in the same

locality owned by the same organisation.

INTREPID11

Objective: INTrEPID is an FP7-ICT project that aims to develop technologies that will

enable energy optimization of residential buildings, focusing initially on the optimal

control of internal sub-systems within the Home Area Network (HAN), but then also

providing adequate mechanisms for effective interaction with external world, including

other buildings, local producers, or electricity distributors, enabling energy exchange

capabilities. Start of the project: 2012, end of the project: 2015.

Methodology:

Developing advanced monitoring and diagnostics concepts and ensuring that

the achieved savings are sustained over long periods of time without being

degraded by deteriorated performance of both mechanical equipment and the

monitoring and control system itself;

Developing supervisory control strategies and energy district management

capabilities able to coordinate larger subsystems (heating, ventilation, air

conditioning, lighting, renewable energy generation, thermal storage, etc.) and

orchestrate operation of the numerous devices in such systems;

Supporting inter-building energy exchange. An energy brokerage component

has been developed to communicate directly with other buildings and local

producers to negotiate possible use of the electricity produced locally on their

premises in order to increase interoperability of buildings and to address the

challenges related to deployment of future Smart Grid concepts and

technologies;

11 http://cordis.europa.eu/project/rcn/105992_en.html


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Involving actively the pilot users as a key part of an Internet Of Things (IoT)

energy management system.

Products:

Embedded intelligent systems and middleware technologies for integration of

heterogeneous data coming from sub-meters and sensor networks will be developed

with the purpose to efficiently monitor and control appliances and sub-systems in

buildings/homes, and increase their energy efficiency.

These technologies will enable optimization at different levels:

Device level: optimization of individual devices energy consumption supported

by continuous monitoring and diagnostics to detect deteriorated performance.

Devices considered include white goods and AV equipment.

Home/Building level: optimization through the coordinated control of local

consumption, generation and storage devices.

District level: optimization through the ability to perform energy exchange with

other participants connected to the electricity grid.

Business cases: The project identifies BC with the three major area of interests.

These are described using e3value diagrams (http://e3value.few.vu.nl/). Each Business

Case includes: a description, roles, description of value flows, diagram, additional

scenarios, use cases (functional scenarios).

Customer awareness: in this case the end user, the consumer has an interest in

receiving information about his/her energy consumption.

1. The consumer gets energy from Energy Provider in exchange for money.

2. Energy Provider pays to Meter Data Collector to get the information about

Consumer’s consumption for billing purposes.

3. Analytics Service Provider pays a fee to the Energy Provider in order to participate

in the solution, i.e. to be able to offer services to the Consumer.

4. Analytics Service Provider processes consumer data received from Meter Data

Collector.

http://e3value.few.vu.nl/


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5. The consumer receives information on potential energy savings from Analytics

Service Provider in exchange for a subscription fee.

Control of energy consuming devices: In order to decrease the energy

consumption, INTrEPID has to be able to affect the behavior of energy

consuming devices. This includes both offline and online scheduling of devices

as well as on-demand remote control of the devices by the end user.

Energy retailers /ESCOs-provided services: the Energy Broker would be the

central actor and would act as a medium for the other actors to interchange

energy and cash flows.

ORIGIN12

Objective

The primary objective is to demonstrate significantly increased uptake of locally

installed embedded renewable generation, and associated carbon dioxide emission

reductions, via the use of the ORIGIN smart ICT architecture. Start of the project:

2012,end of the project: 2015.

The ORIGIN project is supposed to provide communities with an energy management

tool to monitor and orchestrate energy consumption and generation on a community

level.

O1: Develop the ORIGIN smart ICT architecture and deploy it in each of the

three validation communities (Damanhur, Findhorn Foundation Community,

Tamera).

O2: Evaluate and demonstrate the acceptability of the ORIGIN approach to

end users.

O3: Demonstrate significant increased uptake of locally generated renewable

energy in each of the validation communities.

O4: Define and deliver a transferable implementation process

O5: Define a range of appropriate business models for energy-aware

communities

12 http://www.origin-energy.eu/


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O6: Widespread dissemination of project results.

Methodology

The ORIGIN system will address the mismatch between energy supply and energy

demand by integrating consumption and generation subsystems on a neighbourhood

or community scale. In brief, ORIGIN’s advances beyond the state of the art can be

summarised as the following list of distinct elements, while a key advance in itself is

the integration of all these elements within a single solution:

Prediction of energy demand at both individual building and community levels;

Prediction of renewables supply;

Optimisation to deliver control actions and suggestions;

Development and deployment of a hierarchical coordination structure to

organize and enable community level energy demand coordination;

Empowerment of residents, occupants, and facilities managers with clear and

rich information about current usage, predicted demand, and predicted

availability of renewable, along with justified suggestions for behaviour and

control actions.

Methodology for economic outreach

A central element of the report is the selection of an appropriate business model

opportunity and its detailed elaboration on behalf of the communities involved. The

project team used the Canvas approach to identify promising business opportunities

for communities and public utilities which as small utilities often take care of the energy

supply for citizens of a small municipality. With a SWOT approach each business

model was evaluated and assessed by applying a score model. The most appropriate

business models are the informational demand response model which is already

valuable today and the actuation demand response model. The actuation model which

considers dynamic tariffs is especially interesting for utilities with experience in the

energy generation and distribution domain. For other actors it is not applicable.

Furthermore, these business models may be combined with the business model for

forecasting renewable energy prediction. The next step is to test and evaluate the


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informational demand response model and the actuation demand response models in

the three communities. The economic evaluation will take place from the point of view

of the Findhorn community as its local characteristics offer a significant adaptability

potential to other communities and small municipalities within Europe.

Products

The project provides a solution for providing prognoses of load and generation,

“knowing” local flexibilities (e.g. controllable loads) and scheduling the operation of

flexible units. It can also be used to generate incentives (e.g. via flexible tariffs) for the

members of the communities.

The first one is an informational demand response system by including the

opportunity to extend it to an actuated demand response system as soon as

dynamic tariffs become more attractive for end customers.

The second business model is the prediction of renewable energy generation.

Hence, the ORIGIN Joint Venture will be established to commercialize these

two business models.

Business Case

The project established a Joint Venture between the participant members. The project

team favors a contractual JV instead of an equity based JV agreement. As long as the

ORIGIN system is not evaluated the risk of establishing an equity based JV is quiet

high since the efforts to shape the ORIGIN CEMS for real market applications are still

unknown.


ANNEX II Survey

This survey is being carried out by E Co. to collect information for the work of WP8:

Market analysis and model for business growth. In this WP we are now developing a

business case for the application of the technologies and processes developed in the

ZERO-PLUS project.

The business case will help us to make a decision on a product or service for which

we will develop a business plan. The business case (BC) will analyse the different

opportunities and choices, and the benefits, costs and risks of a number of options

selected for analysis.

Start press ENTER

1. Which ZERO-PLUS partner organisation are you representing?

2. Please consider products or services that could grow out of the ZERO-PLUS

project. Rate how important the following potential benefits of such a product

or service are for your organisation on a scale of 1 to 5, with 1 being not

important at all, and 5 being very important.

Benefits: In this context, benefits are the positive outcomes the ZERO-PLUS partners

are looking for from a product or service that could grow out of the ZERO-PLUS project.

a. Contributing to high quality research, innovation and constant improvement of

processes in the construction industry


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b. Contributing to high quality research, innovation and constant improvement of

processes in the construction industry.

c. Increased sales of energy efficiency products or services, through reducing

costs for end users (economies of scale)

d. Demonstrate the readiness of products and processes that are part of the

ZERO-PLUS concept.

e. Enhance the reputation of participants.

f. Provide a clear roadmap for achieving compliance with European regulations

for energy efficiency in buildings.

g. Improve the quality of service to customers that would use or buy a ZERO-

PLUS service or product.

h. Integration of the construction supply chain.

i. Increase awareness of sustainability in the construction industry.

j. Energy savings by users of the final product or service.

k. Energy security of users of the final product or service.

l. Are there any other benefits you would add? please type them here and grade

the importance of each one from 1 to 5 using brackets

3. What factors (constraints) might prevent the service or product that might come

out of the ZERO-PLUS concept from achieving its goals?

a. Availability of finance

b. Availability of skills and labour

c. The market is saturated

d. Materials of supply limitations

e. Internal limitations to collaboration between the ZERO-PLUS partners


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f. Legal constraints such as labour law, industry regulations or intellectual

property

g. Lack of demand for the products or services

h. Time constraints such as delays in the implementation

4. In your opinion, what product(s) and/or service(s) could best take the ZERO-

PLUS concept forward? Please explain.

5. You are a:

Research Partner

Technology Partner

Case Study Partner

6. (Only to Technology providers) Competitors: In the questions below, please note

up to three main competitors of your organisation and what you see as their

most important added value.

We are asking this because in our deliverable, in order to develop the business case

we will also be looking at the main competitors.

Name of competitor - Added value of competitor - Comments

7. (Only to Technology providers) Below, please define up to 3 Key Performance

Indicators that your organisation uses to assess the performance of the product

or service that you provide, compared to that of competitors.


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8. (Only to Case Study Partners) In your experience, what are the 3 main categories

of direct costs in a project constructing an energy efficient settlement (For

example, materials, labour, expenses, transport, etc).

Separately to the development of the business case, in WP8 we are also analysing the

market potential for new residential energy efficient settlements in the EU. In this

deliverable, we will analyse costs in the construction industry, as well as the different

roles in procurement within project developers.

9. (Only to Case Study Partners) In your experience, what are the main categories of

transaction costs that affect the construction of energy efficient settlements?

Here we understand transaction costs as being a cost incurred in making an economic

exchange of some sort. In other words, the cost of participating in a market.

10. Are there any other comments you would like to make that will assist us in

developing the business case and analysing the market potential?

Thank you for your time, we will see you in Palermo


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ANNEX III Risk Tables

For each risk, a impact and probability score was given. After, a mitigation action was

proposed. In some cases, there weren’t mitigation actions that could handle the

identified risks. A new score post mitigation was allocated to each risk. Each option

has a pre and post mitigation strategy score. For the Toolkit see Table 12, for the

Settlement Efficiency Standard see Table 13, for the Settlement Passport see Table

14, and for the Joint Venture see Table 15.

Table 12 Risk analysis for the Toolkit

No Risk area Risk title Description Impact (out of

10)

Probability (out of 10)

Score (out of 20) Mitigation approach

Score after

mitigation (out of

20)

1 Technology Innovation Integration

Innovative technology from the project is difficult to integrate in buildings.

6 7 13

When selecting technologies, evaluate for ease of integration. Train experts on how to integrate the technology.

8

2 Technology Online

platform

Possibility of not finding a suitable platform and software to sustain the toolkit and maintain it.

7 2 9

Select easy to manage software and have a team dedicated to support the website platform.

4

3 Business Process

Not achieving objectives

The toolkit don’t lead to its objectives

9 5 14

Order a third party to certify the quality of the procedures the toolkit proposes.

8

4 Legal National

regulations

The toolkit doesn’t adjust to national or local regulations on construction making construction illegal

7 7 14

Work with clients to develop recommendations that are in agreement with

regulations

3

5 Legal Intellectual

Property

Partners that don’t participate hold property rights of some technology or project development

9 4 13

Ensure that any proposed toolkit does not depend on

tools owned by non-participants

9

6 Market Competition

There are other toolkits for Energy efficient settlements

6 4 10

Marketing to clarify the positioning of the toolkit

and how it is different from other existing solutions

4

7 External EU CO2

objectives

The EU lowers ambition of CO2 reduction targets

6 1 7 NA 7

8 Stakeholders Shortcoming of benefits

Stakeholders don’t get the benefits that they expect and want to exit

7 7 14 Hold regular meetings between stakeholders and create an exit strategy

8


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No Risk area Risk title Description Impact (out of

10)

Probability (out of 10)

Score (out of 20) Mitigation approach

Score after

mitigation (out of

20)

the toolkit business

9 Time/Cost Shortfall of

revenue

The toolkit don’t generates enough revenue to break even from investment

9 6 15 Hold regular meetings between stakeholders and create an exit strategy

8

109

59

Pre-mitigation risk score: 109 out of 180 (60%)

Score after mitigation: 59 out of 180 (33%)

Risk analysis for the Settlement Efficiency Standard (Table 13)

Table 13 Risk analysis for the Settlement Efficiency Standard

No Risk area Risk title Description Impact Probability Score

(out of 20)

Commentary/mitigation

Score after

mitigation (out of

20)

1 Technical Geographical

inclusion

The Standard has a limited

geographical application

4 8 12 Study the possibility to expand the climatic regions to more than 4.

10

2 Business Process

Time extension

Development of a standard is time consuming.

6 9 15 Get an early involvement of a standard expert

11

3 Legality Patents

Problems of ownership of the patent of the Standard

6 3 9

Establish a group work to solve differences

between ZERO-PLUS partners.

7

4 Market Lack of interest

Difficulty breaking into the market

9 5 14

Organize dissemination activities and industry members to understand the ZERO-PLUS approach.

9


Competition from other standards like Passive house or Active house

6 8 14

Explain as the value proposition how the

settlement level approach is an advantage compared to the building level approach of existing

standards

7

6 Stakeholders Stakeholders

decision making

The lack of internal expertise in managing a Standard would make the stakeholders

6 3 9 Train Stakeholders on Standards and methodology

6


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(out of 20)

Commentary/mitigation

Score after

mitigation (out of

20)

relegated in the decision making

7 Stakeholders External

Validation

The Standard doesn’t get enough external validation

7 5 12 Get early involvement from ISO and the ESB

10

8 People Specialized

Staff

Lack of specialized staff on standards and quality procedures.

4 6 10 Define staff needs and start search at an early

stage 8

9 People Certification

network Lack of a network for certification

7 7 14

Certification can start with partners but it will take time to develop a network.

14

109

82



Risk analysis for the Settlement Passport

Table 14 Risk analysis for the Settlement Passport


(out of 20)

Commentary/mitigation Score after mitigation (out of 20)

1 Technology On-line portal

Impossibility of finding an online

platform that would fit the needs of the

passport

6 2 8 Establish platform 5

2 Business Process

Methodology uncertainty

Extension of time frame due to uncertainty of the methodology to develop a passport.

4 9 13 Get an early involvement of a standard expert

8

3 Business Process

Fail demonstration

of goals

The passport fails to demonstrate its use

7 4 11

Ensure a third party assessment before the Passport goes to the market

6

4 Legality Patents

Problems of ownership of the patent of the Passport

6 3 9

Establish a group work to solve differences between ZERO-PLUS partners

7

5 Legal National

regulations

Possible difficulty in developing on building passport

4 6 10 The Passport must include regional and national guidelines as

4


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that can be used in all EU countries

well as European regulatins

6 Market Lack of interest No one uses the passpot

8 3 11 Aim to link the passport to finance (mortgages) and marketig

8


and the existence of other passports

in the building level means that the market niche ZERO-PLUS must

focus on is the settlement level

7 8 15

Target the market as Bussines to Business to

increase the possibility of attracting big developers.

5

8 Time/Cost Uncertain revenue

Uncertainty of revenue stream

6 9 15

Early involvement of Banks and Big Developers. Possibility to include specifications for each customer.

6

9 People Certification

network Lack of a network for certification

7 8 15

Certification can start with partners but it will take time to develop a network.

15

107

64



Risk analysis for the Joint Venture

Table 15 Risk analysis for the Joint Venture


(out of 20)


1 Technology Innovation Integration

Innovative technology from the project will be difficult to integrate.

6 7 13 Improve communication channels between project participants.

6

2 Legality Procurement

Internal Procurement policies from each partner can delay or cancel the creation of a Joint Venture

8 5 13 Organize procurement team meeting with project participants

7

3 Legality Patents

Stakeholders that decide not to participate wont give property rights to fundamental parts of the products or services the Joint Venture wants to market.

9 5 14 Establish a group work to solve differences between ZERO-PLUS partners

10


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(out of 20)


4 Market Awareness

Target companies wont understand the value proposition, and therefore don’t buy the products or services.

8 3 11

Pay sufficient attention to marketing, starting with the sse of traditional marketing channels from each partner to promote the new product.

7

5 External Policy

Changes in EU regulations for some members state might change rules for business.

2 7 9 NA 9

6 Stakeholders Lack of interest

Some partners wouldn’t want to participate in something out of their core business

7 6 13 Develop a Business Strategy including revenue scenarios

8

7 Time/Cost Uncertain revenue

Uncertainty of revenue stream timeline

6 9 15 Establish a board that oversees the business strategy and cost analysis

10

8 People Staff

Competition

Shared staff between the Joint Venture and the parent companies don’t pay enough attention to the new business.

5 5 10 Establish minimum time allocation and performance objectives.

5

9 People Staff

awareness

Staff don’t understand the value proposition of the Joint Venture.

6 5 11 Train staff on the ZERO-PLUS concept.

4

109

66



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