This is the second of three posts about the two common business models in the field of energy audits of existing homes. The first one introduced the two business models: contractor and consulting.

In looking at the pro’s and con’s of the contractor business model for home energy audit, there are two distinct points of view: the homeowner’s and the company’s. Let’s look at the pro’s and con’s from the homeowner’s point of view first.

Most of the companies offering home energy audits that a homeowner encounters will be of the “contractor” type; that is, the company will not only do the audit and the report, but they will do the necessary work also. This “one stop shop” is often attractive to homeowners because it alleviates the homeowner having to take the extra steps of getting bids and making a decision about who is to perform the work. Sometimes the cost of the audit can also be lower than one done by a “consultant”. Contractors often use the energy audit as a “loss leader” in order to secure the work. In other words, the audit is performed at cost, or at a discount, and the money is then made up (or added to) the cost of having the work performed.

There are disadvantages of the contractor business model for the homeowner. The primary disadvantage is that there is less guarantee of objectivity in the evaluation of the home. The homeowner has to put more of his or her trust and faith in the contractor: the contractor tells you what’s needed, and then sells you the fix. Unfortunately the “fix” can be what the contractor specializes in, or what work is easiest to perform, or what work makes the contractor the most money.

For example, one contractor refused to bid on the work of insulating the attic of a shed roof (where the attic height is quite low), telling the homeowner it couldn’t be done effectively and that it wouldn’t be cost-effective. Actually, it could be done (the attic’s siding could be removed and insulation blown in). In addition, the issue for the homeowner wasn’t cost-effectiveness, anyway. It was comfort. In this case, the homeowner was more than willing to pay for a comfortable home.

In another variation, I’ve seen situations where an energy audit performed by a insulation contractor finds that insulation is needed, or one by an HVAC company that finds a more energy-efficient HVAC system is needed.

But that’s about the only downside to this business model for the homeowner. Additionally, if the contractor is part of a local program (such as a “Home Performance with Energy Star” program), or is an Accredited BPI company, they will have a certain percentage of their home audits reviewed. (But note that the company must be Accredited – and not simply have a certified BPI Professional on staff – before this quality assurance actually takes place by BPI.) The existence of that kind of quality assurance certainly helps the homeowner consider putting their faith and trust in a contractor. There are definitely a lot of good contractors with satisfied and happy customers in the marketplace. (But, like everything else, there are a lot of not-so-good ones, too.)

From the home energy auditing business point of view, this business model is about the only truly viable option. It’s almost that simple. In other words, the “contractors” are the most successful in the marketplace. They make money. For a company that is already in, let’s say, the insulation, or HVAC, or remodeling business, it’s relatively easy to add home energy audits to the mix and thereby increase sales. For admission into most local programs or BPI accreditation, a company only has to have one BPI trained person on their entire staff.

The contractor is also the business model preferred by federal, state, city and utility energy efficiency programs. Why? Because contractors are almost guaranteed the ability to “test out”. They can do the “before” and “after” pictures and thus demonstrate the energy savings that the energy efficiency programs must themselves demonstrate in order to stay funded.

The key for the homeowner or potential home energy auditing business is to weigh the pro’s and con’s, and then decide which option is the best for them. The next post in this series will continue the discussion by looking at the “consulting” business model from both points of view.

This short post is the first of a three-part series on the existing home energy auditing industry. Today, we’ll set the stage and define terms. Next post will evaluate the “contractor” business model of home energy audits. The final post will look at the “consulting” business model.

There are two different business models for doing home energy audits commonly used by companies. If the company performing a home energy audit also performs the work recommended by the audit (or subs the work out), that company would fall under the “contractor” business model. Here, the audit produces a report. The report lists items in the home that need to be addressed. Then, that same company provides a bid for the work on those listed items. In other words, the report generally provides the Scope of Work for the company’s estimate, telling the homeowner what they think the homeowner needs to have done, and what they’ll charge to do it.

If the company performing the home energy audit does not perform the recommended work, but acts as an independent consultant to the homeowner, that company would have the “consulting” business model. In this case, a report is produced. Recommendations are listed, and they are usually (or should be) written as specifications, often detailed. The homeowner then contracts with another company to complete the work.

Why is this even important? Well, the advantages and disadvantages of each model are different, of course. But, more importantly, the advantages and disadvantages are different depending on whether you are the homeowner looking for an audit or a home energy auditor yourself. In other words, what is good for the auditor may not necessarily be good for the homeowner, and vice versa. Along the way, I’ll discuss both points of view – hopefully, doing so objectively – and perhaps give you the ability to see clearly which model best fits your needs.