Project sketch: dynamic budgeting

Our client, a commercial landlord operating business parks in various major European cities, wants to tighten up budgetary control by accurately profiling the forecast monthly consumptions and expenditures on about 30 electricity accounts.

Their developments have extensive submetering of both tenants’ and landlords supplies, and projects we have carried out to date include:

  • Building local energy monitoring and targeting¬† schemes for each development, which can be shadowed and supervised centrally;
  • Carrying out some innovative benchmarking studies of selected tenants’ premises across two developments; and
  • Mapping the installed metering, filling gaps and remedying errors in nomenclature and circuit topology.

The budget refinement project approaches from two directions. A bottom-up scheme uses the expected-consumption formulae for individual submeters based on appropriate combinations of heating degree days, cooling degree days and weekly hours of darkness. Using forecast values of these driving factors, each subcircuit’s projected monthly consumption can be calculated to yield an aggregate total per supply account. The advantage of this is that it makes it easy to allow for planned local changes to the estate; on the other hand completeness is hard to achieve. Therefore the bottom-up method is complemented by a top-down approach in which consumption at the main meter level is modelled, relatively simplistically, against degree-days only based on recent performance with cusum analysis to filter out unrepresentative history.