Risk analysis and control strategy of air compressor contract energy management project

Risk analysis and control strategy of air compressor contract energy management project

Contract energy management is a decentralized secondary investment behavior. In the energy-saving benefit sharing model, the energy-saving service company undertakes most or all of the investment, and correspondingly assumes most of the risks. If you accidentally invest, you cannot get it back. The money project will have an extremely negative impact on the development of the enterprise. Instead of complaining about the "inhuman" after being damaged, it is better to conduct a detailed investigation before investing and try to avoid risky customers. This article sorts out common risk points and recommendations for management and control.

　　 Main risk points of contract energy management projects

　　1. Customer's credit risk

　　 Chinese current credit mechanism is not perfect, and poor customer credit will cause difficulty in collecting payments. Cases of poor customer credit include:

　　The customer maliciously conceals the true information, the purpose is to induce the energy-saving service company to invest in it;

　　After customers request detailed energy-saving solutions, they will implement energy-saving projects by themselves;

　　Intensified competition in the investment market, other energy-saving service companies give more favorable terms, and customers default and cooperate with other energy-saving service companies;

　　 During the execution of the contract, the customer transfers the energy-saving benefits of the project through various means; the customer tries every means to delay paying the energy-saving benefits;

　　 The client unit changes the leadership team, and the new leader is unwilling to perform the original contract.

　　 Therefore, before cooperating with customers, we must pay attention to their credit status.

　　2. Customer's business risk

　　Once the customer's profitability declines due to poor management, it may lead to difficulties in fulfilling the contract and unwilling to pay for energy-saving benefits. In addition, customers may also have risks due to being involved in legal disputes. If the customer is engaged in illegal operations or other major problems and causes business suspension or closure, the energy-saving service company suffers losses.

　　3, contract risk

　　 Energy-saving service contracts signed by energy-saving service companies and customers are often not very complete, and some details are not detailed enough. The imperfection of the contract has caused a lot of risks in the execution of the contract and the settlement of contract disputes.

It is best to invite lawyers to intervene at the contract negotiation stage, as far as possible to clarify the various possibilities in the contract terms, especially the terms of energy saving monitoring and confirmation, baseline determination, energy saving benefit payment, etc. must be clearly and clearly established. Special consideration should also be given to issues such as changes in energy prices, changes in energy supply and demand trends, etc. The relevant clauses need to be clearly set in the contract in advance, and both parties agree and understand the same.

　　4, the risk of the project itself

　　Financial and financial risks: Macroeconomic operating cycle, availability of bank loans as scheduled, changes in inflation rate during the contract period, changes in interest rates, and perhaps exchange rate changes. The financial risk is due to improper consideration, which leads to errors in the energy-saving benefits of the project. To avoid this risk, the energy-saving service company should include all possible costs of the project.

　　Design and technology risks: technology selection, technology purchase, technology advancement and maturity.

　　 Equipment raw material procurement risk: whether the installed equipment can operate normally without any problems. In this regard, energy-saving service companies should require suppliers to provide guarantees for equipment performance, or transfer equipment risks to equipment suppliers as much as possible through certain contracts or agreements to diversify risks.

　　 Project construction risk: whether the subcontractor can complete the work specified in the contract with quality and quantity according to the scheduled schedule and budget, and its reputation, technical training, and subsequent maintenance capabilities.

　　 Energy saving risk: Whether the expected energy saving can be achieved after the project is implemented, this is the main risk for whether the energy saving service company can profit from the project. The energy-saving service company may not calculate the energy-saving amount of the project in detail, and the actual energy-saving output after the implementation of the project is much lower than expected, which will cause the energy-saving service company to fail to recover the investment and profits. In addition, whether the authority and recognition of the assessment agency is sufficient, and the consistency of the assessment standards and content recognized by the energy-saving service company, the assessment agency and the customer are also at risk.

　　 Energy price change risk: Energy price changes will cause changes in the project’s energy-saving benefit assessment results, which will lead to changes in benefit sharing.

　　Investment return risk: determine the specific ratio and period of benefit sharing or fixed return, customer's ability to pay, policy changes, system reform, leadership replacement, etc.

　　Main control recommendations

　　1, evaluate customers in detail and objectively

　　 Rather than complaining about the "inhuman" after being damaged, it is better to conduct a detailed investigation before investing to avoid those risky customers. Evaluation of clients mainly includes three items: basic situation evaluation, financial situation evaluation and understanding of major issues.

　　 Customer Basic Situation Evaluation

　　The time when the client company was established, the amount of registered capital, the capital availability, the name and strength of the shareholders, etc. Generally speaking, if the company’s establishment time is too short, it should be fully paid attention to when cooperating with it; when the company’s registered capital is large, it means its strength is strong; if the client’s shareholder is a powerful large company, then the customer risk will be Smaller. When Shandong Demonstration Energy Conservation Service Company evaluates its customers initially, in addition to evaluating the above basic conditions, it also needs to look at the appearance of the factory, the mental outlook of the employees, and their financial statements to fully understand the operation of the enterprise from all aspects.

　　Customer economic form. Clients are state-owned, private, foreign-funded, or private enterprises, and different forms of ownership often indicate different types of risks. However, it generally varies from region to region and to the stage of social development.

　　 Customer and government relations. Some companies can get the support of relevant government management departments. These companies can more effectively control business risks, but there may be some credit risks.

　　 Corporate organizational structure. Including: how many wholly-owned subsidiaries, holding companies, shareholding companies, and their respective conditions. Understand these in order to fully understand the customer's overall business situation and strength.

　　The overall quality of the enterprise. Such as leadership quality, social evaluation, factory outlook, employee mental outlook, etc. Understand these in order to better understand the company's operating conditions and future development trends.

　　 Customer financial situation evaluation

　　Understand the client's main business and concurrent business. Understand whether the project that the energy-saving service company wants to invest in is related to the main business or the concurrent business. Generally speaking, companies pay more attention to their main business, and the risk of investing in this is less.

　　 Understand the business situation. Including understanding of production capacity, sales revenue, total profit, total assets, net assets and other data. At the same time, it is necessary to understand the market conditions, market competition and market prospects of customers' products. Generally speaking, customers with large scale, continuous growth in production and operation and good market prospects are high-quality customers.

　　 Pay attention to the audit of financial statements. Look at whether its balance sheet, income statement, and cash flow statement have been audited, what are the conclusions of the audit report, whether there are any qualified opinions, and what items need to be explained or adjusted.

　　Financial analysis. Including source analysis of asset changes, analysis of changes in profit changes, analysis of changes in profit composition, analysis of assets and liabilities structure, analysis of profitability, analysis of financial ratios, etc.

　　Analysis of bank liabilities and solvency. On the one hand, we must analyze the customer's bank liabilities, and on the other hand, we must focus on the analysis of customer contingent liabilities.

　　Analysis of accounts receivable and other accounts receivable.

　　 Cash flow analysis. In addition to the analysis of debt solvency and operating ability, the quality of profit and future conditions should also be analyzed. In order to fully understand the customer's past and future financial conditions, and fully evaluate possible risks.

　　 Understanding of important matters

　　 Energy-saving service companies should also pay attention to major issues that customers may encounter, because major issues often have a huge impact on investment projects. The analysis of major issues mainly includes:

　　Analyze the major construction projects or major investment projects that the client may undertake in the near future;

　　Investigate and analyze major system reforms that may occur to customers, including changes in capital structure and changes in senior personnel; 　

　Understand whether customers are currently facing major legal litigation issues;

　　 Understand whether the customer has made major business or investment errors in the past three years, and if so, what are the reasons;

　　Whether the customer participated in the stock market and futures market transactions. Whether there are violations of regulations and disciplines in the use of funds. If so, the customer will face great legal risks, which may lead to the failure of the investment project of the energy saving service company;

　　 Understanding and analysis of other important project conditions, mainly for the assets and liabilities of customers with abnormal conditions.

　　 Multi-channel understanding of customers

　　The energy-saving service company must ensure that the customer’s business is in good condition and the financial system is sound, and will pay the energy-saving service company the proportion that should be shared according to the energy saving of the project. Therefore, from the beginning, we should have a comprehensive understanding of customers through multiple channels, and understand all aspects of customers through banks, industrial and commercial departments, other customers, customer superior authorities, and customers' customers. The customer situation that needs to be understood includes: the customer's credit, technical expectations, decision-making, development prospects, and the possibility of follow-up projects. And keep in touch with the leaders at all levels and relevant departments of the client unit, and obtain their feedback on the project at any time, so as to improve the work; at the same time, avoid the risks caused by the organizational reform and personnel changes of the client unit.

　　The methods to reduce customer credit risk are: use scientific evaluation methods. The bank's credit evaluation system can be borrowed to eliminate customers with bad credit. Liaoning Demonstration Energy Conservation Service Company has successfully established strategic partnerships with commercial banks and insurance companies, using their customer reputation evaluation system to conduct scientific and systematic evaluation of their target customers. At the same time, correct evaluation and segmentation of the customer base. Based on the evaluation results, combined with the company’s technical characteristics and the province’s industry characteristics, they divided customers into three categories: gold customers, opportunity customers and high-risk customers, and adopted different management models to reduce customer reputation risk to z*low.

　　 When conducting credit evaluations on customers, the personnel responsible for related projects within the energy-saving service company should avoid them because their evaluation opinions may not be objective enough.

　　 Verify the credit status of customers with other units that have business dealings with customers. Such as checking with the customer's original equipment supplier, cooperative unit, etc.

　　Select excellent customers and say "no" to risky customers

　　 On the basis of detailed evaluation of customers, we try our best to select excellent customers. Such customers should have real energy-saving potential and are sincerely willing to cooperate with energy-saving service companies, not because of an urgent need for funds or for other purposes. When selecting good customers, you can also take into account the possibility of opening up more projects with the same customer.

　　 Sign the contract as perfect as possible

We must strive to control risks in the contract, guarantee the normal implementation of the project through the constraints of the contract, and the normal receipt of the benefits of the energy-saving service company. All contract terms should be as perfect as possible, and various possibilities should be fully considered. They are reflected in the contract. 　　 risk spread

　　In order to reduce the risks borne by energy-saving service companies, when conditions permit, risks should be diversified as much as possible. For example, the parties involved in the cooperation will jointly invest some of the funds required for the project to jointly assume the project risks; invite equipment manufacturers to participate in the implementation of energy-saving projects, and use energy-saving benefits to repay equipment costs in installments.

　　 Use other measures to ensure the normal performance of the contract and reduce risks. For example, customers can be required to provide effective guarantee methods such as third-party guarantees or asset mortgages.

　　 Reduce construction risks

　　The energy-saving service company must complete the project within the time specified in the contract so that the customer can pay it on time. If the construction period is much longer than the planned period, the loan interest of the energy-saving service company will increase, and other expenses may also increase. Ways to reduce this risk are:

　　Determine the delivery date of the relevant equipment before formulating the construction schedule;

　　 Carefully plan the construction steps, and involve relevant managers and operators on the customer side in the process so that they can point out potential construction problems;

　　 Let the project manager of the energy saving service company be fully responsible for the project construction;

　　 There is a certain time margin in the construction schedule to prevent possible delays in the construction period.

　　Reduce equipment and technology risks

　　 Although the equipment manufacturer has guarantees for the performance and quality of the equipment, if the installed equipment is not operating well, the energy-saving service company will still bear additional costs for solving the related problems. Ways to reduce this risk are:

　　 Only use proven technologies, and energy-saving service companies should not conduct application tests of new technologies in their business;

　　Use equipment with reliability records;

　　Choose excellent equipment suppliers who are willing to provide guarantees for their equipment. The guarantees provided should include the labor costs for replacing the equipment. It should be noted here that try to avoid accepting equipment from equipment suppliers who are not in a good financial position, even though they also provide generous guarantees. Because once the equipment has a problem, and the equipment manufacturer goes out of business and is unable to perform its guarantee responsibilities, the energy-saving service company will suffer losses at this time.

　　 reduce financial risk

　　 The energy-saving service company should become an expert in project cost analysis, and the project manager should master some financial knowledge. This is an important prerequisite for project profitability. Methods to reduce financial risk include:

　　 Don't ignore the various miscellaneous expenses incurred in the project, they add up to a considerable amount. For example, when replacing the fluorescent lamp ballast, the wires and connectors to be used, although the cost of these materials is low, should also be included in the project cost;

　　 "Indirect" costs such as transportation costs and cleaning up garbage costs should be included in the project cost;

　　Clarify possible "additional" costs, and make the customer clearly understand that these are additional costs of the project. For example, when replacing the motor on a pump or fan, the cost of pulleys, seals, belts, etc. should be included.

　　Reduce energy saving risk

　　 This is where energy-saving service companies are likely to make big mistakes. Ways to reduce this risk are:

　　 Conduct actual measurements on the current status of the project, rather than rely on assumptions. For example, before the renewal and transformation of the speed-regulating transmission equipment, the load distribution of the pump must be determined to accurately calculate the energy saving.

　　 Leave room for the calculation error of energy saving and determine a reasonable margin of error. For example, the actual energy saving is determined by 80% of the calculated energy saving.

　　 Continuously monitor the energy savings of the project, and pay close attention to the early signs that the expected energy savings have not been reached after the implementation of the project, so as to take timely remedial measures.

　　Or introduce a third party to intervene in energy saving monitoring and confirmation work.

　　Reduce investment return risk

　　 This is a unique risk of EPC business, which requires the attention and research of energy-saving service companies. Before the project starts, the energy-saving service company should formulate a feasible risk management plan based on the specific conditions of the customer to ensure that the project investment and the benefits that should be shared are recovered as planned. According to the experience and lessons of domestic demonstration energy-saving service companies, the ways to avoid such risks are:

　　 Know yourself and the enemy, take the initiative and be safe. Only by fully understanding the customer's situation can we prevent problems before they occur, and have corresponding countermeasures to resolve risks.

　　 The benefit sharing and deadline must be clearly discussed with the customer during contract negotiation, and the "why" and "how" must be explained to the customer. For example, the Liaoning Energy Conservation Service Company adopts a closed capital operation mechanism, which better guarantees the return on investment of the energy conservation service company, and at the same time makes it easy for customers to accept.

　　 Establish a reasonable sharing period and sharing ratio, and leave a certain contingency margin to ensure that the energy-saving service company can still recover all the investment in the event of any adverse changes in the customer.

　　 Choose an authoritative energy audit department or other qualified third-party monitoring agency to monitor the energy saving of the project to ensure that the energy consumption assessment and energy saving benefit analysis of the project can be carried out in a fair and reasonable manner. The audit department should preferably be a relevant national department, a local or an institution with greater influence in the industry.

　　 Attention should be paid to effectively handling the limited divergence between energy-saving service companies and customers, seeking common ground while reserving differences, and avoiding possible risks to the sustainable operation of the project. The benefits of the EPC project to customers are not only through energy-saving methods, but also through multiple channels such as reducing equipment maintenance costs, extending equipment service life, increasing output and quality, reducing raw material consumption, and reducing environmental costs.