Estimating the costs eligible for reimbursement under the terms of the Energodim Program: recommendations of the EE Fund’s specialists
When homeowners dutifully approach renovation of their house, they usually select measures with maximum value from the standpoint of energy efficiency, comfort, and convenience.
Therefore, often a project on an MFB complex renovation includes both works inside the house, and on the adjacent territory: things, such as arrangement of playgrounds, installation of new stairs and elevators, video surveillance systems and more.
This approach is justified, as the result of a package of implemented measures is more visible, and the effect is much greater compared to a phased renovation.
However, participants of the Energodim program should remember that the program does not reimburse ALL the costs that an HOA may incur in connection to renovation of the house and improvement of the surrounding area. That is, measures under the Energodim program can represent a portion of the whole renovation efforts.
Which measures are covered by the grant of the program “Energodim”?
A full list of the energy efficiency measures, eligible for partial reimbursement within the framework of participation in the Fund's program, is presented in Annex 2 to the Energodim Program. The measures in the packages are split into mandatory and optional, i.e. which a house co-owners can select or drop at their own discretion.
Usually, renovation works in a building begin with the overhaul of the heating system, including the installation of an individual heating station and balancing the risers. However, most houses need in-depth renovation, therefore the Energodim program envisages a set of works on thermal insulation of walls, roofs and basements, replacement of doors and windows in both common use areas and apartments.
PROBLEM_1: HOAs that have enrolled in the program "Energodim" tend to send for verification to the Fund their project design documentation, which includes cost estimates of ALL materials / works planned to be performed in the house, including those that the Fund cannot compensate.
This may happen in a situation, when at the stage of development of design documentation, the designer includes into the cost estimate the total value of the renovation in a residential building including a list of costs for design and implementation of some works ineligible for compensation by the Fund under the terms of Energodim program.
This can lead to incorrect calculation of the grant amount, and to the delay of review and evaluation of the documents submitted by the HOA to the Fund and, subsequently, to the delay in receiving the grant.
How big is the grant offered to Energodim participants?
Under the terms of the Energodim program, the Fund reimburses co-owners for up to 70% of the costs of technical services and up to 50% of the costs of works, equipment, and materials, depending on the selected package of EE measures.
In particular, the Fund reimburses co-owners 70% of the cost of energy audit, energy efficiency certification, drawing and examination of project design documentation, technical and author's supervision, as well as inspection of engineering systems.
In addition, the Fund compensates to HOA 40% of the cost of repair works, equipment and materials for package A "Light" and 50% - for package B "Complex".
The grant amount and terms of payment under the Program as amended, as of December 17, 2020, are here.
How to prepare a correct cost estimate?
Under the terms of the Energodim program, during the preparation of the estimate, the designer must separately indicate in the design and estimate documentation the so-called eligible costs. These are all the costs of HOA, that can be partially reimbursed under the terms of the program "Energodim".
All other works that are not related to energy efficiency measures will be ineligible: they must be listed separately in the works statement (or other document).
The list of construction works, equipment and materials that the Fund compensates is presented in Annex 1 to the Operating Procedure for the Program participants.
IMPORTANT: At the stage of project approval, the designer must correctly determine both the cost of ineligible works, and the cost of their design. After that, such costs should be deducted from the general calculations.
The value of such costs is indicated separately in the acceptance-transfer acts of performed works / services related to the development of project documentation, or in additional documents signed by the authorized person of the contractor - provider of the relevant works (services).
To do this, together with the design and estimate documentation, it is necessary to present to the Fund a statement (or other document) with detailed calculations, where to indicate separately the estimated cost for all ineligible works, together with the following amounts:
- estimated profit;
- administrative costs of construction companies;
- amount to cover the risks of all participants in the construction;
- amount to cover additional costs associated with inflation;
- taxes, fees, mandatory payments established by current legislation and not taken into account as the components of the cost of construction (excluding VAT);
Such statement (or another document) must be signed by an authorized person of the contractor of the relevant works (services).
The documents are submitted by the HOA to the Fund together with the application for project approval and / or the request for changes to the project design documentation.
IMPORTANT: if during the verification of the cost of eligible measures the Fund reveals difference between the declared amount and the project description, the Fund may suspend the term of consideration of the application and enable the applicant to submit appropriate corrections.
PROBLEM_2: At the stage of the development and approval of project design documentation, the designer does not always explain the expediency and practicality of additional costs borne by the co-owners during the implementation of energy saving measures in the house. This, in turn, may lead to a reduction in the size of the grant under the Program.
Examples of such costs may include: construction work in winter and summer, outlays of cash for transportation of construction workers by motor transport and travel of construction workers to the construction site and other additional costs provided by the estimate.
How does this happen? The current legislation allows the designer to include in the overall cost estimate certain additional costs that are not directly related to the construction work, but are an integral part of them, and therefore are considered eligible costs. That is, those which can be partially reimbursed under the Energodim Program.
IMPORTANT: such additional costs borne by HOA must be documented.
Under the terms of the Program, at the stage of verification (i.e., together with the application №4) HOAs must justify the cost of all implemented additional measures that were planned at the project stage and provided in the consolidated estimate.
In evaluating the application, the Fund will take as a basis the costs indicated in the consolidated estimate, but will not take into account the cost of the ineligible measures mentioned above.
At the verification stage, the Fund verifies the costs actually incurred and reflected in the Acts of KB-2v. If the list of actual costs includes funds to cover the risks of all participants in the construction and / or additional costs associated with inflation, and / or other costs that are eligible, the HOA will need to provide evidence and justification of such costs.
This means that if the co-owners explain such additional costs, the Fund will partially reimburse them. Otherwise, at this stage, HOA will receive a grant only to compensate for construction work.
IMPORTANT: the additional costs of the beneficiary for the elimination of defects are not considered part of the eligible costs, i.e., are not subject to partial reimbursement under the terms of the program "Energodim".
Therefore, in order to receive the correct amount of the grant, it is crucial to adhere to the approved project budget throughout the implementation period and to document the justification of additional costs, if any, in the process of project implementation.
We sincerely hope that these clarifications will help HOAs and designers to avoid mistakes and misunderstandings in the implementation of energy efficiency measures, as well as help speed up the review and evaluation of documents by the Fund!
For more information, contact IFC Regional Advisers on the EE Fund Support Program: https://bit.ly/37wJodf
As a reminder, the Fund conducts regular online training as part of the Energodim program for HOAs. Please review the schedule of the School on the Fund’s website.