HVAC System ROI: The Power of Metrics
Commercial facility owners and managers find incredible value in using operating costs, projected usage, historic analysis, and other metrics that have a bearing on the true ROI of an HVAC upgrade. These metrics enable facility owners to quantify the value of investing in commercial HVAC services. Here is a real-life example of a project driven by such data.
In 2012, a large, multi-use parking garage in Chicago, which is privately owned and managed, was in need of routine maintenance to safely serve both the residents of a condominium community and the public.
When our energy engineers first inspected the HVAC system in the parking garage, they quickly noticed that the system was already past its expected lifespan as half the exhaust fans weren’t operating due to electrical problems. In addition, since the system was nearly 40 years old, and was basic for its time, it had no control system beyond a thermostat. As a result, the fans were running 24/7 and the facility was literally blowing heat out the vents most of the year, resulting in tremendous, unnecessary utility expenses.
Although Midwest Mechanical was contracted to handle routine maintenance, our technicians went a step further and recommended additional repairs, replacements, and upgrades to bring the garage up to compliance for ventilation and optimal performance -- and to help the owners save wasted money by improving efficiency.
Of course, the cost of those upgrades wasn’t small, and the owners were concerned about cash flow. So, the conversation ended on that note. They appreciated our recommendations, but decided not to move forward with them.
The Power of Technology
Over the next few years, Midwest Mechanical’s maintenance technicians continued to service the facility as best they could while the same nagging issues remained. Engineers would periodically discuss the upgrade recommendations with the owners, but the same concerns over cost blocked the project’s progression.
As technology evolved, the proposal for updating the parking garage’s HVAC system was enhanced by incorporating detailed analysis of historic and expected future operating costs for proposed service scenarios. Eventually, the expected ROI obtainable from heeding the recommendations for updates was impossible to ignore.
The availability of a third-party lending partner proved to be the final piece of the puzzle. Within 60 days, the client had applied for and received a very favorable funding arrangement based primarily on the lending partner’s analysis of the upgrade’s potential energy savings. The contract was signed, and we moved forward installing brand new equipment.
Following the implementation of the suggestions made by our energy engineers, the client noted dramatic drops in their utility costs, both for electricity and natural gas. This was due to better controls and new, energy-efficient heating and ventilation equipment that utilized energy when needed, rather than constantly.
In addition, they were recognized as compliant with city regulations, and took advantage of valuable energy incentives. In summary, they’re expecting $33,000 annual savings on operating costs as a result of this project, and a grand total of $760,000 return on investment over the life of the facility’s HVAC system.
Clearly, the power of metrics can’t be emphasized enough when helping commercial facility owners and managers fully analyze the business case for appropriate HVAC equipment maintenance and optimization.
If your facility has lingering building system needs and you’d like to use building metrics to determine the direction of your upgrades, contact us today and we’ll be glad to arrange an audit and analysis.