THE BUILDING ADVICE BLOG

Six Building Operating Budgets A Competent Mechanical Service Contractor Can Impact

Posted by Jim Crowder on Mar 14, 2019, 11:24:50 AM

Mechanical Service Contractors are uniquely positioned to partner with building owners and operators to measurably reduce operating expenses, the fundamental HVAC value proposition. Using measurement, Service Contractors can easily tap existing operations infrastructure to expand service and track results to substantiate savings claims.

  1. Repairs: If the incumbent contractor is doing a poor or incomplete job, it is likely that repair costs including labor and parts may be escalating depending upon age of equipment and climate.
  2. Lost revenue: Systems failures can shut down many types of operations. From process cooling in manufacturing to maintaining environments (medical equipment) within prescribed tolerances, performance failure has measurable financial impact.
  3. Lost productivity: Research is uncovering measurable impacts IAQ can have on productivity, morale and employee retention.
  4. Capital: A comprehensive Preventative Maintenance program will forestall the need for equipment replacement. This will enable a more predictable, financial based capital planning process and raise your team’s stature as a service provider.
  5. Energy costs: As energy will continue to be the single largest controllable operating cost in facilities, mechanical systems - the biggest consumer of that energy – will continue to be a major source of operating cost savings.
  6. Lighting: Integrating lighting controls and schedules with mechanical systems will have a tremendous impact on energy consumption. Incorporating LED upgrades with proposed mechanical upgrades will help financially justify projects so if you don’t have lighting capability, sub it out.

The Business Case for Including Energy in Your PM Service Conversations

A commercial building’s single largest controllable operating cost is energy, averaging 30%. Factors such as building type, climate and occupancy will vary that percentage. Many owner/operators still don’t realize how big this number is and what you can do for them. Awareness varies by market and building use type, with smaller facilities being less aware. Regardless of utility rates, these are significant costs that can vary greatly.

Building controllable operating costs

The biggest consumers of energy are the mechanical systems in the building. When combined with lighting, these systems will consume from 54-75% of the energy, age of facilities being one of the primary determinants. The corollary is that, often, these systems are the biggest wasters. So, the systems our industry installs, operates, maintains and repairs are also the biggest source of potential energy waste and savings. When combined with the other budgets previously outlined, energy consumption reduction is a catalyst for an update to your PM program’s value proposition.

Commercial Building End Use Graphic

Taken together, these two data points demonstrate that Mechanical Contractors are, potentially, the best positioned to help customers lower their building operating costs. Depending on the building type and the location in the country, a mechanical contractor could impact up to 15-22% of the buildings controllable operating budget from focusing on energy alone. These can be large numbers that owners are frequently not aware of. This is especially true in buildings that are under 100,000 square feet. The key is educating your clients and putting it into simple financial terms.

The point is your PM service is a great platform for helping your clients reduce their buildings’ operating costs. For most of our partners, it doesn’t take anything exotic to deliver this type of value. In many cases, the scope of the PM they are already providing clients is cutting costs. Often, it’s just a case of measuring the impact and educating your client.

Topics: operating costs, HVAC, Energy Savings, Preventative Maintenance, Building Budgets

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