Facility Manager Cost Saving/Best Practice Quick Reads RSS Feed
January 27, 2016 -
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The fastest way to implement an intelligent building initiative is to have executive sponsorship. A high-level sponsor or champion for the initiative is critical since any new project requires capital funding to get off the ground and carry through to completion. It is much easier to launch a new project if the owner/investor can see a clear financial payback or return on investment. This is especially true for initial ventures by an unproven team.
In order to receive executive sponsorship, the project team must be able to articulate what the ROI will be for each of the intelligent building initiatives. The project must then deliver on the promised payback in order to build executive trust for future capital funding. Build each new initiative on the success and payback of previous initiatives.
Calculating payback for most energy savings initiatives is fairly straightforward: multiply the reduction in energy consumption by the local utility rates. Payback calculations for other non-energy benefits can become more complex, and require carefully defined assumptions and stipulations since there are many variables that can contribute to ROI. For example, integrating the building management system with the asset management and property management systems should result in primary payback from increased operating efficiency, but could also result in a secondary payback from increased tenant retention due to enhanced comfort and quicker response times. While it may be reasonable to isolate the payback related to operating efficiency, it is much more difficult to attribute increased tenant retention to the one initiative, when viewed against a backdrop of the many other factors at play.
Because smart systems initiatives require a deep understanding of building systems, it is often useful to hire a third party that has a fundamental understanding, not only of the underlying smart systems and of the communication technologies required to enable intelligence by integration, but also the business drivers that are meaningful in the boardroom, including how to quantify ROI and formulate long-range strategies. The third-party consultant should be vendor neutral.
This quick read is from Kurt Karnatz, president, Robert Knight, senior associate, and Rick Szcodronski, a senior associate, technology consulting, with Environmental Systems Design, Inc.