Take A Close Look At Product ROI Claims

  December 11, 2015

When energy optimization products are being evaluated, the key question is, What will be my ROI? Return on investment is certainly the king of the criteria, and top of mind in any business case. Attractive ROI parameters will be determined by the organization, but it is crucial that facility managers take a moment to really understand how the ROI figures they're being quoted have been calculated. What values are being used for variables such as the cost of electricity, steam, or natural gas used in the calculations? What are the cooling degree-days and the heating-degree days used? "When they make these claims, what's the baseline for electricity?" says Peter Strazdas, associate vice president, facilities management, Western Michigan University. "What city are we talking about? If they don't have that data, well, they found a sweet spot in the country that works well for their numbers. But I'm interested in my environment. You need to look at the variables in your location."

If the ROI claims are legit, Scott Offermann, C.E.M., managing director, critical operations manager, Cushman & Wakefield, suggests facility managers not necessarily cross off smaller figures from consideration. "People always want to have the biggest bang for their buck; they want to do tremendous things and have major impact," he says. "I think one of the issues with that is that energy managers and facility managers miss opportunities because they're looking for the big win and they're not capitalizing on some of the smaller incremental wins. If you're walking down the street, is it better to pick up a hundred pennies, or is it better to wait and pick up a dollar bill?"

Today’s quick read comes from Naomi Millan, senior editor, Building Operating Management.

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