To Justify HVAC Upgrades, Speak in Financial Terms
Speak in dollars, not kilowatt-hours, when making the case for HVAC - this includes showing how better HVAC leads to more comfortable, productive occupants.
Facility managers need to take the time to prepare an executive summary of their HVAC recommendations — in financial terms. If the facility manager needs assistance with the life cycle cost process, the CFO may be able to provide an approved model for reviewing major capital expense investments, including an independent appraisal of the HVAC options considering all aspects of the investment decision. Aside from the cold financials, the analysis needs to address such business matters as HVAC zoning, comfort, and future flexibility for each option.
In making decisions about the HVAC system, and in speaking to top management about the importance of the HVAC system to the employees who will occupy the building, facility managers should keep in mind that the major cost of running a building is not the HVAC cost but the cost of personnel who use the building. A small improvement in personnel productivity will provide huge economic gains for the company. The people who work in the building will ultimately affect the value of the real estate investment to the company.
Because things change, it would be smart to have a plan B in mind for the building when it is being designed. Over the life of a building, there will continue to be innovations that reduce utility operating costs and improve tenant comfort. In an ideal world you keep your renovation options open, so the building can grow and change with your needs over time. What’s more, the company’s needs may change. The operating costs have a direct impact on net operating income of the building, which in turn has a direct impact on the value of the building if it were offered for sale or went up for refinancing.
Real estate begins and ends with finance. Professional facility managers need to put the MBA hat on to make formal financial recommendations to the C-level of their organizations. Making major capital decisions based on first cost alone quickly becomes a problem for facility and real estate professionals.
Richard G. Lubinski (firstname.lastname@example.org) CEM, CEA, CDSM, is president of Think Energy Management LLC. He guides commercial and institutional clients on demand-side management, supply-side management, performance contracting with measurement and verification, utility benchmarking and disclosure laws, and metering, and provides MEP project support.
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