Long-term thinking brings quick savings
Published: 05 January, 2016
Trying to plan for five, 10, or 15 years from now is tough in any business — but never more so when the heat is on to specify and build a commercial project to time and budget. However, making smart choices at the design stage is vital to cost efficiencies and, ultimately, return on investment. Neville Small at Potterton Commercial, explains why investing in quality products and equipment makes for a better project in the long run.
While the commercial property market continues to show signs of recovery, building designers continue to face increasing pressure to find cost-effective solutions at the specification stage. But with around 80% of a building’s lifetime cost spent during its working life, when assessing cost it is essential that specifiers go one step further by scrutinising how appliances will perform over time.
By looking at the long-term operational cost of each individual asset within the building, rather than the initial purchasing and installation cost, building designers can be safe in the knowledge that they are recommending a solution that is cost effective in the truest sense.
When it comes to the heating system, there’s no doubt that reliability and efficiency are key. Components that are cheaper at the initial stages often end up costing more in the long run, whether as a result of operational costs or because they need repairing or replacing more quickly. Careful selection of high-quality, long-lasting, and efficient heating equipment will help bring down these costs.
Another essential is to make robust calculations at the construction phase, taking into account both the maintenance costs and the energy efficiency of the product in question.
Contractors and their customers should be clear on the what, when and how.
• What work will need doing to that particular component throughout its life?
• When throughout its lifetime should the work be done?
• And, finally how much it will cost to do the work, taking into account access and downtime?
The answers to these questions do not have to be complex. Straightforward payback calculations are useful to demonstrate the benefits of investing in higher-quality products from the beginning to reduce energy consumption in the long run. Maintenance costings should take into account both predictive and reactive work, as well as disposal costs and any downtime.
These calculations alone will give a good indication of how a component will perform and an idea of the expense it will incur to the customer as a result. For a more accurate forecast, other factors such as depreciation, assumptions on energy costs and even inflation can be included — depending on the application and level of detail required.
The proof and value of making whole-lifetime calculations is in the building’s operational costs. An appliance made of lasting, quality components and materials that may cost more to purchase initially, may cost much less to run throughout its lifecycle, with a shorter payback period, resulting in better savings. In this way, the specifier can be sure that the customer will be left with the best system to suit their functional and financial requirements. And with increasingly demanding commercial and public-sector budgets, it is clear to see why this approach should be so attractive.
For example, several commercial boiler solutions are available on the market today to suit different applications, but the lifecycle costs of these can vary greatly depending on the type of equipment used. So researching the credentials of the various solutions and suppliers as well as carefully considering the building in question’s usage and demand, will lead to an all-round better solution.
And lifecycle costing doesn’t just provide system and performance benefits for a facilities manager. It can actually provide valuable cash-flow forecast insight for energy managers and financial directors. It can also make the building more attractive to long-term tenants, helping to guard against voids.
The advent of the Energy related Products Directive (ErP), which came into force in September last year , introduced tougher performance rules on complete building-services systems, with an emphasis on how they perform over time, putting efficiency under the spotlight. And though this will help, contractors, specifiers, operators and end-users alike need to remain proactive in their decisions and make them for the long, rather than short term.
A whole-life-costing approach does not always need to be complex, but it does need to be considered in some form or other to deliver the best ongoing results. To achieve a truly cost-effective solution, building specifiers should look beyond attractively priced products that are likely to cost more in the long run. Ultimately, by thinking long term from the word go, building designers will be armed with the evidence to back up their recommendations — inspiring developers to make the appropriate investment for the future.
Neville Small is sales director at Potterton Commercial.