When considering options for HVAC systems for a large commercial or industrial facility, which option is better … saving 20% on design & construction costs or saving 10% annually on operating & maintenance costs over the expected life of the installed system and associated equipment? Instead of answering this question let’s consider another first, “Do construction and operation teams make buying decisions with each other in mind?”
Of course the answer is not always the same but I can tell you that holistic decisions, or decisions that consider the TOTAL cost of ownership are typically superior to decisions made based solely on first cost (construction) differences.
You get what you pay for … perhaps a bit of a cliche but it is often true. What is important to understand is that this CAN be a very positive statement at the end of the day; however, it can just as easily can become a negative statement. The difficulty in making any major financial decision is understanding and evaluating ALL costs for the life of an asset, commonly referred to as total cost of ownership.
Let’s get back to our original question. Which one is better … saving 20% on design & construction costs or saving 10% annually on operating & maintenance costs over the expected life of an installed system? The answer is—it depends—and this is my point. Making a solid decision gives due consideration to all major factors and the most informed decision is one that is made with consideration for both sides of this equation. Often times the importance of making fundamentally, solid holistic decisions must come from the organization’s leadership, largely because balancing first cost and operational costs are competing objectives. It is important to understand when evaluating a major energy consuming component of a facility (such as an HVAC system) that as much as 65-75% of the total cost of ownership is in the operation and maintenance of the system over its useful life. Ultimately, the final decision should strike a balance between the first cost and the long term operating costs. The only way to make a wrong decision is to not consider the big picture.
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