When calculating the savings for a commercial HVAC system upgrade have you ever included the dollars saved from increased productivity? With the average annual cost of an office professional approaching $50,000, what would a 10% increase in production for 20 employees yield a building owner? If you’re only selling the energy savings of a 10-ton packaged unit upgrade, you’re missing the real savings that can be delivered to your commercial customers.
As the return on investment for new commercial HVAC equipment from higher EER numbers shrink, why not beef up the benefits of your proposal by surveying building occupants about their comfort and include increased employee productivity in the savings cost of an upgraded HVAC system?
Equipment replacement savings will offer building owners little benefit compared to the potential dollar savings available from increasing office productivity because of better working conditions. This is accomplished by renovating the air distribution systems to solve specific employee comfort issues.
The Savings of Comfort
One simple rule of thumb followed in business is that a typical employee should yield three to four times their annual cost in income to the company. Using $50,000 as an annual cost, this rule of thumb would indicate an annual income of $150,000 to $200,000 per employee. So an office of 20 employees will typically generate $3 to $4 million a year in income.
If you are regularly testing the performance of commercial HVAC systems and comparing that performance to comfort, you are well acquainted with the comfort and indoor air quality issues in office and workstations today. If you take the time to interview the occupants, you’ll find them quick to agree that if they could work in a comfortable environment that an increase in productivity of 4% to 15% would be very reasonable.
The math gets real simple in this scenario: A 10% increase in productivity times $3 million in annual sales could generate an increase of $300,000. Now that’s what you call a solid return on investment! Compare that to an $800 reduction in energy costs from higher EER.
Help Your Customer Decide
When salespeople throw pre-calculated numbers at their customers, the tendency is to dismiss or seriously discount the savings. A much better way is to share the results of your survey with the building owner and then have them determine the value of the increased productivity that they would received from the upgrades made to their air distribution systems. The simple formula is: Annual Sales times X% Improvement in Employee Performance = Increase Dollars in Sales, due to increased comfort.
You will be surprised at how generous they become with their own savings estimates as you give them the chance to consider and calculate the savings themselves with your direction, guided by a survey of their own employees.
Long before you arrived on the scene they have heard the comfort complaints. You and your system performance testing data are the missing link they need to understand the problem, see the solution and make a good decision.
The solutions that you provide through your testing and diagnostics will supply the answers to the problems your customers have faced for a long time.
Owner Occupied Only
Often the building owner is financially disconnected from the benefits of the increased productivity of the employees that occupy his or her building. Be certain to verify that the owner of the building also owns the business housed in the building. If not, your increased productivity benefit calculation will be meaningless.
Savings from the Distribution System
Also, be certain to offer the increased production approach only when you are actually solving the problems by renovating the air distribution side of the system. Replacement equipment will only provide more warm or cool air. Increasing comfort, even temperatures, reduced noise and pleasant air velocities can only be achieved by renovating and balancing the air distribution portion of the HVAC system.
Existing defects causing these problems are discovered by measuring airflow, velocity, temperatures and noise levels in the conditioned spaces where the employees are located. By comparing these measurements to the original designer’s plans and specifications, you can couple these measurements and calculated values with the complaints of the occupants. At this point these problems that were once invisible become painfully evident.
Interior Designers and Remodelers
Unfortunately these two groups are focused on getting their job done and few remodelers and interior designers give a second thought to the comfort of the occupants from an HVAC perspective.
Often, to do a good job requires us to evaluate the original building plans and specifications and compare them against current system performance. Only then can we effectively redesign and rebuild the system to accommodate the current use of the buildings as part of our job. All too often as a company grows, little thought is given to the HVAC system. As the use and application of different rooms changes, as walls, doors, equipment and people are shuffled from one place to another the BTU and ventilation requirements of that portion of the building are rarely considered.
Get an Advanced Down Payment
By requesting a small fee to test and diagnose the project before you deliver your final scope of work and proposal on the project, you are effectively getting an up-front commitment from your customer. The relationship changes from just another bidder on the project to a client and consultant relationship. Once money has changed hands your customer now has some skin in the game. The odds of this job being yours have just increased three fold.
Differentiation from your competition is what this is all about. Approaching a commercial equipment replacement project based upon testing the distribution system, a survey of its occupants and taking a small fee for engineering is far from the minds of most of your competition when it comes to selling an HVAC system. Who says the playing field has to be level?
Rob “Doc” Falke serves the industry as president of National Comfort Institute an HVAC based training company and membership organization. If you're an HVAC contractor or technician interested in a free commercial building occupant survey, contact Doc at [email protected] or call him at 800-633-7058. Go to NCI’s website at nationalcomfortinstitute.com for free information, articles and downloads.