When it comes to HVAC maintenance offered and provided by service contractors across the country, things have not materially changed with it since it was first introduced by Honeywell in the 1950s. Even with today’s ever increasing competition, falling maintenance prices, and extreme technician shortages – it appears that neither service buyers nor service providers see a real need to change it.
In the beginning, maintenance, or what has often been called PMs, were seen as a really good investment by building owners and their agents. PMs were a means to mitigate the natural degradation of an owner’s HVAC assets, by applying maintenance instead of waiting and experiencing unnecessary or premature equipment failures, normal to aging assets.
The thinking early on was “owners who invest in comprehensive PM extend out the time when they will be required to spend money on ever-expensive equipment failures and replacements” as Tom Walton, founder of Servicenergy, LLC describes it. He goes on to say “owners with such insights and contractors with the ability to understand and communicate the benefits of investing in PM are for the most part, a thing of the past.” The ongoing problem is contractors have never been able to prove the value of their PMs in verifiable ways, and so this has allowed less than qualified service contractors to enter the markets, and do so looking indistinguishable from their quality competitors.
It’s time for a game changing, mind-blowing, change in how people sell, buy and most importantly verify maintenance impact.
Additional Challenges Facing PM
Over the decades, challenges have surfaced and continued to cause problems. These challenges are:
1. An ever increasing number of small to large service contractors who have found their way into the HVAC PM business, knowingly and unknowingly causing pricing and scope problems for legitimate service contractors.
2. Contractors and their buyer-clients either never really had an appreciation on how PMs actually, not conceptually, impact ROI – or they have somehow over time have lost their perspective.
3. Contractors are under ever-increasing pressures by ill-informed owners and budget-strapped building managers to lower their PM pricing to accommodate short-term budget requirements.
4. Contractors wanting to compete, have no choice but to react to price pressures, and they unwittingly become participants in increasing the owner’s capital costs and reducing ROI.
5. PMs for the most part are no longer viewed as smart long-term ROI strategy. Replacing this early-on strategy are low-price PMs that play into reactive, short-term cost saving measures. It has become the practice of “less is more” when it comes to PMs.
It is so common today for contractors to be put in such extreme bid and pricing situations that it results in them lowering their PM’s pricing year after year to survive, and yes, lowering the scope of work delivered to fit the price. This latter point is denied by contractors with buyers, but “scope fade” as Walton calls it occurs at every HVAC service bid and between competitors on a routine basis. Service buyers have no way to confirm that scope fade is occurring, neither do they understand that their buying practices cause fade, and so again price becomes the only point of consideration. Low PM and low price wins the day more times than not.
Every year since PM’s inception, it has been offered by less and less technically and asset-wise sales people to less and less asset-oriented, ROI-knowledgeable buyers.
Add to these almost impossible to solve challenges, this fact – that every year since PM’s inception in the 1950s, it has been offered by less and less technically and asset-wise sales people to less and less ROI-knowledgeable buyers. So it is easy to understand why price pressures are so prevalent in all markets today. The decades-practiced “less PM is more” buying strategy has resulted in the artificial lowering of PM pricing, rather than having a much more effective practice of lowering the overall costs of the building, i.e. energy, asset life, major failures through more impactful ROI-sensitive PM programs.
TODAY: The Really Big Challenge: PM Verification
Everything already discussed points more to the symptoms of the challenge rather than the root cause – what Walton feels is that which exacerbates all of this.
What is it? It is this – we as contractors have never been able to verify the actual ROI of our PMs. We have talked the ROI talk, but not proven it.
Back when PMs were first offered by sales people as ROI tactics, it was during a time when buyers more often than not believed whatever a sales person would tell them – because back then “a man’s word is his bond” and so sales people’s statements were more trusted. If a sales person said it would save money and offered some hand-written piece of paper backed up with long-division calculations, then it must be the truth. Buyers since then have out of necessity and with experience become more scrutinizing in their evaluation and consideration of what is said by sales people offering PMs. Even those sales people, who are honest in intention, have no way to prove, to verify, what they say is true, and it is even more impossible for their companies to prove the impact of their delivered PMs.
So the real challenge is this. We have not had the ability to prove ROIs as a result of PMs. We have had no way of providing what we call objective, third-party verification of such performance factors as energy impact, extension of life, improvement of comfort, etc., tracking and trending of such – that come as a result of applying much better analytics inside of PMs.
The Solution: Analytics Maintenance
It is said “necessity is the mother of invention” and when it comes to Rooftop/PAC units and Split AC units, at least with this category of equipment there are tangible solutions. We have for decades worked on developing and proving out a truly fresh maintenance solution that addresses and proves ROI. We have termed this all-new ROI-proving maintenance, Analytics Maintenance (AM for short). It advances PMs to include third party analytics and provides ROI performance information to service buyers.
Explain analytics within maintenance
We cannot get Analytics Maintenance (AMs) fully addressed in one article, but here are some insights:
- AM is done during normal maintenance. It is not a special energy service or utility event. It should be as common as “white sliced bread."
- It applies advanced on-the-rooftop diagnostics, and will require service techs to be armed with programs like:
Important: You will need to investigate these programs and others, to determine their application to your business and to analytics maintenance. Select the program that achieves analytics at a cost your service buyers can actually afford within their normal PM service.A sample of TPD's EER Report
- Such diagnostics programs arms PM Techs to gather, diagnose and report unit-by-unit performance in terms clients understand, done during normal maintenance.
- Besides gathering snapshots of each unit’s performance, it takes gathered and analyzed performance measurements and trends such things as efficiencies, life performance and other key factors that relate directly to the ROI of units measured.
- Though there are highly effective RTU control retrofits that will provide ROI data, the analytics maintenance ROI strategy can be easily applied across the RTU population nationwide on all sizes, and at a price that its return is recognized in the same year as the cost.
- Analytics also allows service providers and buyers to see the effect of varying PM scopes of work to ROIs – assisting them in selecting smarter ROI-based PM levels.
- Using Servicenergy’s free first-of-its-kind analytics-based HVACAM Light software and other programs if they become available, value-based service contractors will defeat those contractors who are not able to fully disclose the details of their price and prove their value in terms of actual delivered scope and verified ROI.
- With AM, service buyers will take a more involved position in becoming PM-savvy buyers, by fully understanding that price can only go down as scope goes down and learning the reasons for keeping scope at a level that delivers attractive ROIs.
- With AM, both service providers and buyers – will come to understand the benefits of AM and replace or supplement its outdated predecessor, the unverified, outdated PM program.
- AM will allow buyers and providers the ability to measure the actual value-received and not just the value-promised.
Where to Begin Offering AM
Explore and learn. Be open to change from what has been done for over a half century to how it will be done for the next half-century. AM is here today and it is here to stay.
It’s time for a real revolution in maintenance? It’s time for a game changing, mind-blowing, change in how people sell, buy and most importantly verify maintenance impact.
Will AM put contractors at risk by providing buyers full-disclosure of the impact of their maintenance? Not the ones who have nothing to hide. Will AM reduce the ability for contractor providers to make a profit? No, on the contrary, the combination of better planning with AMs and helping buyers understand the opportunity to buy more comprehensive maintenance with better ROIs protects profits.
AM is the future and that future is now! Start learning today!
Tom Walton is president of Servicenergy, LLC and has been consulting/training/developing top HVAC service contractors since 1990. For more information email him at [email protected] and go to www.servicenergy.com.