A common misconception exists among commercial building owners and managers that the only costs under their control are service contracts and repairs. They assume that utilities are a fixed cost governed by the utility companies, and often, the price tag for capital expenditures and system upgrades is perceived to be prohibitive when viewed against maintenance and repair costs.
In the long term, however, this viewpoint can prove much more costly, especially when dealing with aging equipment. At Ascension Manor in Philadelphia, Chadwick Service encountered this issue and presented the client with multiple options to show how investing in capital improvements can actually save money after a short payback period.
Ascension Manor’s existing heating system used Steam Boilers for both Domestic Hot Water and Heating Hot Water. At the time of this study, only one boiler was operable, and there was no redundancy in the system. Although maintained and repaired, the age of these boilers exceeded their life expectancies and were operating under a significant loss of efficiency. In addition, the age of the controls system did not allow for upgrades. The network of steam piping and valves was also nearing its end of life.
Chadwick Service presented four solutions to these challenges of excessive utility and repair costs. To provide a low upfront capital investment, Chadwick Service suggested repair or replacement of the existing Steam Boilers. To provide an investment with a substantial ROI, it was determined that the Steam Boilers should be phased out and replaced with new Domestic and Heating Hot Water Systems. The overall cost of each—including utilities, repairs, and maintenance—was projected over 5 years. The results were as follows:
As you can see, although Option 2 and Option 3 represent a larger upfront cost, the short payback period and annual utility savings make each one a much better option, especially considering the fact that replacement of the steam system will be inevitable down the road. Furthermore, the money saved in utilities can be used for other capital improvements throughout the facility.
After weighing their options, Ascension Manor chose to replace both the domestic hot water and heating hot water systems (Option 3). This was the most expensive option, but also the one with the highest ROI. Completed in Fall 2017, Chadwick Service is currently working with them to evaluate actual costs and establish new benchmarks for their utilities as well as determine additional solutions for their capital planning.