How building commissioning relates to total cost of ownership
Monday, August 25, 2014
As facilities professionals, we are often asked to work on projects and tasks that go beyond the day-to-day operation of our facilities. The types of projects and tasks I'm talking about include capital planning, construction project management and long-term master and capital planning.
Often times we enter this process with precise institutional knowledge, along with our intuition regarding particular items or projects that make sense to pursue in the short term versus long term. Once we have identified these priorities, we need to be able to present the proposal to senior management in a way that allows them to quickly understand, analyze and decide upon the proper course of action.
I stress this business-case approach because for many of us this is a different mode of operation from supervising large crews of mechanics or outside contractors performing the many and complicated daily tactical tasks associated with our particular facility and operation.
In the singular application of and for challenges associated with the presentation of a new project, I want to review the detail of commissioning (Cx) and how this relates to your total cost of ownership (TCO). This single method of approaching a project or initiative will go a long way toward helping to make your business case for higher quality at first cost by showing how it will lower overall TCO.
Some of this terminology might be new, so let's review.
First off, what is TCO?
TCO is the amount of dollars any initiative relating to the construction, installation, continued care, operation and maintenance of your facility will cost over the effective life, or service life, of that particular initiative (which could also be a component, a fixed asset or a project). It is a financial analysis that includes the direct and indirect costs relating to the particular initiative.
This analysis is often employed to understand the difference between something that might be more expensive to install on a first-cost basis but has overall lower maintenance and energy costs with the possibility of higher durability and/or the ability to increase efficiency. The most typical financial analysis for TCO is life-cycle cost analysis (LCCA).
If you've had a career similar to mine, at some point you've had to give up on a project, piece of equipment or component that you've preferred and known is the right decision for something that costs less based solely on its first cost. You've sat there dumbfounded as to how this can be happening, but you had nothing more than your experience and institutional knowledge to gird your case.
You've had to perhaps even bite your tongue because you were so nonplussed at this decision being made by your finance department or senior management. It was almost like your opinion didn't exist or matter. You thought, "How can this be happening?"
In the end you learn and accept that it happened because you did not prepare the proper financial presentation or business case. You did not inform your ultimate decision-makers of the facts, prepared in a way that is acceptable and understandable to them. The business case (I will be writing more about this in future articles) was either weak or nonexistent.
How do we overcome this?
As an FM, when I'm approaching a major capital project (which can include either a large construction project or the installation of an expensive piece of equipment, e.g. $5 million renovation of a new energy plant, etc.), one tool I employ is a commissioning agent (CxA) at the earliest possible time. Ideally, I'll have that agent at the beginning of concept design (the programming phase) or, if it's a piece of equipment, at the initial meetings reviewing the need or replacement of the equipment.
This agency is more than one person, and the CxA should have multiple experts of all stripes — electrical, mechanical, plumbing, fire protection, skin (envelope), materials, fenestration — that will engage with the project as required. You will need to pick a project or equipment price point or system level for where you start to advocate for Cx, but I can make an argument that a project of almost any expense will benefit from Cx.
So, I'm making this sound easy, right? Well, we all know it's not. We've still got to educate somebody who controls our money regarding the value of this Cx thing. What kinds of negative things will you hear? You'll likely hear, "I don't know what that is, and we're already paying the architect/engineer and their consultants too much," or "You and your staff can do this, this is what I'm paying you for," or my personal favorite: "We've never done this before.”
When I was the operations manager at a major university in the 1990s, I inherited two signs from my predecessor that were framed on the wall of my new office; the first one read, "A competitive bid is the only poker game where the losing hand wins!" and "Why is there never enough money to do things correctly the first time but always enough money to fix them?"
I loved those little quotes, and I kept them up in my office. I also bought my first book on building commissioning in 1993, while at this institution of higher learning. I'm continually shocked to see that this marvelous concept of assuring that an owner is getting what he/she paid for is still poorly understood and objected to by decision-makers.
Building commissioning facts
The Cx consultant, the requisite testing and assurance (including administrative costs) will be paid for in under two years for existing buildings (either retro or recommissioning) and typically less than five years for new construction. Note: This is in energy savings alone When considering additional savings from lower overall maintenance and day-to-day operation costs, the payback can be even faster. These economies are best recognized employing "continuous commissioning," meaning that the CxA is on board from the earliest possible moment.
The Cx effort will guarantee that the owner gets the best value for every component of the project. A competent CxA will start early on in the project by helping to establish the owner's project requirements and basis of design. These should also include the project implementation plan and a project communication plan. Once you have started and completed a project with Cx, you will wonder how you ever did a project without it.
If the idea of building commissioning interests you or you've been toying around with how to implement it, you might want to review the Building Commissioning Association website or the Association of Energy Engineers.
At my school I distribute this commissioning guideline to all project teams. These teams include the architect, engineers, construction managers, owner's representative, commissioning agent and any other project related consultant or subconsultant.
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