Smarthvace Newsletter - July 2014r

August / September 2014 YOUR RESOURCE FOR SUSTAINABLE AND EFFICIENT HVAC AND ENERGY PRACTICES

Commercial HVAC Service: Preventive Vs. Breakdown Maintenance

Today’s facility and property managers understand that every penny counts when it comes to HVAC maintenance. The tendency to lowball PM contracts is an industry concern. In Contracting Business, the author reveals how a quality Preventative Maintenance program gives you the leverage needed to save money, reduce emergency service calls, and decrease energy consumption while avoiding the lowball pitfalls. (continued)

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Commercial HVAC Service: Preventive Vs. Breakdown Maintenance “Have you ever noticed that the more a customer invests in planned maintenance, the less they spend on repairs and replacement?

Earl King, Contracting Business - December 2013 The single most common problem in selling commercial service agreements is low-balling competition. I recently worked with a contractor client who is faced with this dilemma (as we all are) and is totally perplexed. His service sale people are instructed to sell quality preventive maintenance (PM) agreements, including all of the necessary tasks to do the following: 1. Extend the life of the system 2. Reduce energy 3. Reduce breakdowns 4. Increase comfort 5. Provide tenant/employee satisfaction.

Since all quality contractors pay their technicians approximately the same, it should be an even playing field, right? Maybe not. In every market, competitors will sell a stripped-down program at a very low price. Of course, without the proper tasks being performed, those contractors will get three to four 2

times the PM price in emergency calls, premature replacement, and repairs. The unfortunate fact is, all too many building owners/managers dive for the low price.

While my philosophy has always been to sell up to the quality program, sometimes we have to make a decision to go low or walk. I have created numerous selling aids to open prospective customers’ eyes to the difference in the programs and what happens when they don’t spend enough on the front end. The most recent selling aid is the simplest one I have ever developed, but also one of the most effective.

Have you ever noticed that the more a customer invests in planned maintenance, the less they spend on repairs and replacement? Another somewhat subliminal message is sent from the size of the two pie charts pictured above. Note that the chart with the larger amount invested in preventive maintenance is significantly smaller than the chart

with minimal PM. This is to say that overall costs are driven down when planned maintenance is adequate.

As always, it’s foundationally important to have a back- up plan using more than one visual aid. I use a time study analysis that displays the recommended time for each task. By showing the prospect the list of recommended tasks and the associated time to perform each task, you can build a strong case for task based pricing.

If all of this effort gets you to the roof or equipment room, the pictures of the prospects’ own equipment is the final blow. It’s hard to argue that the tasks are presently being done by the incum-

bent when the coils are dirty, panels are left off, belts are misaligned, etc.

Once again, it comes down to a strong selling effort. When all of these selling techniques are executed properly and with enthusiasm, and the prospect is still wanting the lowest price, it’s time to make that decision: low ball or walk.

Earl King is the founder of King Productions International, a commercial HVAC contracting sales consulting firm based in Texas. He speaks to associations and HVAC trade groups, and consults with commercial contractors across the country. E-mail Earl at: profithvac@aol.com or call him at 515/321-2426.

Warmer Months Ahead Amy Bigley Works, Retail Facility Business, April 2014 Retail Facility Business recently asked industry experts to discuss challenges and preparedness issues for HVAC systems as the warmer months approach. Our experts are Mark Barraclough, owner and president of SellersMark Barraclough ville, Pennsylvania-based Alpine Mechanical Services LLC; and Dennis Burke, president of Covington, Louisiana-based Responsive Service & Maintenance Company.

RFB: What are some of the biggest HVAC challenges retailers face now?

Dennis Burke Mark Barraclough: Naturally, AC usage increases as temperatures rise. Thus, increased AC usage means higher energy consumption and costs. As a result of increased load and consumption coupled with the lack of a com-

prehensive or deferred preventative maintenance, HVAC equipment inevitably fails. This becomes especially common at the beginning of summer, during a heat wave, or in the middle of the summer season. Equipment failure can immediately lead to uncomfortably hot stores, which results in unhappy customers who leave to take their business elsewhere. When equipment failure happens and customers begin leaving stores, the retailer is faced with a simultaneous increase in repair service costs and/or capital expenditure and a loss in revenue, which becomes far more costly than a regular preventive maintenance program.

Dennis Burke: A general increase in costs will be a challenge in the upcoming months. The rising cost of R-22 and the increased cost of compressors for older units as R-22 are being phased out. Electrical costs will rise due to the increase in fuel costs.

RFB: What trends you are seeing? (Lighter weight RTUs? Energy-efficient filters? More durable compressors?)

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Burke: The most significant trend to date is R-140 units. These units weigh more and require curb adaptors, which often results in extra structural steel reinforcement creating higher installation costs. Also, new R-140 units draw high amperage, which requires upgrades in the electrical supply that results in additional installation costs.

Barraclough: One of the more exciting trends we see gaining traction in the market is the use of Fault Diagnostic and Detection (FDD) software and tools

by HVAC providers on their customers equipment.

FDD provides numerous benefits to retailers including increase customer satisfaction through the quality of service reporting; quick and efficient data collection to analyze and benchmark potential upgrades and energy savings, which reduces service hours and utility expenses; automatically calculate performance parameters, determine system faults and suggest corrective actions before issues become costly repairs or replacements; improve accuracy of data collection and provide expert fault detection and diagnostic information that is uniform to all service technicians; improve consistency of service delivery through standard operations; identify service deficiencies through easy-to-use exception reporting; provide near real-time reporting of service and maintenance tickets directly to customers; provide higher quality, real-time data, driving process improvements to a new level by reducing reporting errors; reduce carbon footprint through increased equipment efficiency; and provide lifetime account management from commissioning through the end of equipment life.

RFB: How can retailers run their stores’ air conditioning more cost-effectively in the summertime?

Barraclough: They can install programmable thermostats that better regulate store temperatures, especially after hours. More importantly, they can employ a regular and comprehensive maintenance program. Regular preventative maintenance ensures that equipment runs efficiently and catches issues before they result in problems or downtime when the equipment is taxed during high heat periods. Using such a program is a sound strategy 4

for not only reducing overall costs in the short term, but also in the long term. National accounting firm KPMG has shown that short bursts of maintenance only when systems fail or utilizing cheaper, less comprehensive firms in an effort to cut operating costs has proven to be a bigger liability to companies than short-term cost cutting requirements.

Burke: By returning to basics and performing scheduled preventive maintenance, retailers can keep their summer cooling costs down. Also, planning scheduled replacements of older equipment allows retailers to take advantage of the higher efficiency of the newer equipment.

RFB: What are some environmentally conscious processes that retailers can take advantage of? Cost savings?

Burke: The replacement of existing equipment with R-140 series, which provides a higher energy efficiency, is one way to keep HVAC systems in check.

Barraclough: Recommissioning or tune-ups that return equipment to manufacturer’s specification result in more efficient unit performance. The result of this tune-up is that most equipment runs at a 90% or higher energy efficiency level and reduces the number of service calls needed. Equipment that is thereafter maintained through a quality, comprehensive, regular preventative maintenance program will continue to see higher energy efficiency levels and subsequently resulting in longer equipment life cycles.

A proper recommissioning program can reduce the HVAC energy spent by 10% and significantly reduce service calls, which can drastically reduce the maintenance budget.

Other areas where retailers can recognize significant cost savings with qualified recommissioning programs is through utility rebate programs. And last, but certainly not least, when HVAC systems are properly maintained, indoor air quality improves and comfort levels in the store are more easily maintained thus resulting in longer in-store visits by customers, which can lead to increased sales opportunities.

RFB: What challenges are on the horizon? How can retailers and providers address them?

Barraclough:The first challenge is to address recent demands. The federal government has mandated a reduction in energy usage. HVAC units represent the second largest consumer of energy in a retail store environment. Now, HVAC energy costs are about 30 percent of retail budget expenditures.

Retailers must reduce this usage through qualified recommissioning programs (or retrofit programs with end of life units) and follow up with regular preventative maintenance.

Another major challenge facing retailers is their budget and aging equipment fleet. There is a growing push by management to reduce maintenance costs but that inevitably means increased service calls, increased down time, increased energy consumption, increased capital replacements and decreased revenue.

This is especially true for retail centers that have older equipment in place.

One effective way to look at the HVAC service investment is to recall how retailers invested in lighting retrofits, which cost more upfront but results in reduced expenses overall. This is exactly how investing in a comprehensive HVAC maintenance program can alleviate budget challenges with a positive return on investment realized often in the second year.

Burke: Future challenges include higher operating costs, higher costs of repairs, poor efficiency and the increased costs of energy.

Retailers can address these challenges by scheduling planned replacement of older, less efficient equipment.

Amy Bigley Works is a contributing editor to Retail Facility Business magazine. Please contact the editor, Katie Lee, at katie@francemediainc.com.

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