Advisory Topic: Business Solutions Vol. 17 No. 46
11.16.2017
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Why the 'As A Service' Model Will Be a Game Changer for Intelligent Buildings

Author: Joseph Feuling, VP, Solutions, CBRE|ESI

Today’s open protocol building automation systems have the potential to make the 'system of systems' within facilities operate as a well-designed, tightly integrated, ecosystem - the operative word here being – potential.

Due to the way that automation systems are designed and procured both within the new construction process and when they are being replaced at the end of their useful lives, that potentialis seldom actualized. These lost opportunities to actualize that potential 'intelligent building' functionality and value are primarily due to two things:

  • The absence of a strong, well informed, BAS advocate to make the connections between the ultimate building occupant’s desires regarding the total building environment and the potential functional contributions of the BAS to meeting those goals.
  • A value engineering process in the new construction environment, and an ‘in-kind' replacement mentality during end of life replacements, that can transform even a highly intelligent integrated systems design concept into a simplistic design providing little beyond automatic temperature control functionality in the pursuit of low first costs
With only a small portion of their abilities being utilized, building automation systems are often quite unimpressive when initially installed. Further, if replaced at end of life with an 'equivalent' system (in-kind replacement), they continue to underwhelm observers, especially given the low returns on investment caused by ‘in-kind’ replacements. The low returns on ‘in-kind’ replacements should be expected. After all, if the original system added little value, installing an exact replica can be expected to do the same.

Given the low rates of return on system replacements for these underutilized systems at end of life, one might ask why someone would bother to replace the automation system at all.

The short answer of course is that any building of significant size really needs an automation system to operate in a manner that provides a comfortable and cost effective work environment. The interactions between the various elements of the HVAC system alone are so complex that relying on manual interventions between a building operator(s) and these systems to maintain an acceptable work environment is simply not an option. If there were no automation system in place, the physical building environment would be a mess, and the operating costs would be far from optimal. Consequently, when the automation system is at the end of its life something must be done. If not, the potential for major building systems performance issues increase substantially.

The end of life 'choice' then really becomes when to replace the system, since without replacement the building environment and the operating costs would ultimately run out of control. Even considering this, given the low returns on 'in-kind' system replacements, many CFOs will choose to not replace the system until disaster is imminent. The logic behind that choice is 'bad investment, don’t fund it' or more accurately 'bad (but necessary) investment, delay funding it as long as possible.' Frankly, it is hard to argue this point with the CFO, given his or her fiduciary obligation to the shareholders to use scarce capital wisely. There is however another line of thinking to explore when faced with this 'bad investment, don’t fund it' scenario - nd that is to restructure the investment opportunity, thereby improving the returns.

As noted earlier, the automation system, in its optimal deployment can facilitate interactions between the various subsystems in the building (HVAC, Lighting, Access Control, Security, Fire, Life Safety, Building Transportation, etc.) capturing operating efficiencies and producing a more productive and efficient building environment. Making this happen would require an intelligent and robust system design that survives the new construction or system replacement bidding processes. It would also require that the system ultimately provided would feature an open communications protocol so that useful interactions between the various systems can take place in support of the occupant’s mission to achieve the most comfortable, productive, secure and efficient environment possible.

It is highly likely that the only way both things will happen is if these system-related decisions are isolated from the usual machinations of either the new construction, or in-kind replacement system procurement processes; and, instead made as service based decisions on the customer’s part, within a service based delivery model on the part of potential service providers. In other words, potential service providers would be asked to install and maintain (throughout its life) a system capable of providing the desired facility-related end results for the building owner/occupant.

In this context, a rationale service provider would be motivated to design and build a system that provides maximum efficiency (in delivering the customer’s desired end results) at minimum costs. This approach provides the intended ‘first cost controls’ of the new construction or end of life replacement bid processes and contributes to the service provider’s profitability.

Everybody wins.

The client gets a better performing building and the service provider grows a business grounded in sustainable value. This clearly represents a substantial improvement from what is typically delivered to the ultimate building occupant today, via the new construction process, or when at end of life, an old inadequate, system is replaced in-kind with a new, inadequate system.

Ask yourself if you have faced the ‘bad investment, don’t fund it’ CFO scenario at an end of life automation systems replacement or, have you had bad experiences with the results of new construction automation systems installations?

If so, you can continue to do the same things, the same way, and get the same results; or, change the game.

You decide.


This Week's Sponsor:

CBRE|ESI helps its clients successfully manage the energy use of complex building portfolios. We help companies take control of their infrastructure, connect disparate systems, lower energy costs, increase occupant comfort and safety, and prolong reliability and uptime in a way that lets them focus their time and talent on their core business. Please visit our website at www.thinkesi.com

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