When real estate developers discuss the cost of building systems, they are normally referring to their upfront cost - how much must be paid to have mechanical, electrical and plumbing systems designed and installed. However, the upfront cost of these systems is only a fraction of their total ownership cost, which considers operation and maintenance expenses throughout the service life of equipment.

Construction projects involve choosing between many available configurations for systems like space heating, lighting and hot water, and a common mistake is looking only at price. In most cases, an extra initial investment in performance is recovered many times in the long run.

Note that the energy inputs of building systems, such as gas and electricity, are subject to price inflation. When you invest in energy efficiency, the savings increase annually because you are using less of an input that experiences price inflation. For example, if electricity tariffs increase by 3% between two consecutive years, the savings from efficient electrical equipment in your property also increase by 3%, even if kilowatt-hour savings remain constant.


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Real Ownership Cost: An Example with LED Lighting

There is a perception that LED lighting is expensive, but it would be more correct to say that LED products have a higher upfront cost that older types of lighting. Actually, LED lighting results in significant long-term savings due to a lower power consumption and a longer service life.

  • Lamp Replacements Avoided: A $5.00 LED bulb seems more expensive than a $1.00 incandescent bulb. However, if the LED service life is 25,000 h and the incandescent bulb only lasts 1,000 h, you must compare the price of one LED bulb with the price of 25 incandescents - paying $5.00 is better than paying $25.00.
  • Electricity Savings: If an LED bulb has a rated power of 10 W, it will consume 250 kWh during its service life. For comparison, a 60 W incandescent bulb consumes 60 kWh over its 1000-hour life, but the total for 25 bulbs is 1,500 kWh. Assuming an electricity tariff of 20 cents/kWh, LED lighting costs $50, while incandescent lighting costs $300.

In this example, owning the LED bulb leads to a total expense of $55, while owning the 25 equivalent incandescent bulbs costs $325. In other words, incandescent lighting is almost six times more expensive when you consider the total ownership cost.

This is a simple example with light bulbs, but the same principle applies for all building systems. For instance, if you need a 12,000 BTU/h air conditioner, a $1,000 ductless mini-split unit may seem more expensive than a $350 window unit, but you will likely achieve energy savings of over 70% with the ductless system.

Importance of a Professional MEP Design

Energy efficiency measures are key to help you achieve the lowest building ownership cost, but you will have poor results if the equipment purchased is not suitable for the intended application. Consider the following potential consequences of a poor building system design:

  • Excessive lighting represents a waste of power, even if you use LED products.
  • Oversized air-conditioning systems cause humidity issues. They also suffer from a reduced service life, since excessive capacity causes them to run in shorter cycles, and frequent starts and stops are detrimental for motors.
  • In general, oversized motors lead to many noise and vibration issues.
  • Poor design can have severe consequences when dealing with fire protection systems.

The design phase of a construction project provides an excellent opportunity to improve performance at the lowest cost possible. Integrating energy efficiency into a project from the design phase is much cheaper and easier than making corrections and improvements after construction has started.

In the case of New York City, building code compliance adds to the engineering challenge of a building project, since local codes are among the most demanding in the world. Working with qualified designers can actually have an attractive return on investment - you are getting a building design with a lower ownership cost, while completing the project approval process faster.

 

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