file under: Chemicals, Energy, Facilities, Food and Beverage, Industrial, Metals and Mining, Oil and Gas, Power, Sustainability

Getting the Most Out of Your Facilities Budget

Faced with staff and budget funding challenges, corporations may find it difficult to invest in both short- and long-term facility improvements. Industrial sector capital is prioritized to propel research and production programs, while facility funds are used primarily to repair and replace equipment rather than to reinvest in infrastructure.

Current low energy costs may make less expensive, quick solutions to infrastructure issues more attractive; however, an upswing in energy costs is expected in the near future. Therefore, recapitalization planning for facilities is necessary to open up future capital for high-priority programs.

How, then, might industries save now on their facilities budget to create more opportunities for key program investments?

  • Conduct life-cycle cost analysesLife-cycle cost analysis is a method to examine the costs associated with any particular component of a facility’s infrastructure over its projected lifespan. Take lighting for example: not only should the initial cost of the fixture be factored, but maintenance, operating and storage costs should also be considered. When making decisions on whether to upgrade, maintain or overhaul infrastructure, life-cycle cost analysis offers a convenient way to weigh the pros and cons of each option. This may mean comparing the up-front costs and long-term savings of LED versus high-efficiency fluorescent lighting. A facility manager may find that the initial costs of LED lighting are slightly higher than fluorescent lighting, but that over time there will be fewer costs associated with replacement and maintenance.

    On the other hand, life-cycle cost analysis is particularly important in influencing decisions between aging infrastructure and long-term capital projects. Though it may be easier to install LED lighting, it would not be as simple to swap out a boiler or chiller or to switch from separate utilities to one central plant. Life-cycle cost analysis, therefore, is a key component in analyzing, understanding and proactively planning infrastructure maintenance and future improvement needs.
  • Apply energy-efficient practices. Saving energy means saving money—both in the present and future. Industries can address a variety of low-hanging fruit or bigger-ticket issues to attain greater energy-efficiency. Simple-to-implement upgrades, like LED lighting, occupancy or daylight sensors, time-of-day or level-of-light control systems, and building management systems, put energy control into the hands of the facility manager.

    Renewable energy technologies, like photovoltaic panels and geothermal heating and cooling systems, offer another option to increase efficiency. More complex enhancements include making roof modifications; installing new heating, ventilation and air conditioning systems; or upgrading building envelopes. If multiple structures are in contention, having central utilities can drive down costs associated with buying energy from a local utility. The goal of implementing energy efficiency is to save operations money for future upgrades to the same buildings or for reinvestment in other programs.

    Energy audits offer a beneficial way to examine energy needs and measure their costs against the return on investment for all proposed improvements.
  • Enhance aging infrastructure. Retrofitting and reusing buildings are both smart choices for facility managers who are unable to pursue land development or relocation to a green site. These methods exemplify a commitment to the environment and social responsibility. Choosing to retrofit or reuse a facility reduces overall waste by making use of an existing or abandoned building rather than creating something new. To ensure a previously used facility will meet standards, a site condition analysis of the building envelope and facility structure should be performed. After deciding to retrofit or reuse, facility managers may find cost savings in many of the energy-efficient technologies mentioned above.

    Though it is difficult to predict financial outcomes from retrofitting or reusing a facility, the investment they show in workforce productivity holds great potential for savings. Recent studies show that improving air quality, reducing noise and increasing natural light for staff result in a more positive work environment and greater staff productivity.

Forecasting the future

Sustainability is fast becoming a standard for industrial manufacturers. Leadership in Energy and Environmental Design (LEED®) has become the standard, and energy code requirements are changing and increasing at a rapid pace. For example, the 2013 update of ASHRAE Standard 90.1—the U.S. standard that provides minimum energy requirements for buildings except for low-rise residential buildings—was a major revision over the 2010 version, containing more than 100 changes.

Awareness of these ever-changing standards will be paramount in overcoming a future rise in energy costs. Paired with a renewed focus in cost-effective facility budgetary planning, they will allow industries to focus on the tasks most important to their business. Beyond bottom-line benefits, integrating short- and long-term facility improvements are great for reputation and branding, underscoring a commitment to the environment and people.

Be Informed

For another take on facilities trends, read:

  • Meet Tim King” – a Q and A with our champion of sustainable facilities