Comment: Incorporating EM with FM
Sougata Nandi, founder & CEO of 3e Advisory and 3e Apps, on how an energy management (EM) programme can help reduce FM costs, among other things
Facility management (FM) and energy management (EM) are two sides of the same coin as the influence of one is directly proportional to the results of the other. However, each requires its own specialised skillset that is rare to be existent simultaneously, in the same technical personnel. Proper maintenance regimes reduce energy costs and a comprehensive energy management programme helps reduce FM costs and there exists sufficient objective evidence to support this. The divergence between facility management and energy management starts at the point where the former is dictated by “building operation for zero complaints” while the latter operates on the principle of “building operation for optimal energy cost”.
Typical facility management contracts are governed by KPIs and SLAs designed to ensure that the customers (building occupants) have a smooth occupancy experience in a building. Thus the polarised focus on quick response times to complaints and PPMs to minimise breakdowns (and thus complaints). And rightly so, since a building owner’s financial model is far greater influenced by the lease revenues (or occupant productivity if the building is self-owned), than it is by the FM and EM costs. Thus, ensuring occupant comfort (qualified generally by “zero complaints”) takes precedence over high FM & EM costs.
Transitioning the current practice from facility “management” to facility “operation” could actually ensure occupant comfort at a lower utility cost. Facility operation is 24x7 active control of each and every MEP equipment in the building that consumes electricity in order to maintain comfort conditions, as opposed to a one time programming of the BMS or Chiller Plant Manager. Fundamentally, this requires the building “operator” to only operate equipment that is necessary, when it is necessary and at the optimal capacity needed, on a real time basis. Energy cost reductions of anywhere between 10 to 40% (case to case) can be routinely achieved through this approach alone, with minor retrofit.
This is made possible by the fact that buildings are designed for peak capacity/ load conditions, with installed MEP equipment capacities determined by same criteria. Fact remains that a building functions at peak conditions only for a few hours in a year. Through the daily, weekly and seasonal cycles, a building’s occupancy and external ambient conditions fluctuate dynamically. By matching the MEP equipment capacity to the current capacity/ load in real time, a 24x7 active building operation can generate utility cost reductions, without compromising on comfort conditions. In fact, in some cases, comfort conditions could actually improve; especially in this region where commercial building occupants are used to manually tampering with the air supply vents in their offices.
Operating MEP equipment on a “need-to-operate” basis has the extended benefit of reducing equipment run-hours, which not only extends equipment lifetime, but also reduces both planned as well as preventive maintenance requirements (“need-to-maintain”) and thus costs. A leading chilled water utility company has significantly reduced their maintenance costs through “need-to-maintain” approach. For relatively smaller equipment like FCUs this may not create a huge impact individually, but in buildings with hundreds of FCUs, the collective impact could be significant reductions in FM and EM costs. The cost reduction impacts are even greater for equipment like chillers, chilled water pumps, FAHUs etc. Thus, a 24x7 active building operation regime not only establishes reduction in ongoing operating expenditures, but also revenue assurance, thereby enhancing profits.
While this approach appears to be logical and simple, it is far from easy to implement, continually hampered by classic “business as usual” approach.
First, every building owner is perpetually concerned about occupant complaints, especially if the customer is a key tenant or a high profile multinational company. Sometimes, the first and last showstopper is from the building owner, who simply declares that “I do not want to receive complaint calls from so-and-so”, putting a complete halt to any energy management program. It is much easier to let the MEP equipment run full blast than to entertain an irate high profile customer.
Second, impediment is the structure of FM contracts itself, which holds the FM provider accountable for customer complaints and locks them into rapid response times through stringent KPIs and SLAs, violation of which could lead to imposition of penalties. While from a professional service delivery POV this type of contractual obligations are warranted, they also tend to make the FM provider shy away from optimising MEP equipment operations for fear of customer complaints. Again, it becomes far easier to let the MEP equipment run full blast than to be susceptible to penalties and poor ratings from customers.
Third, blockade is the way FM businesses are forced to operate. In a cannibalised industry environment and a highly competitive market where each FM customer is highly prized, but the contracts not lucrative, service providers are compelled to leverage opportunities that require more maintenance works as additional scopes. FM contracts are generally “input” based, meaning any additional works like breakdowns in spite of PPM, lead to additional revenues and profits, thus making it incompatible with reduced run hours of MEP equipment.
Fourth, obstruction is the absence of financial incentives for reducing energy costs in general FM contracts. While some building owners have started including a clause on energy cost reduction as part of FM, the fact is energy management is a specialised skillset that requires to be compensated for separately. Some owners have taken the bold step of deploying a separate energy management contract with the same FM provider that has its own independent commercial terms and conditions based on performance.
In conclusion, while FM and EM are symbiotically intertwined, building owners need a deep level of education on the key facets of each and how both can be efficiently administered for triple bottom line benefits without compromising on comfort conditions.
Caveat – if a building has an inherent design problem, then it is best to focus on resolving these problems, which often comes at the cost of higher FM, and EM costs.