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When whole-life cost outweighs initial outlay

Most manufacturers of heating systems are now looking to systems that deliver whole life costs as a way of making real energy savings. Short term, a cheap system might seem the right way to go, but don’t be deceived, warns Simon Garratt

Current industry regulations obviously insist that staff cannot work in cold temperatures but with factory and warehouse owners faced with an ever increasing overhead, the temptation is to resort to finding the cheapest heating system available, even though it is rarely the most energy efficient.

Although paying for more energy efficient heating systems may not be a popular idea, it makes tremendous sense when true value is looked at, rather than initial costs.

According to Government information, the most reliable indicator of ‘value’ in the construction industry is the relationship between long-term costs and the benefit achieved by the end user. And when it comes to the heating system, best value is gained from the system that achieves the required functionality at lowest cost when calculated over the whole life of the equipment.

Whole-life cost analysis is an economic evaluation process solely for the purpose of assessing the true cost of constructing and running a building over a period of time, based on the functional requirements of the building. It is effective for new buildings, including design and build projects, and is a pre-requisite for all PFI contracts.

The technique was originally used by the accountancy profession to compare outcomes when income varies over time, using today’s value or net present value as a starting point. Today, the methodology is used widely in many industries, although uptake in the construction industry is ‘quite small’, according to John Langmaid, principal consultant at BSRIA.

Using these calculations, modern manufacturers such as AmbiRad, a specialist in energy efficient heating systems, have proved they can deliver energy savings of up to 70 per cent, a significant reduction in running costs.

It’s a technique that has been in existence for decades. With more and more people seeing the benefits of whole-life cost analysis, its popularity in construction is increasing. Rather than focusing on the cost of instalment and payment for the system, it focuses instead on the building’s requirements, how well each solution tackles them and the costs of doing so.

Going cheap might look good in an initial payment. But compare its whole-life cost to that of an energy efficient system, and the difference can be thousands, wasted money that businesses cannot afford to lose.

When considering each building’s needs, it shouldn’t be simplified to just simply ‘the building must be heated’, as the full requirements are far more specific. Value management and value engineering are indispensable factors in finding the more efficient solution.

The system should match the needs of the occupants, as well as the building’s shape and size. This means knowing exactly where and when heat will be needed and how it can best be delivered.

In specifying a heating system, it is important to base requirements on output and functional needs, rather than describing the process by which these will be achieved. This allows for flexibility and perhaps more thoughtful or innovative approaches to a heating solution, one that will fulfil needs over the system’s life. For example, it should respond to alterations in the work pattern, downsizing or expansion.

AmbiRad displayed the genuine energy-saving benefits of this method and its heating systems with an example at the RAF Coltishall air base. Whereas it previously had a highly inefficient high temperature hot water distribution system, it turned to reducing its extensive fuel consumption.

Following an investigation into the options, taking into account whole-life costing, AmbiRad’s radiant tube heating was found to be the best solution for long-term value. After just a few months of instalment, energy consumption was found to have reduced dramatically. Compared with its previous boiler system, the base saw a 64 per cent reduction in heating costs and a 55 per cent emissions reduction. Over a 10-year period following the system’s introduction it was calculated that the base would get discounted savings of near £150,000.

This is something every sector can benefit from. And, with forward thinking companies strongly backing the system, like AmbiRad, there can be nationwide savings of up to millions of pounds. With fuel prices looking to never back down, it is a saving that no one can afford not to make.

// The author is the marketing manager for AmbiRad //


1 July 2014


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