bsp; = $9535.5

Scenerio 1: No maintenance work in Place

Annual energy = (old Energy cost – New energy cost)

                          + (old O/M – New O/M)

                       = (140,000 – 80,310) + (3000 – 0)

                       = 62,690

Using the life cycle analysis tool Table 2 above shows the analysis of the investments on the HVAC for a period of 20 yr.

The result obtained from the available data, given in Table 3 for Scenario 1, is given below:

The Net Present Value, NPV = $427,812

Internal Rate of return = 53%

Savings to Investment ratio = 5.0

Payback years = 2.1 yr

Return on Investment (ROI) = 403.96%

Scenario 2: Half of the recommended maintenance work

New Investment O/M = $4000

Annual energy = (old Energy cost – New energy cost)

                          + (old O/M – New O/M)

                       = (140,000 – 80,310) + (3000 – 4000)

                       = 58,690

The life cycle investment schedule from Table 2 is still in use.

The result obtained from the available data, given in Table 4 for Scenario 2, is given below;

Net Present Value, NPV = $393,758

Internal Rate of return = 49%

Savings to Investment ratio = 4.7

Payback years = 2.2 yr

Table 2. Life cycle investment schedule.

Table 3. Available data for life cycle analysis for scenario 1.

Table 4. Available data for life cycle analysis for scenerio 2.

Return on Investment (ROI) = 372%

Scenario 3: Full recommended maintenance

New Investment on O/M = $6205

Annual energy = (old Energy cost – New energy cost)

                          + (old O/M – New O/M)

                       = (140,000 – 80,310) + (3000 – 6205)

                       = $56,485

The result obtained from the available data, given in Table 5 for Scenario 3, is given below:

Table 5. Available data for life cycle analysis for scenario 3.

Net Present Value, NPV = $374,985

Internal Rate of return = 48%

Savings to Investment ratio = 4.5

Payback years = 2.3 yr

Return on Investment (ROI) = 354.0%

The detailed life cycle analysis calculation is given in the Appendix.

From the analysis above, the expected (ROI) when weak or no maintenances were put in place seems high. This could look good but the explanation is given in the next section.

4.2.1. Scenario 1: No Maintenance in Place

Scenario 1 assumes that nothing is spent on maintenance. Therefore the cost of preventive maintenance will be zero in this case. The cost of repairs, the cost of energy, and the frequency of equipment replacement will increase, because the equipment is assumed not to be maintained [7]. The frequency of repairs increases in an amount similar to the expected-life degradation [7]. For example, even with proper maintenance, a compressor would need to undergo minor repair every four years [7]. This scenario assumes that the repair frequency will increase by 20 percent. A 403.96% ROI seems like a huge return, and it is.

Consider, however, the cost of just one piece of equipment: A chiller. The chillers would cost an average of $67,950 to replace. Maintaining the chiller costs $3000 per year, and proper maintenance adds years to the equipment’s life, avoiding the extremely expensive capital outlay needed to replace it [7].

4.2.2. Scenario 2: Half of the Recommended Maintenance

In Scenario 2, a lesser value of PM was being invested on the HVAC against the recommendations from the manufacturer. For example, if the expected life of a Chiller will decrease by 20 percent if not maintained and proper maintenance will cost $3000 per year. Therefore if $1500 (half the recommended amount) is spent on chiller maintenance, the expected life would decrease by 10 percent instead of 20 percent.

4.2.3. Scenario 3: Recommended PM (From Manufacturer)

In Scenario 3, the manufacturer’s recommended amount of preventive maintenance was considered. The equipment is assumed to last its expected life and that energy performance will not degrade over the life of the equipment [7].

If the average age of the chiller is 17 years, the expected useful life of the chiller is 20 years, so in years 3 and 23 of the Scenario 3 analysis (from the manufacturer), the chiller needed to be replaced. In Scenario 1, the expected useful life of the chiller would be 16 years, and it needs to be replaced in years 1 and 17 of the analysis.

This analysis indicates that the expense spent or to be spent can be pushed out over time by properly maintaining the equipment.

5. Conclusions

The effect of maintenance on energy systems cannot be underestimated. It has valuable effects on the life cycle cost of a system and as well as on the energy utilization with improvement on the life span of the system.

The results obtained from this research has shown that maintenance has a way of improving the ROI of the amount invested in installing and building of a system, especially the HVAC system used in homes. It is ideal that more preventive maintenance should be carried out on the HVAC as compared to the corrective maintenances.

Finally, following a strict and comprehensive maintenance schedule will prolong a building’s HVAC systems, save cost of replacements, reduce the loss of energy and increase the comforts of the building occupants.

6. Acknowledgements

The authors are grateful to Prof. Dr. Osman Kukrer who took his time to go through the manuscript and offered many advices.

REFERENCES

  1. A. Yabsley and Y. Ibrahim, “Study on Maintenance Contribution to Life Cycle Costs: Aircraft Auxiliary Power Unit Example,” School of Applied Sciences and Engineering, Monash University, Churchill, 2008.
  2. Anonymous, “General Maintenance,” 2009. http://www.slideshare.net/pradhyot05/general-maintenance
  3. G. Sullivan, R. Pugh, A. P. Melendez and W. D. Hunt, “O & M Best Practices Guide, Release 3.0,” Federal Energy Management Program, US Department of Energy, Pacific Northwest National Laboratory, August 2010.
  4. R. Suttell, “Preventive HVAC Maintenance is a Good Investment,” The Source for Facility Decision Makers Buildings, 2006. www.buildings.com
  5. R. Karg and J. Krigger, “Specification of Energy-Efficient Installation and Maintenance Practices for Residential HVAC Systems,” Consortium for Energy Efficiency, Boston, 2000.
  6. C. J. Gann, “Computer Applications in HVAC System Life Cycle Costing,” Communication White Carrier Corporation, Syracuse.
  7. W. L. Koo and T. Van Hoy, “Determining the Economic Value of Preventive Maintenance,” Jones Lang LaSalle, 2003.

Appendix

The tables below show the life cost analysis of the HVAC considered in this paper.

Scenario 1. No Maintenance Work Carried Out

In this case,

              Annual energy = (old Energy cost – New energy cost) + (old O/M – New O/M)

                                    = (140,000 – 80,310) + (3000 – 0)

                                    = 62,690

Available data for life cycle analysis for Scenario 1.

Life cycle investment schedule.

Life cycle cost analysis calculation for Scenario 1.

Therefore ROI = = 403.96%

Scenerio 2. Half of the Recommended Maintenance

              Annual energy = (old Energy cost – New energy cost) + (old O/M – New O/M)

                                    = (140,000 – 80,310) + (3000 – 4000)

                                    = 58,690

Available data for life cycle analysis for Scenario 2.

Life cycle cost analysis calculation for Scenario 2.

Therefore ROI = = 372%

Scenario 3. Recommended Maintenance

              Annual energy = (old Energy cost – New energy cost) + (old O/M – New O/M)

                                    = (140,000 – 80,310) + (3000 – 6205)

                                    = $56,485

Life cycle investment schedule for Scenario 3.

Life cycle cost analysis calculation for Scenario 3.

Therefore ROI = = 354%

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