During a recent RAC building energy event the topic of valuing good engineering which results in systems that work well was raised and during a brief discussion with CIBSE ex-Presedent Andy Ford we took this point a bit further.
We are used to proving the payback of various widgets, be it LED lighting or a biomass boiler, the maths are simple; it costs X and saves £Y per year so X/Y = payback years. Easy. It can get a little more complex with RHI, net present value or other complications but essentially we know X and Y and so can give a quantitative answer.
However if I proposed that the client spend 5% more on an installation of say a biomass boiler which would allow for better quality of installation, proper engineering oversight, real commissioning, how would I ever prove the payback on the additional 5%? I know what the X+5% is but can I determine Y and thus the payback?
Perhaps the client would shout about how installations should be done properly in the first place, but we all know the price pressure has driven down the net margin in building services work to such a point that the pipe fitters are working at a furious rate and no one ever really checks the nuts and bolts. So we are where we are; absolutely the lowest cost installation and plant in order to push the X/Y payback towards the acceptable figures of 2 or 3 years.
Unfortunately the X/Y sum is a sales tool, sold and bought before a pipe bend is made. Once the install is done and handed over, as quickly as possible obviously, who checks the X/Y? Sometimes it goes right and that’s that, sometimes it goes slightly off and sometimes it goes horribly wrong. In the latter cases it is either swept under the carpet, with a few careers, or the contractor is hung drawn and quartered on the spot.
Increasingly we are looking at different technologies, complex system integrations, cross over between disciplines and individual buildings. This means less of the old school method of 1000 systems all the same irrespective of local conditions which does allow for maximum purchasing leverage and minimal skills. What we are now doing emphasises skills in designing unique systems to suit individual buildings.
In individually designed systems I believe that i could increase the performance of a system by spending more time on ensuring the work is completed to a high standard and by taking time to tune up the performance during and after the commissioning phase. For example; if the pipe insulation is complete i can cut down losses, if the pipe rises and there are air valves in the proper place i can ensure no air is trapped, if the number of bends is minimised I can cut down pump head, if the boilers all fire correctly in the right order at the right time I can ensure maximum efficiency is achieved. What is the value of twenty of these minor issues on an installation over 20 years? There is a potential saving in capital cost, operational and maintenance costs, but can i quantify them?
In doing so i am determining the value of good engineering, I know what it costs and probably what the market value of it is but what benefit does good engineering bring? In other words I know X in the payback calculation, but what is Y?
Could i give two prices to a client; one for standard and one for enhanced engineering? Could i offer extended warranties on the enhanced engineering product? it’s like a whole X/Y payback sum in itself, but a bit more fuzzy!
How does a client ensure they are not just paying for hot air and puff but actually getting good engineering? The same way we judge the value of a product in a store; prior knowledge, reputation, image and cost.
In simple words that we are all familiar with ” you get what you pay for “. To go back to the discussion I was having we all agreed that it is really difficult to prove the value of good engineering and that gut feel would be the best way. Try selling gut feel to a Financial Director!
There’s another truth ” if you let accountants run the show it will be very very poor show”. So, i hear you cry ” let the engineers run the show” that leads down a path of technical excellence but compromised financial performance. It has to be both engineering and commercial, a joint decision and process with equal weighting and cooperation between both parties.
To summarise my thoughts on how a client best purchases an engineering product; they must be aware of the technical issues, have a good assessment of the whole life performance and be able to tie these back to purchase price, not be wedded to an absolute lowest price and acknowledge that some part of the decision will be made on instinct alone.