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Tips for Calculating an After-Hours AC Rate

by 7NOX Team | Aug 26, 2021 | After-Hours HVAC, Sustainability, Tips

After-hours HVAC charges are a sticky OPEX budget item. Normal core hour rates are predictable. Power providers determine your property’s kWh costs for you. But with after-hours AC, managers must calculate the hourly rate themselves. And it’s work that needs to be done right if you want to recoup your full utility outlay.

With figuring after-hours AC rates, you get as much as you give. The more detailed your cost analysis, the more accurate your rate. And an accurate rate will refund your actual utility cost per hour, an inaccurate one won’t.

But determining detailed costs also takes time—your time—and that’s valuable. There must be a middle ground—an approach that minimises time while maximising resource win back. To locate it, we approached FMs working today for their input on striking a balance. Here’s what they told us.

Lock In the Parts of Your AHAC Rate Early

Most after-hours AC rates need to include more than electricity for chillers and boilers. For sure, there’s the fixed energy cost of your HVAC system to consider (more on that later), but what about other resources and services you provide? Lock in these costs early. It will give your calculation process more focus and direction. But what are the other costs?

If you’re managing an office space, your tenants may need access to lift services, parking and hallway lighting. If you’re a university, you may need to add security and cleaning services to the charge. FMs with manual AHAC programs need to include an admin fee to cover staffing costs. Someone will need to record the after-hours request, program the BMS and handle cancellations.

Start with the most obvious expenses and work your way to more granular items. Go as far as practicable for your situation. Some guess work is inevitable, but at least identify each hard cost. You can always discard extraneous ones later. Besides, you’ll need the list later when drafting your AHAC clause for your lease. Listing excluded costs in your lease is a smart way to quell tenant complaints about future AHAC increases.

Fixed Energy Cost: “Keep it Simple”

Since it’s your biggest electricity hog, your HVAC system will make up the bulk of your energy use for AHAC. Therefore, it results in the biggest potential for annual OPEX losses. So accuracy literally pays here.

The simplest (least accurate) method would be to divide your annual energy bill by the number of standard operating hours per year. It’s a simple, but rough estimate that lumps every kWh into the same basket. It tells you how much it costs to operate your property, not your plant. The lack of kWh discrimination could result in under or over-charing tenants and making your property less profitable.

At the other end, an FM could attempt to record their plant’s actual kWh usage in real time. Smart meters and EMS equipment give real time feedback, but they’re expensive and complex to integrate. Stuart Bryant, GM for a large property holder in New Zealand, explained how his company attempting to calculate their AHAC costs with smart meters:

“In one instance, we installed a series of TOU meters across all distribution boards that controlled the mechanical plant to work out the ‘actual’ energy usage. This worked but was complicated, and I wouldn’t recommend it.”

Such a granular approach is costly—both in time and money—and, by the end, may be more trouble than it’s worth. Even if benchmarking your property’s kWh usage is the point, usage rates and costs fluctuate throughout the year, so the accuracy you locate at one moment will inevitably vary from season to season.

“In one instance, we installed a series of TOU meters across all distribution boards that controlled the mechanical plant to work out the ‘actual’ energy usage. This worked but was complicated, and I wouldn’t recommend it.”
Stuart Bryant, GM

“I’ve found that a simple system (agreed with the tenant up front in the lease) works best,” Bryant states. His point is notable: simplicity can be preferable to accuracy, especially when tenants are involved. Simple calculation methods are much easier to get tenant buy-in from the get go. Complexity often breeds skepticism, as tenants fear hidden costs lurk within convoluted processes.

Pro Tip: Schedule an energy audit. Whether it’s for a NABERS assessment or simply to save on energy bills, an energy audit gets the hourly data you need to calculate your fixed energy costs. Plus, it increases your sustainability.

Should You Include Depreciation?

Including accelerated depreciation will likely depend on the complexity of your HVAC system and budget. After-hours AC requests do shorten the lifespan of your equipment, so if you decide to recoup that cost, make sure it’s worth your time. One way to manually calculate depreciation is to research ASHRAE reported estimates for each piece of HVAC system, but this is complex and time consuming.

FM’s with access to asset management systems can speed up the process. Some AMS software use built-in ASHRAE reports to predict equipment life cycles. These programs can serve as a helpful guide for adding hourly depreciation to your AHAC if you have access to them.

Still, other FMs are using experts to fill in the depreciation data gaps. Bryant explained that his company solicited incumbent engineers to gather data for calculating depreciation. He notes, “Having the independent data and showing the workings meant a simple explanation to tenants when they’d questioned costs.”

Bryant’s quote highlights a critical piece of the AHAC puzzle: third-party validation. Soliciting experts is expensive, but it also adds independence and credibility to the data you collect. For some managers, ensuring a calculation that reassures tenants is worth the upfront investment. For others, it may be an unnecessary cost.

Aim for Fairness, But Be Practical

With AHAC, the notion of tenant fairness will inevitably creep into your calculation. While buildings with only one HVAC zone make figuring AHAC costs fairly straightforward, multi-storied buildings introduce complexity. Consider these two situations:

Situation #1: Tenant A is a data center and Tenant B is a law firm. Tenant A uses five times the electricity as Tenant B.
Situation #2: A building has two HVAC zones: Zone 1 is bigger and requires $50/kWh to cool. Zone 2 is smaller and only requires $30/kWh.

For Situation #1: How do you plan for this discrepancy in power usage? Is it fair to charge both tenants the same rate for after-hours AC? For Situation #2: If you opt to go with the $50/hr charge for your AHAC rate for all tenants, aren’t tenants in Zone 2 getting ripped off?

These are fair questions to consider, and there are practical ways to provide for exceptions. For example, FMs with a multi-tenant building could average their electricity costs across HVAC zones:

Floor 1 – 3 = $22/hr
Floor 4 – 8 = $36/hr
Floor 9 – 12 = $30/hr
Average = $29.33/hr

Averaging in this way spreads the cost more equitably among tenants, but the process assumes that energy data per zone is easy to come by. Plus, most FMs want only one AHAC rate for all tenants because it keeps leases consistent and billing easier. So, while you should strive for fairness, stay practical in your expectations.

Bryant says shifting your perspective on after-hours AC is beneficial here. He suggests thinking of it as a one time “cost of service” rather than a pro rata charge. “Again, I think simplicity is the best policy here,” he states. “The basic calculation that tenants have agreed to pay when using AHAC is most important. It doesn’t matter if one or multiple tenants are using it at the same time because it’s really a cost of the service you’re providing for each.”

Keep Sustainability a Priority

If you’re not on top of them, after-hours requests can tank your sustainability efforts. Without an effective booking system, cancellations and reschedules may have you heating or cooling empty spaces. Make sure you’re automating as much of the process as possible. Consider investing in technology to help, like an AHAC automation app that lets tenants order after-hours AC from their smartphones. Automation helps you conserve time, money and energy.

Plus, look for opportunities to work with individual tenants to save energy during their requested hours. Bryant suggests starting with tenants who make regular requests. “Talk with the tenant or landlord about ways to minimize their electricity usage during this time. Consider adjusting your BMS for better control of temperatures. It will limit the usage of your main plant and reduce electricity and/or gas consumption.”

Conclusion

Tenant satisfaction is a key “cost” of sloppy after-hours AC calculation. Overly complex processes, infrequent communication, and billing inconsistencies lower tenant satisfaction and occupancy rates. Tenants unfamiliar with AHAC may question the need for a separate billing at all. Others may be confused by the idea of delivering a utility-as-a-service. A few may even dispute your fixed energy rate. Many tenants simply forget the AHAC agreement exists, leading to angry emails about mystery electric bills.

These situations are why setting expectations with tenants is so valuable. “Agree to the cost and workings of the plan up front with the tenant,” Bryant advises. “Spend the time early to avoid spending time each month discussing and explaining costs and charges.”

4 Reasons to Automate Your After-Hours HVAC Program

by 7NOX Team | Aug 5, 2021 | After-Hours HVAC, Save Time, Sustainability, Tips

If you haven’t yet automated your after-hours HVAC program or, worse, have no program at all, you’re missing out on benefits that maximise your staff productivity and cut out wasted time. Automation also helps increase tenant satisfaction and productivity, which, in the end, helps your properties thrive. Here are the biggest benefits from automating your after-hours HVAC program.

1. Easier Scheduling

The typical after-hours HVAC scheduling process usually involves several staff members and these four steps:

Tenant fills out a work request in person or on the website portal
The request is recorded on a spreadsheet
The building engineer programs the request into the HVAC system
The facility manager prepares & sends monthly billing statements for each tenant

Each step requires time and resources from your team, and when problems pop up, tasks grow exponentially. If an engineer isn’t available, another staff member has to be scheduled. When a tenant needs to schedule a change, someone must sort things. An AHAC cloud-based platform eliminates these issues by automating many of these manual steps. Here are the steps in an automated system:

Tenant makes a requests via smartphone app or desktop browser
(Automated) Recording requests entries
(Automated) Programming the HVAC system
(Automated) Sending monthly statements

Automation reclaims lost time from tending to tedious tasks. You can, instead, spend that time improving your property and tenant experience.

2. Fewer Billing Errors

By eliminating steps in your after-hours HVAC program, you stamp out inaccuracy. The best-laid plans run into the realities of everyday life. Engineers get sick. Requests are forgotten. Entries are flubbed. Statements don’t match. In contrast, automation software doesn’t lie, get ill and or forget.

The fallout from mistakes isn’t just the wasted time setting things aright. For facility managers, inaccuracy means loss of profits, and those losses can be huge.

When a billing discrepancy arises, it’s often easier to acquiesce than upset a tenant. Some managers avoid charging for after-hours at all because they fear situations like this. Where this is the case, you’re unnecessarily paying for another business’s electrical costs while shortening the life span for your HVAC equipment. The accuracy of an automated after-hours program ensures your properties stay profitable.

While AHAC automation may seem like a simple tool, its potential impact for FMs and their tenants is limited only by the lack of exploring its many applications for both.

3. Happier Tenants

Most automated after-hours platforms let tenants make reservations from a smartphone app or desktop browser. It’s a perk that benefits both managers and tenants. Tenants no longer need to waste time filling out work requests, and managers can reduce staffing costs associated with after-hours management. Since AHAC apps fully integrate with your BMS, start and stop times for HVAC service are automatically received, executed and terminated by the software. This frees your engineers and maintenance staff up to attend to higher property priorities.

Since lease holders can schedule after-hours HVAC “on demand,” this eliminates the need for an advanced notice. Most commercial leases with an after-hours clause stipulate a 24 to 48-hour advance notice from the tenant. But tenant schedules can vary wildly. Some have highly predictable office hours; others manage chaotic itineraries. For the latter, even a 24-hour notice puts them in a tight spot. But by eliminating the need for a notice, automation apps give your tenants and their employees greater work flexibility — a growing priority for workers splitting their work hours between home and office.

4. More Sustainable Properties

Going on-demand with your after-hours HVAC program conserves energy to. Changing or canceling bookings by mobile device is easy and convenient for your tenants, so they’re much more likely to cancel their after-hours appointments when things change. The upside is you won’t be heating or cooling empty properties simply because something came up at the last minute. With more accurate billing, you’ll get a better overview of your total energy use and be able to find opportunities to increase efficiency and cut waste.

Pro Tip: Identify seasonal trends for your after-hours program and use the data to make targeted improvements in lighting, insulation or renewable energy investments within specific zones of your property.

Conclusion

The benefits of after-hours HVAC automation make a strong case for its adoption among facility managers. While it frees your team from tedious tasks like reporting and billing, automation’s biggest selling point is it’s a value-add for your tenants.

Clients and their office managers can use the data collected by automation software to streamline their own internal processes. Retail tenants can use after-hours data to set sustainability benchmarks and goals. Software developers could employ after-hours usages in evaluating each team’s productivity and/or cost to a project. Law firms could recoup losses by adding their AHAC charges as a billable line item for a client.

While AHAC automation may seem like a simple tool, its potential impact for FMs and tenants is limited only by the lack of exploring its many applications for both.

After-Hours HVAC: 5 Reasons to Start Charging Tenants

by 7NOX Team | Jul 29, 2021 | After-Hours HVAC, Industry Trends, Smart Buildings, Sustainability

Charging tenants for after-hours air conditioning (AHAC) presents many difficult questions for FMs. How do I calculate an hourly rate? How do I separate after-hours billing from normal utility OPEX? Do I have enough resources and staff? Calculating and managing after-hours HVAC is complex, and some FMs choose to forgo charging tenants to avoid the hassle. Instead, they raise “maintenance fees” or other charges to cover the extra electricity.

If this describes your situation, there’s a good chance you’re falling short of recouping the full cost of your operating expenses. Plus, you may be missing out on other “softer” benefits associated with charging for AHAC services. Here are five reasons to start an after-hours HVAC program today.

1. After-Hours kWh Are Usually Peak Load Times

Most leases list “operating hours” for the work week at 8:00 am to 6:00 pm or something similar. This leaves evenings open for tenants to schedule after-hours HVAC (along with Sundays and holidays). However, peak hours for electricity also occur in the evenings, especially in the summer months. Peak hours or on-peak times are when you’re paying the highest price per kWh to run your HVAC system. So, tenants using after-hours AC in the evenings are consuming current at a premium. Even if you’re charging a general CAM fee or “admin fee” to cover the added energy costs, it may not be enough to offset these higher peak demand prices. And if you’re not charging at all, you’re certainly cutting into your profits.

2. AHAC Charges Encourage Energy Conservation

For seasoned FMs, it’s no secret that charging pro-rata rates for electricity doesn’t encourage conservation among your tenants. Absent a green lease or submetering, tenants show less incentive to save energy with pro-rata billing. Why put in the effort to save 10% per month if the savings will be split among everyone in the building? But an effectively managed after-hours HVAC program can counter this attitude. It works like a type of sub metering. Tenants are responsible for only their share of kWh used, and they are billed as such each month or quarter. This encourages them to bring down their electrical consumption to lower operating costs.

3. New Hybrid Workspaces Demand It

As the COVID pandemic begins to subside, companies are asking remote workers to return to the office. But some employees are pushing back, instead, demanding more flexible schedules. The expectation is that many employees will split their time between home and the office. These new work approaches will broaden normal operating hours and pressure FMs to adapt. Thus, the demand for “amenities” like after-hours HVAC will become necessities. By starting your after-hours program now, you’ll make the transition easier for your staff and clients.

4. It May Improve Your NABERS Rating

If you want an accurate assessment of your property to secure a NABERS Energy and Water rating, you’ll want to include any after-hours air conditioning (AHAC) requests. To rate your building’s efficiency, a NABERS assessor needs to calculate your total rated hours. First, he or she will calculate the power consumed during normal operating hours (ex. 8:00 am to 6:00 pm). Next, the assessor will add any qualifying AHAC requests to the total. However, requests must record the date, time and space. Simply handing the assessor a spreadsheet with the “total hours run” for the year won’t work. As a result, your AHAC hours data may be skewed or not counted. Inaccurate or omitted data lowers your efficiency rating, but an after-hours HVAC program will account for every kWh.

5. It’s Easy to Automate

Just the thought of adding a separate utility billing process to their weekly tasks is enough to turn many FMs off of charging for AHAC. It’s a legitimate concern. Manual scheduling and billing programs do require staff resources, time and spreadsheets to function. However, today’s after-hours HVAC apps automate the bulk of the process, leaving you with time to focus on your properties. Tenants use a mobile app or web browser to make after-hours HVAC bookings. The app then integrates with your BMS to carry out the request. Monthly billing is also automated, so recording mistakes are minimised and time management is maximised.

How Energy Management Systems Help Your Properties

by 7NOX Team | Jul 8, 2021 | Industry Trends, Smart Buildings, Sustainability

The move to smart buildings is here, and with it the demand for “smart power.” Innovations in wireless technology, monitoring hardware and cloud-based data are all making energy management systems a must have for FMs. Energy management ensures true power digitalisation—a state where every watt is recorded, stored and used to make informed, real time decisions about a building’s power usage.

One key component to power digitalisation is the energy power management system (EPMS). An EPMS is a specialized software that works as the “brains” for your energy monitoring strategy, giving you a broad look of your overall grid along with insights into every connected electrical asset. Here are a few ways an EPMS brings value to your properties.

Lower Electrical Costs

Because an energy management system provides transparency into your power consumption, you can lower energy costs by identifying ways to optimise your electrical usage. For example, use an EPMS to locate your biggest energy consuming assets. Then switch run times to off-peak hours when electrical rates are lower. Audit your current usage in low demand areas to see if you can cut waste completely by installing motion sensitive lighting or switching to automated HVAC scheduling. All this new energy efficiency will also help raise your power factor rating, and your provider may offer a discount if your rating is above average for your area.

energy management power chart — Useful power is the energy that actually does work. Demand power is the amount of electricity delivered to your facility. Your power factor is the ratio of your useful power to your demand power. The higher the better.

Increased Equipment Lifespans

Advanced equipment and technologies within many sectors (e.g., healthcare and IT) are becoming more sensitive to power fluctuations. Complex equipment also requires a consistent energy supply to function properly. Insufficient or inconsistent power supplies significantly impact their lifespan. Therefore, electrical supply monitoring is critical to avoiding damaged assets. Modern EPMS software warn staff to power quality issues like power sags, swells and harmonics before failure or harm occurs.

Reduced Carbon Emissions

In addition to cost savings, optimising your energy efficiency also lowers your carbon footprint and makes your more competitive. Properties with hybrid-grids can use their EPMS to identify the best times to switch to cheaper, greener energy supplies like solar, wind or battery. And because energy management systems benchmark your consumption, reporting on energy reduction and savings against targets is more accurate. That makes your efforts more sustainable over time.

Power Event Tracking

When the power does go out, it can sometimes be difficult or impossible to determine the cause. You may only have a few seconds to troubleshoot the issue before it happens. And your electrical provider may try and place the blame on your property. Flying blind to power events leaves you vulnerable to hefty fines for blown transformers and labor costs. But the accuracy of an EPMS can track your system down to the individually connected device. It records every power event with your grid, so you’ll have documented proof when the power company shows up if you’re to blame.

Expanding Your Energy Grid

Not only does an EPMS warn you if you’re exceeding the capacity of your circuits, it forecasts if a new renovation or piece of equipment will push you past safe limits. Historical data of your electric usage and top-down views of current load capacities help managers and engineers easily determine their wattage budget for any area. This can be critical when updating to more efficient equipment or more robust units with larger amperage ratings.

Conclusion

As the old saying goes, “If you can’t measure it, you can’t manage it.” But too often managers and owners still see power as a fixed expense, something measured primarily by the end-of-month cost. But today’s wireless technology and the IoT have transformed energy consumption and distribution into a flexible outlay that can (and should) be adjusted to meet an ever-changing supply and demand. Smart buildings run on smart power, and smart FMs who get ahead of the game by adopting energy management systems can increase the value of their portfolios for owners and tenants.

Best Online Continuing Ed Resources for FMs in 2021

by 7NOX Team | May 16, 2021 | Continuing Ed, COVID-19, Sustainability, Tips

Art Linkletter summed up professional development perfectly when he said “Things turn out best for the people who make the best of the way things work out.” Adapt or perish is the mantra for today’s professionals, and so much so for facilities managers who must adjust to a post-COVID workplace, BMS automation and sustainability among other growing trends. Luckily, the internet offers plenty of opportunities for busy FMs looking to expand their skills and adapt. Here are the best online continuing ed resources for FMs in 2021.

LinkedIn Learning

LinkedIn’s relatively new online learning platform, LinkedIn Learning, has enough facility management courses to fill the entire year. LinkedIn Learning is $39.99 NZD per month or take advantage of the free 30-day trial. Here are a two courses sure to be popular in 2021:

“Facilities Management: Social Distancing and PPE”— This course tackles relevant post-COVID challenges like how to change the way people enter buildings, proper placement of hygiene stations and how to avoid cross contamination.
“Leading Projects”— Cross-functional projects involve being able to structure teams and plans effectively. This course teaches how to define the scope, investigate options, select a course of action and execute a plan.

International Facility Management Association (IFMA)

Eco-friendly buildings and sustainability are now an integral part of the FM profession. That’s why we recommend the IFMA’s “Sustainability Facility Professional” certification program for FMs who want to stay ahead of the curve. The online course teaches how to bring more efficiency, data-driven decision-making and sustainable practices to their clients’ properties. The certification is self-paced and has several prerequisite courses, so it’s perfect for IFMA members who are already certified in FM introduction courses. Visit the IFMA site for more info.

Massey University (NZ)

Massey Uni offers two diplomas in facilities management available through distance learning. The Diploma in Facilities Management (DipFM) is built for new FM professionals just entering the industry who want to strengthen their skills with foundational knowledge, while the Graduate Diploma in Facilities Management (GradDipFM) is aimed at professionals holding a non-FM related tertiary qualification, such as engineering, commerce or science. Both courses are one year full-time, but can be completed part-time. Also, both offer the option to exit at Certificate level on completion of four papers.

Vector Solutions

Training site Vector Solutions has an extensive catalogue of online courses to benefit every level of facility management. If you’re looking for maintenance certification, Vector Solutions’ facilities maintenance courses are specifically created for technicians and building engineers, and they have certification tracks for commercial, industrial or both. FMs needing more general professional development resources can find over 220 classes on leadership, finance, compliance, time management, communication and sexual harassment. Check out Vector Solutions full catalogue of FM training courses.

BOMI Webinars

BOMI International has partnered with online education service Lorman to create a series of live webinars for 2021. These e-Seminars get FMs up to speed on current issues “International Business Codes” and Workplace Bullying/” Fees average around $200 and attendees can add a downloadable recording for future reference. Visit the Lorman website for a complete listing of live webinar topics, times and dates.

3 Ways to Improve Tenant Satisfaction

by 7NOX Team | Apr 18, 2021 | COVID-19, Save Time, Sustainability, Tenancy

Whether you’re leasing a small two-bedroom or multi-level high-rise, tenant satisfaction is critical to your bottom line. When tenants are happy, they tend to lease longer. This maintains consistency in your properties and lowers your exit costs. But what really makes a happy tenant? It can be more complicated than you think. Savvy property managers and owners use tenant satisfaction studies, along with their own surveys, to zero in on what’s important to their tenants. Here are three ways to start improving your overall tenant satisfaction straight away.

1. Help Them Become More Sustainable

Interest in green working spaces is growing in tenants all around the world. Surveys show that building sustainability advice is as high a priority for tenants as advice on health and safety. Your renters want to do their part to conserve energy while providing a safe workspace for their employees. Plus, everyone saves money in the process. Here are some things to try:

Keep your tenants informed about new construction and invite their input.
Create a forum on your portal for regular contributions on sustainability.
Make sustainability a regular part of your building meetings with tenants.
Use an automated billing app to give them more control over their energy consumption.
Email them guides on building sustainable office spaces.
Regularly post recycling program reminders to your social media sites.

2. Update Your Tenant Communication Plan

Experts recommend you review and update your tenant communications program every 12 months to ensure it’s meeting your tenants’ needs. To effectively evaluate your plan, ask questions like:

Is the right person in charge of managing the plan?
Is your plan easily accessible by you and your tenants?
Are you updating your plan regularly?
Do you have all the components you need?
Can you measure the effectiveness?

Regular evaluation ensures your tenant communication plan is up-to-date. Take advantage of technology by employing a multi-channel approach that includes email, phone, text and social media. Unprecedented events like COVID-19 have pushed the emergency component of comms plans to the forefront, as property managers work with governments to ensure public safety. Annual plan audits will ensure you’re prepared.

3. Sort Maintenance Requests Fast

Resolving maintenance issues quickly isn’t just good building management, it also makes your tenants happy. Nothing is more frustrating than working around a faulty light, broken door or unreliable internet. While most renters understand that things happen beyond the landlord’s control, that doesn’t absolve you from doing your due diligence.

Even if it’s a small issue, get to the problem as soon as possible—it may not be a “small” problem for your renter. Today, it’s easier than ever to locate one-off contractors and handyman services from online services like Angie’s List or MyGuy. In the long run, hiring a contractor will likely be worth the cost if it results in a satisfied tenant.

These three suggestions highlight two key aspects of tenant satisfaction: information and control. Remember, your tenants have to factor your building management, administration and technology into their own business decisions. Unreliable internet service, late notices about lift outages or a confusing tenant payment process all affect their ability to plan and respond as an organization. Keep better information and more control as end goals in your decision making, and you’ll always ensure that your tenant satisfaction improves.

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