How To Evaluate The Return On Investment Of Building Automation Systems And Operations?
Buildings consume more than 40% of global energy, making them one of the largest consumers in the world. The building’s performance must be optimized, energy consumption must be controlled, and energy standards must be met through advanced systems.
Today, building automation systems and operations have become a critical component of modern building design, particularly as the focus shifts towards sustainability and energy efficiency. Its growing importance is attributed to its capability to improve the energy efficiency, comfort, safety, and sustainability of buildings.
Building owners and operators can benefit from BAS while saving money. Let’s get into the detail:
Building Automation Systems
A building automation system (BAS), also known as a building management system (BMS), is a centralized system that controls the heating, ventilation, air conditioning, lighting, and other systems in a building. It automates and optimizes building operations through sensors, communication networks, and software algorithms.
Depending on the size, function, and operational requirements of the building, the BAS system’s capabilities and components can vary. Basically, there are two components to it: hardware and software. Software controls and manages hardware by controlling algorithms and programs, while hardware includes sensors, actuators, controllers, and communication networks.
Building automation systems and operations include a variety of functions:
- HVAC control: BAS monitors and controls temperature, humidity, and air quality for energy efficiency and occupant comfort.
- Lighting control: Light sensors can optimize energy consumption and reduce costs by detecting occupancy and daylight.
- Energy management: Making use of BAS allows you to monitor and analyze your energy usage and identify ways to reduce it.
- Security and access control: Building access control systems allow you to control and monitor access to a building and its facilities.
- Equipment monitoring and maintenance: By analyzing the performance of equipment, BAS can reduce downtime and repair costs.
Facility managers depend on building automation systems and operations to optimize building performance and achieve their goals.
Building Automation Systems and Operations ROI: Factors to Consider
When evaluating the ROI (Return on Investment) of building automation systems and operations, there are several factors that should be taken into consideration. Here are some of them:
- Cost of installation and implementation
The initial cost of installing and implementing a building automation system can vary depending on the size and complexity of the building. The cost includes the purchase and installation of hardware, software, and network infrastructure.
- Energy savings
Building automation systems can optimize energy consumption, reducing energy waste and costs. Evaluating the potential energy savings is a critical factor in determining its ROI.
- Maintenance and repair costs
Maintenance and repair costs can be reduced by identifying and prioritizing maintenance needs with building automation systems. However, there are ongoing costs associated with maintaining and upgrading the system over time.
- Improved occupant comfort and productivity
Building automation systems can regulate temperature, humidity, and air quality, providing a comfortable and healthy environment for occupants. Studies have shown that comfortable and healthy environments can increase productivity and reduce absenteeism. Consider this factor while calculating the ROI.
Please note that the ROI calculation for building automation systems and operations can vary depending on the building type, location, and operational requirements. A thorough evaluation of all the factors involved is crucial in determining its ROI.
ROI Calculations for Building Automation Systems
There are several calculation methods that can be used to evaluate the ROI (Return on Investment) of building automation systems and operations. Among the most popular methods are:
- Simple payback period
This method calculates the number of years it takes for the savings generated by the building automation system to cover the initial investment. Let’s look at how you can calculate it:
Simple payback period = Starting investment / Annual savings
- Net present value (NPV)
By discounting future cash flows to their present value, we can consider the time value of money. Here’s how it’s calculated:
NPV = Current cash inflows – current cash outflows
- Internal rate of return (IRR)
A building automation system’s lifetime return is calculated using this method. The formula for calculating IRR is mentioned as follows:
IRR = Discount rate at which NPV is 0
- Cost-benefit analysis
A comparison of building automation systems is based on the costs and benefits they provide over the period of their lives. Energy savings, maintenance cost reductions, and increased productivity for occupants are the benefits. Initial investment, maintenance, and upgrades are the costs.
- Return on investment (ROI)
In this method, the return on investment of a building automation system is calculated as a percentage of the initial investment. It is calculated like this:
ROI = (Annual savings – Annual costs) / Initial investment x 100%
Calculation methods can have an impact on ROI value. Building automation systems and operations should therefore be evaluated using multiple methods.
The BAS system automates your facility’s operations and systems!
There are numerous benefits to building owners, operators, and occupants associated with implementing a building automation system (BAS). Among them are:
- Energy efficiency: BAS reduces energy waste and costs by controlling and managing energy usage.
- Cost savings: Maintenance needs can be identified and prioritized to achieve energy savings. Also, BAS can optimize building performance, reducing energy use and associated costs.
- Occupant comfort and productivity: By controlling temperature, humidity, and air quality, building automation systems enable occupants to work comfortably and productively.
- Safety and security: Building automation and security systems can be integrated to control and monitor facilities. It can also monitor and analyze the performance of equipment, identifying potential safety hazards before they occur.
- Remote monitoring and control: The building automation system can be monitored and controlled remotely from a central location.
- Scalability and flexibility: Systems designed for building automation can be expanded as the building grows, making them highly flexible and extensible.
- Environmental sustainability: By optimizing energy efficiency and reducing waste, automated building systems reduce the environmental impact of a building.
Modern building design and operation rely heavily on building automation systems for these specific reasons.
Connect with Zenatix if you are also interested in leveraging this technology. It offers advanced IoT solutions in India.