AIAC promotes industry best practices to improve your competitivity through building asset renewal requirementsJune 12, 2017
On June 5th, for this year’s World Environmental Day, AIAC, along with CAE and Ecosystem, hosted a webinar titled “The Hidden Opportunities in Your Buildings”.
The goal was to share a new vision regarding critical asset renewal needs for building managers, plant engineers or C-level executives looking to get more value from these typically unappealing capital expenditures. Building upgrades are rarely considered a sound business investment as it is rarely, if ever, part of the core business.
The webinar featured the case study of CAE and Ecosystem, who approached asset renewal with a different strategy. By focusing on generating value, they turned a capital expenditure into an investment opportunity and contributed to CAE’s business competitivity. The recent project implemented at CAE’s Montreal headquarters reduced the energy bill by 24%, in addition to simplifying HVAC equipment maintenance, improving building comfort, and addressing the issue of R-22 removal. The project also earned the 2016 Leadership Award from the Canadian Industry Program for Energy Conservation (CIPEC) and recently received the 2017 Energia Award in the category of sustainable projects in the industrial sector.
CAE is a Montreal-based multinational who is a leader in the delivery of training for civil aviation, defence and security, and healthcare markets. Their Montreal headquarters also includes a plant where flight simulators are designed and assembled.
Ecosystem is an award-winning design-build firm specialized in performance contracting projects. They excel at complex building upgrades and use integrated delivery methods to meet and exceed their clients’ financial, operational and environmental goals.
The webinar highlighted the building upgrades which included reconfigured rooftop units, which saw 149 aging units replaced by 38 units, heat recovery networks, new centralized heating and cooling plants, and improved building automation systems.
Reconfigured roof top units
New heat recovery loop in one of the three new heating and cooling plants.
These improvements are obviously very specific to CAE’s particular needs, but David Héon, CAE’s Manager of Facility Services / Health, Safety, and Environment, was quick to point out the best practices that can be applied by many other businesses.
A key to the project’s success was using a performance contracting model. The RFP process compelled bidders to design projects that would generate the greatest value for CAE, and the winning design-build firm became contractually committed to achieving performance targets rather than simply being paid for implementing building upgrades.
Getting the nod from the executive board
This model enabled Héon to make a compelling business case when presenting the proposed project to CAE’s executive board. The project was competing against other internal projects which were better aligned with the core business, such as opening a new training center, but as Héon stated to the executive board, “This building upgrade project, along with the contractual guarantee from the design-build firm—which locks the project cost, the financial incentives and the annual operation savings—is risk-free for CAE.”
As Héon explained, the project design took advantage of major asset renewal needs to completely rethink the HVAC design rather than opting for a simple one-for-one equipment replacement. Leveraging the resulting energy savings and third-party subsidies allowed CAE to turn necessary asset renewal into a smart investment that generates a payback.
Comparing cashflow over 16 years between a typical “one-for-one” replacement project and CAE’s project.
Getting the most from the contractor
Once the green light was given and Ecosystem was selected to design and build the project, CAE and Ecosystem worked in close partnership to maximize the results. Héon quickly noticed that hiring a firm and paying them to achieve results had a positive effect on their involvement and commitment through all steps and challenges of the implementation phase. Another advantage resulting from the performance contracting model was that instead of following a predetermined and rigid project design, Ecosystem was constantly willing to change and improve the design to maximize the project benefits and energy savings – a clear advantage when it comes to adapting quickly to the business fast changing reality.
The Ecosystem staff gained insight into CAE’s specific needs by collaborating with the CAE technical staff who have extensive knowledge of the building. In addition to designing measures to meet performance targets and bring all equipment up to code, Ecosystem also aimed to address many of CAE’s outstanding maintenance and operational issues. Having Ecosystem’s designers and construction managers and CAE’s own operation & maintenance team working as a single unit proved to be a rewarding experience for all parties.
How well is the project performing after two years of performance monitoring? “We are still a bit short of the guaranteed annual energy savings, reaching 88% in 2016, but we are on track to exceed 90% for the current year,” notes Héon. “Ecosystem set very ambitious goals and they are still actively involved and working very hard to improve the project. So far they have honored their performance contract very well.”
The webinar concluded by stating the various success factors such as the importance of a well-developed RFP, which can be adapted from existing templates from the Quebec building management association AGPI. It also highlighted the fact that the performance contracting approach was a key element in swaying CAE’s executive board in favor of providing financing for this project. At CAE, the aging systems had reached a point where major renewals were inevitable, and Héon concluded that these circumstances can provide a great opportunity to completely rethink the design to create more value. “Any money shaved off our bottom line increases our profits” remarked Héon.
Learn more through this interview conducted with CAE’s David Héon: http://ecosystem-energy.com/news/interview-with-david-heon-of-cae/