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Economic Modelling Helps Assess Building Management Systems
The NPV (Net Present Value) economic modelling technique proves a useful tool in determining the suitability of a BMS, helping assess intangible benefits (which are not easily translated to costs) as well as tangible (direct) cost savings.
A Building Management System (BMS) controls and supervises a number of systems, primarily the HVAC (heating, ventilation and air conditioning) and sanitary systems, and often various electrical and control systems. Before a decision is made on whether to install a BMS, the potential savings must be balanced against the investment costs. However, assessing the savings is complex - they depend on interest rates, preventive maintenance, seasonal and many other factors, as well as 'intangible' factors such as comfort and accessibility. As part of MOMENTUM (which originally developed intelligent systems for building management and used technology from the Esprit HS-COMPONENTS project), the NPV economic modelling technique was evaluated for BMS applications. Based on well established investment calculation models, NPV was validated as a suitable decision tool, providing a detailed assessment over the system lifetime. A Simple PayBack (SPB) model can be used, but is generally only suitable for quick calculations covering a two to three year period.
The number of office buildings and shopping centres is increasing, and building design is becoming more sophisticated and energy efficient. Thus the need for BMSs, to maintain a comfortable work environment and ensure efficient use of building 
systems, is growing and its cost-efficiency is becoming a crucial factor in assessing total building cost. The NPV economic model has been reviewed and refined specifically for BMS installations and provides an excellent indicator to economic feasibility. As economic modelling tools become increasingly sophisticated and accurate, the NPV model is expected to lead the way in the decision making process for BMS installations.
Models of varying sophistication can be designed, with the profitability requirement expressed by choosing an interest rate or upper limit on the number of years before payback. Savings attributable to the BMS are normally treated as an annual figure, arising from reduced operation and maintenance costs; system costs are derived from the initial investment, annual maintenance costs and possible future reinvestments. The NPV model provides a simple value, the difference between the calculated total savings and initial investment, with all costs and savings transferred back to present day values. If this value is positive, the system is an economic investment. If it is negative, the model allows simple 'what-if' analyses to determine what factors can be changed to produce a positive value, and so an economic implementation.
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Research Area Technology and Components for Subsystems
Project MOMENTUM
Related Results HS-COMPONENTS
Keywords building management; economic modelling; heating controllers;
| Project Participants | |||
|---|---|---|---|
| DIT ES | |||
| Iberia ES | |||
| INESC PO | |||
| Institut Cerda ES | |||
| Schlumberger FR | |||
| Teice Control ES | |||
| Tour and Andersson ES | |||
| Trialog Informatique FR | |||
home page | Results Zone | IT Solutions | Application Areas | Research Areas | Technology for Components and Subsystems The URL for this page is /esprit/src/results/res_area/tcss/tcss18.htm
This page was last updated on 22 November 1996, and is maintained by esprit@dg3.cec.be