Focus on HVAC Management

Chain Store Age spoke with Ron Prager, COO of Brinco, about how retailers can better manage one of their most critical assets: HVAC systems.

1. What are some of the most common mistakes retailers make when it comes to HVAC maintenance and repair?
The most common mistake we see retailers make is deferring or cancelling preventive maintenance (PM) service in an effort to reduce expenses.

We understand the need to reduce expenses, particularly in the current challenging retail environment. In certain circumstances that necessitates reducing or deferring PM spend, but wholesale cancellation of PM’s is not the way to go, especially if the equipment employs gas heating. Reduction of PM cost is best dealt with strategically ie: rotating months of service based on geographic location and other factors. When a retailer simply turns off the PM switch, the result is typically increased expense and increased exposure to substantial liability.

The second most common mistake we see is attempting to commoditize a highly specialized and technical service via the RFP process solely, without taking into account that HVAC services are just that; a service not a commodity, with many variables including the quality of those services and the capability of the provider to stand behind the service provided.

Due to the complexity of HVAC equipment, the trade specific knowledge required to evaluate the work required, the fact that the work occurs out of sight, the fact that each site may present its own unique issues ie: unit accessibility, mall requirements etc., and the fact that there are thousands of different OEM components across more than 20 brands of equipment makes commoditizing quality HVAC service an impossible task.

2. What about HVAC replacement?
The economic changes that have occurred within the retail sector over the past ten years have had a major adverse effect on proactive replacement programs leading to increased spend on time and material repairs and unit down time. Short-term leases and a lack of confidence in the future of some brick-and-mortar locations has forced retailers to continue using equipment that is far past its normal life expectancy.

Additionally even retailers who have a proactive replacement program in place, often choose prospective replacement sites based on prior spend at a particular location rather than taking all factors into consideration. In some cases this strategy works, but in many cases they simply end up replacing equipment where they have already made a significant investment in new compressors and heat exchangers.

We recommend taking a strategic approach to determining which locations are candidates for replacement and work with our clients to develop multi-year plans. These plans also provide valuable information for store planning and real estate teams. It can be extremely important for a real estate director to know that the equipment at a location will require replacement three years from now when he is negotiating a lease renewal or considering exercising current lease options.

3. Are there any new regulations coming that will affect HVAC equipment?
We are seeing energy code requirements becoming more stringent at an increasing rate. Most local and state energy codes adopt ASHRAE 90.1 as a reference standard. In addition to setting minimum energy efficiency standards for new equipment, low leakage economizers, variable air flow, multiple stages of cooling, and variable water flow on chilled water systems are now becoming code required.

We have also seen extremely stringent regulations put in place regarding maintenance of cooling towers in New York City, to the degree that towers actually require physical inspection every other day. As you might imagine, the cost of this compliance is tremendous and so are the fines levied for nonconformance. These requirements are the result of recent outbreaks of Legionnaire’s disease over the past few years.

4. What is the best way retailers can control HVAC costs?
HVAC cost control begins with making appropriate decisions during the design and construction phase of a retail store. The design team needs to:

• Consider the cost of gaining access to installed equipment over the predicted store lifespan. Construction cost reductions gained by locating equipment over the sales floor are insignificant when compared to the need to use a scissor lift to access the equipment, or the need to perform all PM Service during unoccupied hours due to difficult access to the equipment during operating hours.

Limited access also increases system down time and impact to sales, as the ability to resolve an issue quickly is impeded by the need for specialized equipment to access the units, multiple techs, and the need to work during unoccupied hours.

• Plan for redundancy. No matter what equipment is installed, and how well it is maintained, there will be component failures at some point, and replacement components are not always readily available. The design team needs to make certain that no matter how small the footprint, the store must be served by multiple units.

Controlling the cost of HVAC installation and repair is subject to the same challenges that are presented when attempting to commoditize maintenance work when preparing an RFP. It is also the primary reason for Brinco’s existence. Work must be triaged so that impact to stores is minimized. Trade specific knowledge must be employed to validate replacement parts cost and number of labor hours required.

Also, strategic protocols must be employed to determine what work is required, what work is discretionary, and when second opinions are appropriate. Finally, extended warranties and possible call back status must be tracked and enforced.

5. What services does Brinco offer retailers?
Brinco is a single trade vendor within the HVAC / Refrigeration discipline. With that being said, our offerings and expertise within this highly specialized technical discipline are vast and comprehensive. We maintain and have replaced systems ranging from a single 2 ton unit to 500 ton chilled water systems. We have worked, and continue to work, with retailers to develop prototypical designs and lease exhibits, and multi-year proactive replacement programs. We provide preventive maintenance programs designed to meet the retailer’s specific needs and excel at performing high quality demand repair work quickly and at reasonable cost.

6. How does Brinco set itself apart from other HVAC service companies?
Brinco’s model is transparent. Our clients appreciate our integrity, our superior technical capability and expertise, and our dedication to building a comprehensive long range cost effective program. We build long- term relationships with retailers who value what we bring to the table, and strive to deliver maximum value for each dollar spent on their HVAC systems.

7. How has technology changed the way Brinco services retailers?
Technology has not changed “the way,” we service retailers. It is simply another tool in our toolbox. Service is still about getting the highest quality of work performed quickly and at a fair price. It is and has always been about thinking outside the box to develop elegant solutions to complex problems.

What has changed with technology is the speed at which we can mine data. We now have the ability to spend more time analyzing information, as opposed to spending time entering that information. Technology has also changed the way we communicate; translating into faster more accurate information transfer.

8. What criteria should retailers use in evaluating an HVAC service contractor?
First on our list would be integrity and reputation. HVAC is far too complex a discipline to simply use metrics to make judgements.

-Second is the total cost of repair and maintenance per square foot, or per ton of installed equipment excluding replacement costs. These are numbers that cannot be manipulated, although their accuracy increases with each year a contractor continues servicing the same equipment. 

-Third, would be the ability of the contractor to solve for root cause on ongoing issues, as this is a good measure of the provider’s overall ability.

9. If you had one piece of advice to give regarding the upkeep of HVAC equipment what would it be? 
We cannot overstate the importance of maintaining accurate asset lists with all pertinent equipment information as well as accurate service histories.  In order to manage repair and maintenance of HVAC systems, the retailer needs to be able to forecast future requirements.  These requirements will be based to a large degree on current equipment age and condition as well as historical data.  The ability to forecast and develop quality programs is directly proportional to the quality of the existing data and the provider’s and retailer’s ability to work together to analyze it, and establish programs tailored to that retailers specific unique needs. 
  
10. Looking into the future, how do you think HVAC equipment will evolve during the next five years? 
Over the past twenty years, we have seen HVAC equipment become increasingly complex at an exponential rate.  We believe that this trend will continue over the next five years.

The increasing complexity of the equipment is being driven by the application of EMS systems, internal microprocessor-based controls, and code required energy savings.  Low leakage economizers with self- diagnostics, variable airflow on constant volume equipment, and variable flow refrigerant systems will become increasingly prevalent.  We believe that systems will have better self-diagnostics, and that we will soon see equipment that can communicate faults directly, and via wireless communication, to the technician onsite or remotely offsite in far greater detail than has been available in the past.  These are all positive changes, however, there is an extreme shortage of competent technicians and the industry is anticipating this situation to worsen at an alarming rate.  Increased equipment complexity combined with a shortage of capable manpower does not bode well for the future.  At a minimum, labor rates are going to see a major correction.  If one looks at the compensation rates for network technicians working comfortably within buildings, versus the rates for HVAC technicians performing physically demanding work on roofs in all weather conditions; it is difficult to understand why anyone considering a technical career would choose to become an HVAC tech. Eventually, due to supply versus demand, we believe that the labor rates for HVAC technicians will increase to the level that will induce more individuals to enter the HVAC industry. However, we may be looking at 100% labor increases to entice people entering the workforce to choose the life of an HVAC tech with its physical demands and increased education requirements due to the complexity of the systems they are required to perform work on.