Short-changed?

Short-changed?

Alan Obrart, L.AIRAH, wonders why the bottom line is so thin for those HVAC businesses that detect and fix difficult-to-resolve problems in buildings. He has a theory. 

I’ve been pondering why profit margins have become slender for technically competent, regulation-compliant HVAC businesses. And this is the case even when the business in question has acted responsibly – even proactively – to solve an issue and see that a building is up and running. There are several factors at play here, each part of a complex puzzle. 

Let’s take a situation where we have a typical mixed-use commercial building.  

The HVAC business in question overcomes some difficult site problems, and makes sure the system is commissioned and running. So you would think the client would be happy, and yet when all is said and done, the end result is a rather thin bottom line.  

Question: Where is the money? Answer: It’s still with the unsatisfied client. 

The client 

The complex structure of the building and development industry can include multiple stakeholders – architect, designer, project manager, developer, builder, financial institution – all assisting the client (the owner) to complete its project. 

In theory, the development consent (with conditions) and the building contract (with exclusions) should clearly define the scope of works, who pays and when. 

In practice, it’s a big relief when the total project price from a builder falls within budget, which begs the questions of how accurate was the budget? 

When a project is funded, there is often a rush to sign all documents. In this haste, key questions are left unasked, and major considerations excluded from the process. 

The omissions problem 

Has the client that wants to occupy, rent, or sell all or part of the building fully understood what performance the HVAC will deliver, to what areas of the building, and under what conditions? 

Cooling, heating, ventilation, noise control, energy use – have these all been considered and discussed? 

The exclusions – the conditions under which construction proceeded – were they understood? Are they limiting the usage flexibility, and if so, is this to the full extent of the development consent? 

Exasperation and misunderstandings 

It’s at this point when an exasperated client might ask why they are being asked to pay extras and variations to allow tenants to have:  

  • A food shop, requiring exhaust ventilation, from the ground to above the roof 
  • An IT business on level XX, requiring additional cooling, condenser location, and electrical power 
  • A fit-out, including full-height partitioning, apparently interfering with installed HVAC  
  • A meeting room for 40 staff, and managing director’s office suite, in full-height glazed areas, requiring new individual controls and ventilation? 

A frustrated HVAC supplier might respond by pointing out that the approved drawings showing a simple, generic office layout (no doubt to keep the tender price low) were signed off by the client. This despite the fact no individual tenant requirements were shown or included. 

Price versus value  

All of the possible uses for multiple-use commercial buildings described here – and of course others commonly required – must be discussed with the client who is responsible for paying. This must be done prior to documentation. In this way an understanding of the consequences of including new costs for whatever reasons – flexibility, exclusion, or cost – can be clearly understood. 

Flexibility is the key to making this arrangement work. All reasonable uses within the development consent must be analysed. 

Here are some potential questions to think about: 

  • Are condensers allowed on the roof? If so, to what minimum height?   
  • What are the noise restrictions? 
  • Does the partition layout compromise NCC/BCA egress provisions? 

Finally, listen to the nagging voice of experience that understands a simple comparison and an old saying: the best price may not represent the best value.  

Alan Obrart is a life member of AIRAH, and a recipient of the Institute’s highest honour: the James Harrison Award. 

ecolibrium october-november

This article appears in ecolibrium’s october 2022 issue

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