3 great business cases for IoT in older buildings

Every day I speak to a lot of property professionals – FMs, building engineers, asset managers. There is a lot of interest in turning existing buildings into smart buildings and using the IoT to improve the performance of buildings but still people are stuck with the business case. Clients won’t invest in the tech unless they can see a clear ROI; property assets are so variable that guaranteeing ROI is tricky.

Frustrating for property professionals who can see big efficiency gains in their operation if they can get better data from their buildings, but who are stuck without the tools to persuade clients to invest. Frustrating for clients who are hearing a great deal about the promise of IoT but can’t relate its benefits to immediate pain points.

After three years of pilots, turning average buildings into smart buildings, we have a large estate of sensors in operation, so we’d like to offer three clear business cases to discuss with clients. Tread carefully: different clients with different types of tenure will respond better to some than others.

1. Energy savings.

Want to save 10% of your gas bill simply by changing a setting in the BMS? We’ve written about energy savings before at length but the simple message is that nearly every older building will have opportunities for saving energy at *no* cost beyond identifying where controls don’t match the operations of the building. A couple of examples:

– the call centre in North West England which saved 18k on energy by changing HVAC set points and reducing conflict between zones

– the airfield in Eastern England who identified nearly 100k of wasted gas spend from poorly controlled heating in their hangars

The business case. Most older buildings waste energy simply because the control of their heating and cooling no longer matches the operation of the business. Timings may be off, unused areas may be heated, heating and cooling may be in conflict with each other. These issues are extremely easy and cheap to fix, and lead to rapid payback, but first they must be spotted. A properly smart building uses simple sensors to confirm that the BMS is doing exactly what it should be.

To calculate the possible ROI here are a few basic rules of thumb:

Costs of heating (or cooling) 1 m2 each operating hour £3.60 (from CIBSE benchmarks). Put another way, for a typical office operating a 9 hour day the annualised cost of 1 hours’ HVAC psm is £32.40. Therefore in a typical 1000 sq m office reducing the heating run time by an hour would save £3,240 on your annual heating bill.

Reducing set points by 1° can produce savings varying from 3 – 7%. So for the typical 1000 sq m office above, with an annual energy bill for HVAC of £29,160, that would be an additional £874 – £2041. These figures are hugely simplified – in reality the results will be complicated by factors including external temperature, and varying amounts of savings depending on how far your building is from the external temperature.

The faster and more frequently you can find these energy savings opportunities the more money you can save – at a minimum an annual audit (not from BMS data) should give you substantial payback. Remember these are *no cost* fixes.

This is a business case that appeals most to owner occupiers of space who have some control over their building services and who are invested in reducing their energy costs.

2. Space utilisation

Fun fact: fully loaded with rent, rates, utilities etc, desks in the UK cost employers between £3000 and £15,000 each year. Yet a lot of them are empty for a lot of the time, with utilisation rates often below 60%; so if ever there was a business case for better building data it’s in space utilisation.

So if your client has a large and fluctuating workforce and a big estate then they are probably already thinking about better space utilisation and if they’re not, they should be. Although the cost reduction argument is strong its not the only one, as it is possible both to reduce space and to provide more of the most heavily used facilities so that workers are better equipped and feel supported.  The range of new options for flexible working, from providers like The Office Group and WeWork, and a huge range of digital team working tools, mean that short term staff fluctuations can be easily accommodated and folded into the organisation.

For a quick business case on utilisation audits to discuss with your colleagues:

Estimate fully loaded desk costs (calculator by region here), multiply by number of desks and then ask what level of underutilisation you would need to find to justify the audit.  Even with audit costs of £100 – £150/desk, you’ll find it’s surprisingly small.

3. Productivity improvements

This is where the big wins are. Staff costs are by far the largest cost component of most businesses, and even small improvements in staff productivity can be game changing. It’s not just call centre operatives able to handle 10% more calls each day or traders making 2% more trades but also improvements in the quality of work from creative teams, or better focus from staff tasked with safety critical jobs.

Frustratingly, its also the hardest to prove. Here’s a summary of what we do know:

– Many studies have shown that indoor environmental quality has a measurable impact on people’s productivity

– Poor temperature control can reduce productivity by up to 10% at +/- 5% around a ‘safe’ band

– Better lighting can raise productivity by 23%

– Better ventilation increases productivity by 11% (link to UCL work)

– Productivity in different tasks can be affected by different aspects of the environment (for example noise levels)

The ROI from a better working environment goes beyond enabling staff to concentrate better. A better building reduces absenteeism and staff churn, so that recruitment costs drop.

Not all of these business cases will work for every client, but nearly every client is interested in saving costs and building a stronger team. The next time your client asks you how you can do something different in tired old buildings these are the conversations to have.

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