ENGR 301 IS IT A GOOD DEAL FOR KONKORDIA?

ENGR 301 IS IT A GOOD DEAL FOR KONKORDIA?

IS IT A GOOD DEAL FOR KONKORDIA?1

At KONCORDIA’s Facility Management Office

Ronald Trumpet, a seasoned salesperson in his bright suit and straw hat, walked into the Facility’s Management Office of KONKORDIA University to talk to you about the HVAC equipment of KONKORDIA’s JNSB Building. Ronald said “how do you like to hear my scheme for you to make money from nothing and then end up with some new equipment that you can effectively use?”

Having been working as a facility manager after your graduation from KONKORDIA University in 2015, you are well aware of the JNSB Building’s HVAC condition. Interested yet suspicious you asked: “what do you mean, I have to put up no money and end up with an equipment that I can keep?”

“You got it!” Ronald continued “I send my specialists to do the installation and startup of a brand-new HVAC equipment that runs more efficiently than your current one. You pay nothing, AND, you would be making money in a year?”

“Where is the catch?” you exclaimed.

“NONE, no catch” said Ronald. “you just sign a three-year contract to split 50/50 any savings the equipment generates on the use of your HVAC equipment plus pay for a service contract for the equipment maintenance. We will take out the loan for the equipment and installation and pay off the loan with our share of the savings. After three years the equipment is yours. You will only be giving us some of the money you are paying the power company for electricity. The service contract for the equipment is $15000 per year, but think of your peace of mind!”

“Your offer seems interesting but I need to do more analysis. For any purchase order with this magnitude the facility management team must submit a proposal to the Provost Office for approval. I will keep you posted on this next week” you mentioned as you were shaking hand.

ENGR 301 IS IT A GOOD DEAL FOR KONKORDIA?

Facility Management Team Meeting

When Ronald left, you sent an email to the facility management team for a meeting in two days to further evaluate the new HVAC option. In the meeting you shared with the team your research findings that could be useful to better evaluate Ronald’s offer:

• The combined horsepower (HP) for the fans and blowers in the HVAC system total 400 HP. The system currently run at capacity 100% of the time.
• Most systems are overdesigned. A 10% reduction from maximum speeds is possible without impacting performance if fixed speed motors and controls are originally used to drive the blowers. This system is designed this way.
• Ronald claims that with his equipment (variable speed drives and controls for motors) the system will run at 20% of capacity at least 45% of the time. For example, on nights, weekends, and holidays, there is little need for heating and cooling.
• All the fans in the HVAC system are centrifugal – Thus the effective HP is a cube of the speed (see appendix 1). This implies at 90% speed, the required HP is 0.93 times the required horsepower at 100% capacity. Note that at 20% speed, the required speed is actually 10 HP rather than the 3.2 by 0.23 times 400 HP.

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1. This case is a modified version of an original case written by Dr. W. Truran (T. Eschenbach – 978-0195397833 – 2009)

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