November 2009

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Paul OswaldEMAIL INTERVIEW - Paul Oswald & Ken Sinclair

Paul Oswald, President, Environmental Systems Inc.

Executives responsible for operational and financial performance often seek a silver bullet to improving cash flow as it relates to building performance. Paul Oswald, president of Environmental Systems Inc. with offices in Milwaukee and Chicago, takes us through the distinct linkage between adopting a lifecycle management approach and improving building performance as well as cash flow. Not a silver bullet, Paul says, but a measureable process of reducing operating costs and improving the bottom line year after year. For specific ROI measures, contact Paul directly at paul.oswald@envsysinc.com 


Lifecycle Management Approach to Building Performance Improves Cash Flow

If you are constructing a new building, renovating an existing building, or simply looking to improve operations and maintenance, the life cycle approach assists in the decision-making process by correlating these choices with the financial impact and benefits to the organization.

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Control Solutions, Inc

Sinclair:  How would you define a lifecycle management approach to building performance?

Oswald:  An integrated concept to assist businesses in managing the total life cycle of their buildings and assets toward more sustainable and energy efficient consumption patterns. This approach helps executives ensure investments made in these assets are returned to the business over the entire life cycle.

Sinclair:  What do you encounter in the marketplace that would illustrate the value of a lifecycle management approach to building performance?

Oswald:  Too often we see companies invest in buildings, equipment and systems that underperform within two to five years. The biggest opportunities for saving energy in most buildings involves lighting and HVAC, for example. But less than 1 percent of all commercial and industrial companies use advanced technology to measure and manage energy spending. Yet nearly all companies use advanced technology to measure and manage telecommunications spending. In other words, companies will scrutinize employee cell phone use while completely ignoring wasted energy at 100 times the cost.

Sinclair:  How do you make the case to decision makers that the lifecycle approach is best?

Oswald:  We break a building or asset into distinct life stages: design and procurement, installation and turnover, operations, maintenance, and asset management and replacement. Each stage has different considerations when attempting to affect cost, which impacts overall building and asset life cycle costs. There are savings that can be attributed to these considerations at each stage of the life cycle that have been documented in both national and international research conducted by a variety of different organizations. Using these savings opportunities, owners and decision makers can determine cash flows and the overall investment impact to determine the best course of action to meet their business goals.

If you are constructing a new building, renovating an existing building, or simply looking to improve operations and maintenance, the life cycle approach assists in the decision-making process by correlating these choices with the financial impact and benefits to the organization.

Sinclair:  What types of companies benefit most from this type of approach?

Oswald:  This approach applies to every vertical market and industry. Every market has its own value drivers whether it is health care, education, office, retail or manufacturing. The life cycle management approach delivers bottom line savings and can impact top line revenue opportunities.

Control Solutions, Inc Sinclair:  With sustainability being an area of significant interest, how does the life cycle approach impact or relate to sustainability, and can businesses really afford to be sustainable?

Oswald:  Practical sustainability creates an opportunity for companies to realize savings and efficiencies that result in reduced environmental impact. In many cases, decisions are based on low first cost without consideration of the operating, maintenance, education and other costs incurred over the life cycle of the building or asset. While it is true that these are very cost-conscious times, we also know that people are concerned about sustainability and the environmental impact of their decisions over the longer term.

By using a life cycle perspective to making selections and choices, businesses not only reduce costs, but improve operating efficiency and productivity, and improve the sustainability and environmental impact of their business. A particular design choice may have a lower first cost but will wind up costing the business more over the life cycle because of lower efficiency ratings, improper maintenance, and numerous other factors. This has a direct impact not only on the bottom line, but the sustainability and environmental impact of the building, which can affect top line revenue.

Sinclair:  How can companies impact top line revenue by adopting a life cycle approach to building performance?

Oswald:  Top-line revenue generating opportunities are becoming more numerous as consumers and major companies, are driving sustainable, efficient business operations through the supply chain. Tenants and employees are choosing companies committed to environmental responsibility. Suppliers—from office space to widgets—are finding that more business partners are demanding sustainable practices to help them reduce their environmental impact.

Life cycle management ensures your business is competitive. Depending on your market or industry, the word competitive can have very different meanings. Manufacturers seek lower production costs or better environmental performance. Owners of office buildings seek more marketable property to prospective tenants. Whatever your business, each one wants competitive advantage, and the life cycle approach to building performance definitely contributes to achieving these goals.
 

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