ARC Advisory Group
Reprinted with permission.

Successful facilities management entails taking a holistic, performance-based approach to building automation
and tracking key performance metrics in real time. 

Executive Overview

Despite signs pointing toward a global economic recovery during 2002, there remain tremendous pressures on all companies to find ways to lower their variable costs and become more profitable. In today's turbulent economic environment, companies must go beyond simply lowering costs and find ways to optimize every facet of their operations. 

A key factor to optimizing operations, which is often overlooked, is the strategic management of brick and mortar assets. By strategically leveraging brick and mortar assets through comprehensive facilities management, companies can save millions of dollars in energy costs, increase productivity and employee morale, and attract high quality recruits. When managed strategically, brick and mortar assets can become tools, which support the company's strategic goals, as opposed to costs, which drag profits down. 

Integrated BASs are an invaluable tool for facilities managers striving to optimize their facility's operations by tracking key performance metrics against strategic goals. Integrated BASs provide facilities managers the tools to go beyond simply lowering costs and work toward creating a more productive workplace while improving their facility's flexibility and reliability. Properly integrated, BASs can automatically control building functions to operate in the most effective manner possible. Internet-based BAS applications now available empower facilities managers to integrate their facility's many systems and provide them the necessary information to make informed strategic decisions in real time. Comprehensive facilities management strategies using integrated BASs can quickly signal problems and opportunities, and help facilities managers evaluate possible actions accurately and quickly. 

Facilities managers in all building sectors can now benefit from integrated BASs. The low-cost computing power available with BASs puts sophisticated facilities management within the reach of small as well as large companies. A relatively small capital investment in BASs can give facilities managers the tools to base their operational decisions on real-time performance data as opposed to educated guesses or hunches. In many cases, a BAS will pay for itself in a matter of years through energy cost savings alone. The real benefits, however, stem from the higher return on assets, not the least of which is improved human asset performance. 

The Scope of BASs Has Expanded to Include All the Major Building Control Systems

Electric Utility Deregulation Provides New Opportunities 

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Lowering energy costs is the first step many facilities managers are taking to reduce their company's variable costs. Focusing on energy efficiency is an ideal place for companies to begin their journey to lower costs, as it is sensitive to rising energy prices and regional energy shortages. In addition, because electric utility budgets are rarely cut, they are an excellent source of capital for upgrade projects. Advancements in electric utility deregulation are opening the door to new opportunities for facilities managers to reduce energy costs. As deregulation continues to redefine the electric utility markets, however, it seems to have generated more confusion than energy savings. Energy prices are now changing in real time along with energy consumption, creating a dynamic too complex for the majority of companies to optimize. BASs available today, however, empower building owners and managers to take control of their energy costs on both the supply and demand sides by providing them the necessary information to make informed strategic decisions. New opportunities abound for those companies who learn to optimize the relationship between their energy supply and demand. Too often, facilities management resort to purchasing single energy savings systems to lower their energy costs. This technique, which considers only a fraction of a facility's energy consumption systems, typically leads to needless expense and minimal savings. Integrated BASs, on the other hand, empower facilities managers to employ energy management strategies to the fullest. Integrated BASs now available can search the Internet for real-time energy price information, while monitoring the company's energy usage in real time. The synthesis of supply and demand data available with integrated BASs gives building owners and operators unprecedented decision-making power. A relatively small capital investment in an integrated BAS can provide accurate information on a company's energy usage and result in energy savings between 15 to 20 percent by minimizing the company's use of electricity during costly peak hours and by keeping power usage steady and predictable. Lower energy costs, however, is just the tip of the iceberg. If used properly, BASs will make the overall company more profitable by making employees more comfortable and productive.

Improved Climate Control Increases Employee Productivity 

Traditional approaches to creating a productive working environment for employees consist of trying to make the entire building comfortable for all occupants all the time. It is impossible, however, to satisfy the needs of all employees with the same environmental settings. ASHRAE standards assume that a facilities manager is doing well when 80 percent of employees are comfortable at any given time. Consequently, the productivity of more than 20 percent of the workforce is hampered by poor environmental control. Typical results of employee discomfort due to excessively high temperature or humidity include a fall-off in performance as high as 30 percent for such skills as typing and analytical thinking. The reverse is true for motor skills and speed, which drop off when the temperature becomes uncomfortably low. 

Expanded use of integrated BAS technologies with open communication protocols allow facilities managers to define an ever increasing number of areas and comfort ranges to best suit their facility's climate control requirements. BASs allow facilities managers to independently control the environment in each of the facility's defined areas and make each workspace comfortable to the individual needs of the occupants. By increasing the environmental customization available, BASs empower facilities managers to make a greater percentage of the workforce comfortable, which greatly improves the company's overall productivity and bottom line. 

Although the initial cost of BASs is deterring many users from making the necessary investment, users must take into consideration that the cost of work lost due to employee discomfort far outweighs the cost of a new BAS. Even a small increase in employee productivity translates into thousands of dollars in savings and goes a long way toward paying for the initial BAS investment. Ultimately, by investing in an integrated BAS, facilities managers create a more productive environment, which greatly improves the company's operating efficiency and lowers its total cost of operations. 

Successful Facilities Management Requires Integration 

[an error occurred while processing this directive]The lack of integration between automation systems in many buildings today is a leading inhibitor to optimized facilities management. Many facilities managers continue the outdated tradition of considering facilities management as a series of unrelated functions. Consequently, building automation systems typically operate independent of one another and suffer from an inherent lack of functionality, which significantly limits the company's ability to optimize facilities management. 

Successful facilities management entails taking a holistic, performance-based approach to building automation and tracking key performance metrics in real time. To truly optimize Return on Assets (ROA), facilities managers must be able to measure key performance metrics against the company's strategic goals. Ability to gather real-time performance information from the building's many systems is essential. Interplay between the many building systems, however, is too complex and too dynamic to measure and manage unaided. Until facilities managers acquire tools to track the performance of the facility's many systems in real-time, little progress will be made in the area of successful facilities management. 

Until recently, disparate technology and proprietary platforms made implementation of an integrated BAS infrastructure non-viable. As the cost of implementing Internet and IT technologies continues to decline, however, the approach facilities managers take toward the automation of building controls is changing dramatically. 

The integration of Internet and IT technologies with BASs has turned the traditional thinking about controls and automation on its head. BASs are increasingly becoming an integral part of companies' IT systems. As BASs become part of a much larger IT infrastructure, the various automated building systems within a facility are not only communicating with one another, they are also seamlessly sharing critical information between each other. The ability for the various building systems to share critical information in real time greatly expands the opportunities available to facilities managers. 

Integrated BASs have become an invaluable tool for facilities managers striving to increase their company's ROA by tracking key performance metrics against strategic goals. The development of Internet-based BAS applications empower facilities managers by integrating the facility's many systems and providing them the necessary information to make informed strategic decisions in real time. Comprehensive facilities management strategies using integrated BASs can quickly signal problems and opportunities, and help facilities managers evaluate possible actions accurately and quickly. Facilities managers in all building sectors benefit from integrated BAS because their operational decisions become based on real-time performance data as opposed to educated guesses or hunches.

Integrated BASs Increase Manufacturing Efficiency 

Many companies in the industrial manufacturing industries also have an additional opportunity available through the integration of a BAS with their industrial automation systems. Many mission-critical manufacturing environments, such as integrated circuit and pharmaceutical production, require precise control of temperature and humidity in order to ensure the quality of the final product. Fluctuations in either temperature or humidity can have dramatic results on the quality of prescriptions drugs or integrated circuits and can mean the difference between a batch of product ultimately being accepted or rejected. In addition, a strict level of air cleanliness is required to ensure the final goods are not fouled by dust or other stray particles during production. 

To reduce the effects of changes in the environment on the final product, manufacturing plants should establish a collaborative relationship between their industrial automation systems and BASs. Semiconductor manufacturers, in particular, can benefit from integrating their autonomous machinery on the production floor with their BASs. With such a relationship established, BASs used to monitor and control mission-critical environments can translate information about the quality of the environment to intelligent automation control systems. Process optimization tools within automation control systems can then correlate variations in the manufacturing environment with scheduled work flows. 

Real-time environmental monitoring and control information offered by integrated BASs is also essential in high precision metal working applications. Today's highly complex metal working applications require a strict level of temperature and humidity control that can only be achieved by integrating a BAS with the metal cutting machinery. When cutting to micron level accuracy, air quality has a dramatic impact on the surface finish of the final product. By integrating their machine cutting tools and BASs, users are assured that the quality of the product will not by adversely affected by changes in the environment. In addition, users can program their BASs to control air quality to the lowest common denominator mandated by the minimum requirements for the particular application. By creating a synergy between BASs and production floor equipment, users not only ensure final product quality, but also reduce energy consumption and optimize production scheduling. 

[an error occurred while processing this directive]It is clear that equipment and automation suppliers to the pharmaceutical industry are beginning to understand the importance of integrated BASs to meeting the requirements of US FDA 21 CFR Part 11. This is welcome news to both the industry and the FDA as they move to bring their systems into compliance. Integrated BASs are vital in achieving product quality and safety in both the pharmaceutical and food & beverage industries. Close coupling of manufacturing automation and building automation systems for both data exchange and control is now a requirement. Even many newer food products cannot be produced safely or to quality standards without tight environmental control in the manufacturing process. 

Recommendations 

Optimizing facilities management requires a thorough understanding of the many issues at stake. In light of this, facilities managers should consider installing integrated BASs to collect real-time facilities performance data, which can then be used to guide their major strategic decisions. Simply investing in a new BAS, however, does not ensure efficiency. Optimizing facilities management requires planning and a shift in operating procedures. BAS implementation must, therefore, be considered as a piece of a larger overall strategy to optimize the company's overall health. 

• ARC urges manufacturers to take a comprehensive view of facilities management. Too often, facilities management resort to purchasing single energy savings systems to lower their energy costs. This technique, which considers only a fraction of a facility's energy consumption systems, typically leads to needless expense and minimal savings. 

• Facilities managers should define and measure key performance metrics against total company goals in real time. Integrated BASs are an excellent tool for empowering facilities managers to track the company's key performance metrics against their strategic goals. 

• Building owners should consider their capital and expense budgets as potential investments, rather than costs, and look to creatively apply building automation products and services in all areas of their facilities. 

• Energy is the pulse of a facility, and should be tracked in real-time using integrated BASs to provide clues for improving the overall health of the organization. 

• When cost justifying BAS investments, users should keep in mind the benefit of increased productivity achieved through improving employee comfort. Improving employee comfort increases the company's productivity up to 20 percent, which translates into thousands of dollars in savings and goes a long way toward paying for the initial BAS investment. 

• To take full advantage of real-time energy pricing, building owners should invest in integrated BASs to provide the tools they need to benefit from energy price transparency. Integrated BASs, fed with real-time metering information, should serve as the intersection between energy supply and demand. Building owners and managers should link all of their facilities to a BAS, and send the collected data through energy management software for analysis. 

• Users involved in the production of goods requiring mission-critical environment control should integrate their BASs and industrial automation control systems to track and control the environment on the production floor. By integrating a BAS into the existing automation and IT network, users will significantly increase manufacturing efficiency and lower their operating costs. 

• The ultimate goal of facilities managers should go beyond reducing costs. Facilities managers should work towards creating an environment that supports the company's core business objectives.

Founded in 1986, ARC Advisory Group is the leader in providing strategic planning and technology assessment services to leading manufacturing companies, utilities, and global logistics providers, as well as to software and solution suppliers worldwide. From Global 1000 companies to small start-up firms, ARC provides the strategic knowledge needed to succeed in today's technology driven economy. ARC Strategies is published monthly by ARC. All information in this report is proprietary to and copyrighted by ARC. No part of it may be reproduced without prior permission from ARC. You can take advantage of ARC's extensive ongoing research plus experience of our staff members through our Advisory Services. ARC's Advisory Services are specifically designed for executives responsible for developing strategies and directions for their organizations. For information  Email: info@ARCweb.com  Visit our web page at www.ARCweb.com 

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