Getting Started With a Building Automation System: Cost Analysis & Breakdown

According to the Center for Sustainable Systems at the University of Michigan, in 2019 commercial buildings were responsible for consuming 18% of all energy used in the United States. And that number is growing; since 1980, the energy used in the commercial sector has nearly doubled. With energy costs rising and environmental concerns becoming more pressing, building owners are increasingly seeking ways to improve efficiency via building automation systems (BASs).

Today, advanced automation is more affordable than ever thanks to affordable IoT technology like smart sensors. Yet, according to the U.S. Department of Energy, less than 10% of buildings have building automation systems, and small buildings are more likely to lack adequate controls. 

The absence of building automation systems is often due to perceived expense. Despite the increasing accessibility of smart technologies, many building owners are hesitant to invest in upgrades. But that hesitation comes at a cost. A lack of automation and poor control systems leads to significant energy waste—25% or more, by some estimates. Indeed, costs for running antiquated systems tend to be much higher over time than installing and using a smart system.

By looking at building automation systems, cost, and the benefits of deploying more effective controls, you can determine whether investing in a smart system makes sense for your building. 

Building Automation Systems: Cost Per Square Foot

The cost of deploying a building automation system can vary considerably. It depends on factors like the specific components chosen, whether you are working with new construction or a building with legacy equipment, and location. Often, however, the cost of deployment falls between $2.50 and $7.00 per square foot. 

Advances in technology have drastically transformed what building automation systems can do. The expanded capabilities of such systems leads many building owners to assume they are financially unrealistic, especially in smaller buildings. However, technological progress is driving down many of the costs associated with building automation. 

• Wireless technology has reduced installation costs considerably and can be installed in 20 percent of the time it takes to install similar wired IT arrangements. 
• Cloud-based software and software-as-a-service options eliminates the need for expensive on-premises hardware and high upfront costs
• The rapidly falling cost of IoT devices allows you to integrate advanced monitoring at an affordable price.

Ultimately, sophisticated BASs are now within reach of more building owners than ever before. This is particularly true when you consider the long-term cost savings they produce. 

Savings in Building Operating Costs Per Square Foot

An intelligent building automation system reduces operating costs in significant ways, and such systems often pay for themselves within four years. However, this time may be reduced by strategically implementing efficiency-focused automation. 

According to the Metropolitan Energy Coalition, a basic building automation system saves between $0.20 and $0.40 per square foot in utility costs each year. More recent research by the Multidisciplinary Digital Publishing Institute found that implementing a building automation system can reduce energy expenses by 24%, rising to 57% when combined with other energy-saving measures. 

One of the most important ways to reduce operating costs is using smart sensors and analytics software. These technologies guide automation of high energy consumption systems. For example, HVAC and lighting can be adjusted according to variables like:

Occupancy

Peak hours

Weather

Season

When the analytics software has machine learning capabilities, these adjustments become refined as the dataset grows. As the adjustments become refined, costs are further reduced over time. Additionally, savvy building owners identify inefficiencies and develop strategies for eliminating waste by leveraging the insights produced by an intelligent system.

Non-energy-related operating costs are also dramatically reduced with the use of an intelligent BAS. Maintenance becomes preventive instead of reactionary, extending the useful life of equipment, ensuring optimal performance, and minimizing reliance on human intervention. With mobile-first user interfaces, sites are monitored and managed remotely, reducing the need for on-site staff and travel. 

Total savings depends on the specific technology employed, building size, and type of equipment. It also depends on your location; local, state, or national entities may offer energy rebates, grants, or other incentives that help to cover building automation system costs and speeding up return on investment. 

Adding Value

Deploying an intelligent building automation system can have indirect but significant financial advantages. It makes your building more attractive to tenants, buyers, and financing institutions. 

A 2016 report by the European Commission found that lease rates in better-performing smart buildings can be approximately 12% higher than in non-smart buildings. Additionally, valuations and sales prices tend to be 5-35% higher. Additionally, buildings with specific sustainability certifications, such as LEED or Energy Star, saw: 

• faster absorption of tenants
• reduced tenant turnover
• competitive lease terms
• reduced operating and maintenance costs
• higher tenant satisfaction

In the long term, advanced building automation systems are associated with higher net operating income, increased investor demand, and reduced risk.

According to global real estate services company JLL, the desire for smart buildings isn’t just about environmental responsibility or perceived comfort. By serving tenants better, such buildings have a direct impact on occupancy costs, saving approximately: 

• $1 per square foot per year if absenteeism of employees decreased by 10 percent.
• $7.35 per square foot per year if retention of employees increased by 10 percent. 
• $43.55 per square foot per year if output from employees increased by 10 percent. 

Studies have found that healthier, more comfortable buildings increase worker productivity in multiple ways. Researchers at Harvard University estimate “that the productivity benefits from doubling the ventilation rates are $6,500 per person per year. This does not include the other potential health benefits, such as reduced sick building syndrome and absenteeism” while only costing about 40 cents per person annually. Other studies have found that employee productivity can increase by nearly 10% by just optimizing temperatures and ventilation from outside the building. Smart technology helps achieve these results. 

How Buildings IOT Can Help

Buildings IOT helps you create a cutting-edge building automation solution. With innovative products like onPoint Analytics and expert-led services, we work with you to determine the best strategy for your building while helping you manage costs and optimize return on investment. 

Buildings IOT offers the services and technologies you need to create a cost-effective building automation solution. Contact our team today.