Pre-packaged MEP solutions
From complete chilled water systems to data center power packages, our roundtable discusses the economic benefits, liability concerns, and adapatability of pre-packaged systems for mechanical, electrical, and plumbing systems.
CSE: What are the economic benefits and penalties associated with a pre-packaged system vs. a component-specified system?
R. Stephen Spinazzola : There are many types and sizes of pre-packaged systems; ranging from packaged pumping systems to complete packaged chiller plants. The major advantages for packaged systems are price and performance. Packaged systems are made in factories by a staff skilled in tasks associated with a particular product. As with any manufacturing process, there are many repetitive tasks in which workers become very efficient in producing the product. The other advantage we have seen is that the manufacturers can guarantee system and plant performance.
Martin Olsen : Due to the capital cost benefits of outfitting an entire building, operators of mission critical facilities have historically built systems in large individual segments. It is not practical to match capacity and demand closely in the same setting due to the length of the time it takes to design, engineer, and deploy a new facility. Users would have a significant lag in capacity coming online. Compartmentalizing the computer operation and supporting infrastructure in segments outside of the brick-and-mortar building provides terrific opportunities for timely capital spending. Other economic benefits are higher part-load efficiencies as capacity is matched more closely to demand, hence reducing the amount of idling equipment.
Tom Pierson : The benefits are similar to the benefits that packaging brought to the chiller, or to the power industry. Specifically, it is an innovation in the process of how chiller, boiler, or combined heat and power plants are designed, procured, and built. This new process can remove much of the cost, waste, risk, and variability that are inherent in the bid and spec process. The results are lower installed costs, higher efficiencies, more predictable performance, higher quality execution, and faster design/construction cycles.
CSE: What are the performance benefits and penalties associated with a pre-packaged system vs. a component-specified system?
Pierson : The single biggest advantage is guaranteed and repeatable financial performance. Think of the car analogy:
What would the efficiency (mpg) of your car be if each were developed from a spec that was then bid out to multiple contractors?
How well integrated would the engine be with the microprocessor control system, transmission, and aerodynamics of the car?
What would be the total cost/mile over the vehicle's life?
Who could even answer these lifecycle costing questions?
A chilled water plant is a complex and dynamic system, and it is difficult to model and optimize due to the many different real-world operating conditions, parameters, different components, and control strategies. It takes a lot of effort to do this correctly.
Spinazzola : We have seen better efficiencies and performance with packaged systems. Since these products are manufactured in a factory setting, they have much more control over the equipment, adjacencies, etc., which allows for more predictable performances.
Olsen : The results of a pre-packaged system are efficiency optimization and repeatability. Engineering, manufacturing, and testing a whole system rather than individual components ensures attention to the overall efficiency of the system rather than certain components. You can have the most efficient chiller, but inefficient pumps will ruin the total efficiency chain. Naturally, pre-packaged systems drive scalability, which assumes a number of systems deployed over time. Repeatability is vital to ensuring the future deployments. The penalty is limited and can be distilled down to identifying the right module size. If under- provisioned, it is easy to catch up, given the dramatically shorter deployment time. If the project is over-provisioned, it will be a costly mistake.
CSE: From a lifecycle perspective (design, installation, operations, and maintenance), where do pre-packaged systems save money over component-specified systems?
Olsen : Design, manufacturing, and installation. The biggest savings are in the manufacturing and installation of the system. Generally speaking, $100 of hardware costs $100 to install in a legacy brick-and-mortar fashion. Logically, a large component of the on-site labor is reduced or eliminated because it is brought into a factory setting. This uses skilled and trained factory workers who move the model from engineered-to-order with every site. This approach introduces custom elements to a configured-to-order using standard components, which have been tested and tried.
The largest savings should come from the up-front cash savings. However, some systems produce high operational savings by using highly efficient components—some consuming 75% less energy—that are matched, tested, and verified within as an efficiency chain. Some pre-packaged systems can save as much as 25% on capital expenditures compared to a brick-and-mortar approach due to factory engineering, assembly, and testing prior to deployment. And with high-efficiency components installed, operators can save up to 60% in total cost of ownership compared to a legacy approach. Additionally, owners can save up to 45% in the first year of deployment.
Pierson : Again, energy and guaranteed performance save the most. For most plants, energy represents about 70% of the net present value (NPV) cost, first-cost is about 20%, and O&M is about 10%. Since energy is the biggest cost, it also represents the biggest opportunity for cost improvement, especially since efficiency has rarely before been measured or rewarded from a system perspective. Well-designed packaged systems can also significantly reduce maintenance costs and installed costs, but these savings are much smaller than the NPV energy savings. For some industries, the speed-to-market advantage is the biggest value driver, for others it's the flexibility to change the system in the future. Modular can help in all these areas.
CSE: What barriers exist in current codes and standards, or in working with AHJs, for pre-packaged systems?
Olsen : Pre-packaged systems are relatively new to the market, although a great deal of history and experience already exist. As rapid adoption continues, authorities having jurisdiction (AHJ) will be forced to evaluate their general position on these. Are they individual structures that require building inspections, or are they simply weatherproof appliances? A nationally recognized laboratory (NRL) approval or listing from UL, Canadian Standards Assn., or Environmental Technology Laboratory often determines the difference between the two. The challenge is to work with the NRL to identify the right standard for these systems.
Spinazzola : Pre-packaged systems have to meet the same code requirements as field-erected systems. Code-required paths of egress and clearances to service equipment must be incorporated into the end solution. Life safety features, including applicable code requirements for fire alarm and sprinklers, have to be provided.
Pierson : The biggest barrier is making the HVAC industry understand that a packaged system is fundamentally different than a plan and spec process. These systems need to be driven more by performance criteria and a recognition of which packagers can execute a project on time, on budget, and on performance. There can still be advantages for what we call “a stick-built project in a shop environment,” but they will not be the same NPV value that could have been supplied with a more standardized process.
CSE: What are the liability issues? Do engineers shed risk or take on more when using pre-packaged systems?
Olsen : The risk factor has been dramatically reduced by using pre-packaged systems. Engineering firms still have an important role to play in these because a pre-packaged system is not all-encompassing. Engineers are there to ensure the right pre-packaged system is selected to address availability needs at that specific site.
Pierson : This should be one of the biggest advantages to engineers, which should be a greatly reduced risk. Whenever you are using very repeatable designs that have been built and tested in a wide variety of projects, there is reduced risk. The ability to control the design, procurement, installation, and commissioning of a project from a single source greatly reduces the chances for error and streamlines communication. This is one of the reasons performance can be guaranteed. It is very difficult to get this same type of tight control through the many different people and entities that a normal bid and spec plant would have. The engineer and the owner have a single entity they can hold responsible for performance and schedule.
Spinazzola : In our experience, there is no fundamental shift in liability. The engineer of record is still required to provide a signed and sealed design that can be submitted for plan review.
CSE: Generally, are some building types (offices, schools, industrial sites, hospitals, etc.) better suited for pre-packaged systems and why? Are pre-packaged systems better suited for new construction or retrofit solutions?
Spinazzola : We really do not see any limit to the application of pre-packaged systems. We have used them more on data center projects, but that is more a function than being one of our primary project types. Their use for new and renovation both have equal merit.
Olsen : There are really no ill-suited applications for a pre-packaged system. Unlike the “data center in a box,” these systems use the same or similar components as the brick-and-mortar installation would. Additionally, the supporting infrastructure does not require nearly the same amount of foot traffic a raised floor (IT) does. As a result, access is only required a few times for service and maintenance, which has only a marginal effect on the overall application. For example, a generator that has already been placed on a concrete pad outside should be packaged with the entire power chain. This method saves valuable real estate space and takes only a slightly larger footprint for the system.
New construction is a perfect opportunity to rethink the infrastructure deployment strategy and go with a system that can save money now and in the future. However, it can also be a solution to help customers back out of the emergency out-of-power situation. With this approach, the operator will try to add more capacity to existing, live systems instead of using available outside space to place a fully functioning infrastructure that is ready to pair up with the facility.
Pierson : Building type is not as important as what type of procurement and/or specification process is used and what the scope splits are. The vast majority of pre-packaged systems have been sold into new construction versus retrofit. Also, most prepackaged systems have tended to be more in the private sector, especially those that had fairly sophisticated owner and engineer involvement. Some of the best markets to date have been in projects such as data centers, mission critical facilities, casinos, and power plants. All of these markets had owners or engineers who understood NPV, internal rate of return, and financial performance. The retrofit market holds enormous potential for packaged plants, but the energy service companies, retrofit contractors, and engineers will have to become a bigger factor in the innovation of their delivery process.
Vice President Business Development,Active Power Inc,Austin, Texas
Founder and ChairmanTurbine Air Systems (TAS),Houston
R. Stephen Spinazzola , PE, LEED AP
Vice President of Applied Technology Group, RTKL, Baltimore
- Events & Awards
- Magazine Archives
- Oil & Gas Engineering
- Salary Survey
- Digital Reports
- Survey Prize Winners
Annual Salary Survey
Before the calendar turned, 2016 already had the makings of a pivotal year for manufacturing, and for the world.
There were the big events for the year, including the United States as Partner Country at Hannover Messe in April and the 2016 International Manufacturing Technology Show in Chicago in September. There's also the matter of the U.S. presidential elections in November, which promise to shape policy in manufacturing for years to come.
But the year started with global economic turmoil, as a slowdown in Chinese manufacturing triggered a worldwide stock hiccup that sent values plummeting. The continued plunge in world oil prices has resulted in a slowdown in exploration and, by extension, the manufacture of exploration equipment.
Read more: 2015 Salary Survey