n Reduced costs result from the ability to competitively procure systems with
open architectures and a generic structured cabling system.
n System management among many separate facilities through the use of the
Internet or a private network can be consolidated.
n Integration with additional business systems, such as human resources and
purchasing due to standardized databases, is easier.
For a building life cycle of 40 years operational costs may account for 50%
of the total cost of the building. Operational costs are then equal to the total
cost of construction, financing and renovating the building. A relatively mod-
est savings in annual operational costs will garner significant savings over the
building’s life cycle.
Public and private organizations have weighed in on the cost savings in
integrated smart building systems. For instance, a study conducted by the
National Institute of Standards and Technology posed the question, “[D]oes
it indicate that investment in CBS (cybernetic building systems) products and
services by individual owners and operators will be cost effective?” The answer
to that question is most certainly “yes.”
This study concluded that “[f]or every dollar invested in 2003 approximately
$4.50 is returned (i.e., a savings-to-investment ratio of 4.5). This equates to an
adjusted internal rate of return of approximately 20% per year....” The study
conservatively estimated that integrated systems have annual energy cost sav-
ings of $0.16/sq. ft., annual maintenance savings of $0.15/sq. ft., annual sav-
ings for repair and replacement of $0.05/sq. ft., and annual savings related
to “occupant productivity” of $0.39/sq. ft. (Information in this and the preced-
ing paragraph is from R.E. Chapman, “How interoperability saves money,”
ASHRAE Journal, February 2001.)
Conclusions by the Continental Automated Building Association upon ana-
lyzing life-cycle costs follow. (The following list excerpted is from the Contin-
ental Automated Building Association publication, Life Cycle Costing of
Automation Controls for Intelligent and Integrated Facilities, A White Paper
for Task Force 3 of the Intelligent and Integrated Building Council, April 2004.)
n First costs for integrated systems (including management hardware and
software, network upgrades, web services, and devices) were 56% less than
nonintegrated systems.
n Annual costs for changes, alterations, and upgrades after a system’s war-
ranty period (including service contracts, additions and remodeling, soft-
ware upgrades and reserves for systems replacement) in integrated
systems were 32% less than nonintegrated systems.
The Economics of Smart Buildings 165