In those days — between the end of World War II and the 1980s — the quality focus was on the manufacturing process, though the standards that stem from QIP have spread and can be applied to any process in the workplace today.

In 1994, NCI CEO Dominick Guarino — who was the editor-in-chief of a competitive magazine at the time — wrote an editorial titled, “The House as a System,” where he cited research that eight out of 10 homeowners weren’t completely satisfied with their home comfort systems. In that editorial, he challenged contractors to consider the entire house as a system and to understand the HVAC system is not the only thing that needs to work properly.

This was the basis for what is now called performance-based contracting. Performance-based contracting — or, put another way, performance-based service — examines how buildings perform and what impacts their performance from a safety, health, efficiency, and comfort standpoint.

A Nation of Regulation

At NCI, we like to say, “If you don’t measure, you’re just guessing.”

I believe this is a mantra the industry should live by. It would also be nice if our government would, too. The regulations and laws that impact this industry often begin with good intentions, but, after all the political footballing, they end up being burdensome and expensive.

In the latest wrinkle of the good-intention scenario, the U.S. Department of Energy (DOE) recently announced its plan to regulate the energy efficiency of electric motors. The DOE believes these components gobble up more than half of the electrical energy used in the U.S. Contractors, distributors, and manufacturers will be impacted by such regulations through electric motors performance in residential, commercial, and industrial HVACR applications. Initially, this impact will arrive in the form of higher-priced replacement motors, equipment price increases, stocking and restocking issues, and so on. Ultimately, residential, commercial, and industrial consumers will be directly saddled with these higher costs. Sometimes the efficiencies sought by the regulation are lost in the cost to get there. It remains to be seen if this will be the case in this scenario.

Efficiency Matters

It’s always good to be energy efficient. I have always believed that. But, sometimes, it seems our legislators are more focused on political gains than real energy gains, and they over-regulate as a result. Yes, I’ve heard the arguments that regulation stimulates competition and creativity. I even agree with that, up to a point. But, it can go too far and can potentially stifle competition and creativity.

The good news is there are ways to work through this. Replacing failed single-speed motors with variable-speed ECMs is certainly one way to increase efficiencies. Selling customers service agreements and teaching them the importance of mechanical system maintenance is certainly another. One thing that always has made me proud to be a member of the HVAC industry is how we always work hard to solve problems and deal with national regulatory issues, such as this.

In the world of performance-based service, cumulative efficiency is of the utmost importance. The focus isn’t on component and equipment efficiency; it’s on building and HVAC system efficiency; it’s on knowing the static pressures and the impact they have on airflow throughout the building; it’s on measuring and diagnosing leakage in duct systems; it’s on testing and understanding building pressurization and its impact on production of carbon monoxide and overall energy efficiency.

Obviously, manufacturers will work tirelessly to find more ways to squeeze additional energy savings from components and equipment. Interestingly, at least in the HVAC universe, manufacturers have been doing a lot of that anyway. But, they could be greatly helped in this quest if more contractors were testing, measuring, and using data to solve building issues instead of focusing only on the mechanical equipment. I believe the subsequent efficiency savings could actually be more, at a lower cost, than much of the supposed savings of regulating component and equipment efficiencies past the point of economic reality. The bottom line, in this perfect scenario, is that government may find itself not needing to be so regulative, and that would be great news for the entire industry and its customers.

As one door closes, another opens. Let’s close the door on new, onerous component efficiency regulations and open the door to testing, measuring, and delivering the building efficiencies and comfort our customers want and deserve.

Publication date: 1/26/2015

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