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Proposal for the Replacement of HVAC systems

Akebono Farmington R&D center


Donald DeKeyser, Alyssa Mascia, Monday Xiong, Jay Davis
Wayne State University

Executive Summary
Guardian Environmental Services (GES) installs and maintains heating, ventilation, and airconditioning (HVAC) in large buildings. They are based in Livonia and service clients
throughout the Detroit metropolitan area. Their client, Akebono Brake Company, has two HVAC
systems at their Farmington Testing Facility. GES has repaired these units several times over the
past two years, costing Akebono over $30,000. These systems currently use a type of liquid
refrigerant that is being phased out by the government and will not be produced after the year
2020.
We have worked with GES to create a proposal that outlines the best course of action for their
client. We examined three courses of action Akebono could take.
1. Continue to repair the current systems for 5 to 10 year
2. Upgrade to the latest system from the same manufacture (Daikin)
3. Upgrade to a new system from a different manufacture (Trane).
We also considered what else could be done to ensure the best possible outcome for GES and
Akebono, such as financing options and government incentives for energy efficient and
environmentally friendly technology.
Based on our research and the expertise of the engineers at GES, we have concluded that
upgrading to the latest system from Daikin is best course of action for Akebono for the following
reasons:

Repair costs will continue to add up, soon equaling the price of a new system.
The new Daikin systems are more efficient and will save Akebono a significant amount
of money
The refrigerant R-22 will no longer be produced after 2020
The Daikin system is superior to the Trane system (better components)
Installation of the Daikin system would cost $12,000 less than installing a Trane system

We also suggest that Akebono take advantage of these additional services


Gem Commercial Credit Inc. lease to own program
Consumers Energy Incentives

Contents
Introduction

Problem

Method

-Differences between new systems

-Types of refrigerant

Costs

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-Costs of Continued Repairs

-New System Pricing

-Options for Offsetting Costs

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Solution

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Schedule

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Appendix A (GES Documents)

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Appendix B (Daikin Energy Efficiency


Documents)

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References

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Figures/Tables
Table 1: Record of Major Repairs

Table 2: Comparison of Potential New Systems

Table 3: Price Comparison of New Systems

Table 4: Energy Consumption and Cost of Daikin Systems

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Introduction
We reached out to Guardian Environmental services and requested the opportunity to collaborate
with them to create a report. They suggested that we write a proposal for their client, Akebono,
who is considering having GES install new HVAC systems at their Farmington Facility.
Our proposal will outline the best course of action for Akebono by addressing the following
questions:
1. Should the current HVAC systems be replaced, or should they continue to be repaired?
2. If they are necessary, what manufacture should the new system come from?
3. What other steps must be taken to ensure the best possible outcome for Akebono?
We determined that replacing the HVAC systems is necessary because of the projected costs of
repairs. The average cost of repairing both systems is approximately $5,000 annually. This does
not take into account major malfunctions and breakdowns that can cost upwards of $15,000.
Our analysis of the two manufactures (Trane and Daikin) revealed that Daikin can provide
superior products in this situation. For example, their systems are more modular and
customizable. Their end users are able to easily adapt their equipment to their specific needs.
Our further research identified services that Akebono should take advantage of to offset the costs
of this investment. These service such as include government incentives and lease to own
financing services.
This report will outline our analysis of the current HVAC systems, why they need to be replaced,
and our comparison of different replacement options. It will also contain our analysis of financial
services and other cost saving options, and our proposal of the best course of action for Akebono.

Problem
The two HVAC systems (RTU-5 and RTU-6) at Akebonos Farmington location have cost the
company over $30,000 in repairs over the past two years. These systems have an expected life
span of fifteen years. Both systems are nineteen years old. Akebono has contracted GES to help
them decide whether to keep these current systems or replace them. They do not like the large
upfront cost of installing new systems; however they are weary of the mounting costs of repairs,
detailed below.
RTU-5
Daikin model 070b, a 70 ton* system installed in 1997. This unit has required $7,895 worth of
repairs in the past two years.
RTU-6
Daikin model 051b, a 50 ton* system installed in 1997. This unit has required $25,258 worth
of repairs in the past two years.
* Ton refers to a unit of cooling equivalent to 12,000 BTU, not the measure of weight.

Record of Major Repairs


Unit RTU-5
Unit RTU-6
Date:01/12/2015
Date:01/12/2015
Work Performed: Inspect and calibrate Heating Work Performed: Adjustments of heating
alarm
controls and air flow.
Price: $1,523.92
Price: $1,523.92
Date:12/02/2014
Date:10/21/2014
Work Performed: Replace Hot Gas solenoid
Work Performed: Repair split in duct work.
Price: $1,661.92
Price: $2,039.16
Date: 12/02/2014
Date:08/21/2014
Work Performed: Change compressor oil
Work Performed: Replace fan belts and check
Price: $1,669.00
fan motor.
Price: $1,701.38
Dated: 09/25/2014
Date:09/08/2014
Work Performed: Changed filters, checked
Work Performed: Check air cooled condenser,
air/heat, and lubricated fan motor
fan coil, blades, and fan motor.
Price: $2,039.16
Price: $1,770.00
Date: 06/17/2014
Work Performed: Remove and replace
compressor and install new refrigerant filters.
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Price: $14,920.00
Table 1: list of all repairs in the last two years in which the cost exceeded $1,000

Method
Differences between new systems
At the recommendation of GES we examined two manufactures, Daikin and Trane, as potential
suppliers for the new systems. We looked specifically at models that were comparable in tonnage
to the current systems. This led us to the 50 ton 050ds and 70 ton 070ds Daikin models and the
50 ton SFHLF504 and 70 ton SFHLF704 Trane models.
Shown below are multiple key differences between the new Daikin systems and their Trane
counterparts that clearly highlight Daikins superior quality. A full component list can be found
in appendix A
Comparison of Potential New Systems
Daikin
Trane
Fan Type
Air Foil supply fan
Forward Curved supply fan
Max Gas Furnace Modulation
20:1
4:1
Burner Sizes
10 burner size offerings
2 burner size offerings
Compressor Modulation
4 step for 50 ton
4 steps of capacity control
6 step for 70 ton
DX Coil Configuration
Blow Through
Draw Through Only
Insulation
R3.7 insulation standard
R-2 insulation
R6.5 insulation optional
Wiring
All wiring within conduit.
No conduit; Bare wires
Table 2: Comparison of features in the potential new systems.

Fan Design
Daikin uses an airfoil supply air fan, while Trane uses a forward curve supply air fan. Airfoil fans
are inherently more energy efficient than the forward curved fans and can operate at a wider
range of pressures and speeds and further enhance system performance.
Furnace Modulation
The Trane furnace is a 4:1 design, meaning that it can operate at 25%, 50%, 75%, or 100%
capacity. The Daikin system is a 20:1 design. Full 20:1 turndown with continuous modulation
between 5% and 100% of rated capacity provides precise temperature control for a comfortable
tenant environment. 20:1 control will enable much more accurate temperature control and a
more steady space temperature in the office areas
Burner size option
Daiken has several burner size options which allows for more accurate sizing allowing better
control and more accurate control. A properly sized burner will cycle on and off less often. Each
On/Off cycle creates expansion and contraction which will shorten the life of the burner
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Compressor Modulation
The Trane units each have 4 stages of cooling. The Daikin 50 ton unit has 4 stages and 70 ton
unit has 6 stages of cooling. More stages of cooling will enable more accurate control, especially
at low capacity. More stages and lower capacity operation allow the system to run longer
decreasing the On/Off cycling which creates wear on the compressor.
DX coil configuration
Daiken uses a blow through configuration. The supply air fan is before the cooling coil. Trane
uses a draw through configuration. The supply air fan is located after cooling coil. Blow through
coils effectively provide colder air temperatures per ton of air conditioning. This potentially
allows a significant reduction in the amount of air usage and resulting reduction in building
energy use.
Insulation in unit walls, ceiling and floor
Daiken units have a 3.7 R-Value insulation. Trane units have a 2.0 R-Value insulation. Higher Rvalue insulation correlates to less heat transfer, better efficiency and ultimately less money spent
for conditioning the air.
Wiring
Daiken places all of the internal wiring inside wire conduits, this help protect wiring during
many years of use and during typical maintenance. Trane has wire exposed.
Refrigerant type
HCFC 22
The current systems use HCFC 22. This refrigerant is currently being phased out by the
government due to its potential for ozone depletion and its high Global Warming Potential
(GWP). It will no longer be produced after the year 2020 (Environmental, 2016). Reclaimed
(cleaned) HCFC 22 will still be available to purchase, but as supply drops the price will increase.
R-410A
The new systems will use R-410A as a refrigerant. R-410A does not contribute to ozone
depletion, and contributes less to global warming than HCFC 22.

Costs
Costs of continued repair
Repair costs
The repairs GES has made to the two systems have already cost the company over $30,000 in the
past two years. Given that the systems are past their expected lifetime of fifteen years, the annual
cost of repairs can be expected to increase as time goes on.
The compressor in unit RTU-6 was replaced in 2014 and cost Akebono almost $15,000. Unit
RTU-5 still has its original compressor and will likely need a new one in the near future. This
will also cost Akebono around $15,000 dollars.
The other repair costs average out to around $5,000 a year. Over the next five years Akebono
could expect to pay another $40,000 for repairs ($5000 per year and $15,000 when the
compressor in RTU-5 fails). Combined with the previous $30,000 and the expected $40,000 over
the next 5 years and Akebono will have already paid roughly 35% ($70,000) of the cost of
installing a new system ($200,000).
Loss of productivity
The cost of malfunctioning or broken equipment goes beyond the cost of repairs. Loss of
productivity is a serious concern. If a compressor (necessary for cooling) breaks during a hot
summer or a furnace (necessary for heating) breaks in the winter, there is serious potential for a
significant loss of productivity. If the building cannot be kept at a reasonable temperature,
employees may, as Mr. DeKeyser recalled from experience, Go out for long lunch hours, leave
early, waste time complaining to managers, and otherwise be unhappy and unproductive.
New system Pricing
GES has provided quotes for the installation of both potential systems, shown below.
Documentation of the quotes can be found in appendix A
Price Comparison of New Systems
Service provided by GES
Price (Daikin system)
Price (Trane system)
Transportation
$2,900
$4,900
Crane
$12,000
$15,000
Unit Cost
$162,000
$162,000
Labor
$11,000
$18,000
Remove/dispose of old units
$6,500
$6,500
Total
$194,400
206,400
Table 3: Comparison of the price of installing the two new systems. Prices taken from quotes by GES

Installation of the Daikin system is the more cost effective of the two options. Much of the
increased cost of the Trane option is due to the differences in the current Daikin systems and the
new Trane system. Adapters and other modifications would need to be purchased for a Trane
system to function with the current curb (A metal framework that sits between the system and the
roof) that is designed for a Daikin system.
Options to offset cost
Increased energy efficiency
Daikin provides an online tool to compare the energy efficiency of its products, the results of
which are summarized below; original documents are located in appendix B. This tool provides
information such as annual energy use in kWh, annual energy costs, and expected annual
savings. Upgrading to the new Daikin systems would save Akebono approximate $5,600
annually.

Energy Consumption and Cost of Daikin Systems


System

kWh/yea
r
051b (Old 50 ton)
86,856
050ds (New 50 ton)
65,890
Annual Savings
070b (Old 70 ton)
111,697
070ds (New 70 ton)
75,665
Annual Savings

Annual energy cost


$8,686
$6,589
$2,097
$11,170
$7,567
$3,603

Table 4: Comparison of energy consumption and operating costs of the


old and new units

Consumers Energy Incentive


Both new Daikin systems are eligible for incentives due to their energy efficiency. Consumers
Energy will reimburse a business $30 per ton. This means that the new Daikin systems, 50 and
70 tons, would save the company $1,500 and $2,100 respectively (Consumers, 2016).
Lease to own programs
Gem Commercial Credit, Inc. offers lease to own programs for businesses. These lease payments
are tax deducted as an operation cost. Also, the cost of installation and related costs will be
incorporated into the lease, helping to defer the cost of the entire project. The payment terms are
flexible from 90 days up to 60 months. Leasing frees up resources for other operating costs or
emergencies (Gem, 2016)
Warranties
New equipment from either manufacture will come with a full parts and labor warranty for one
year from date of installation, an extended parts warranty for the compressors and a 10 year parts
warranty for heat exchangers. These warranties are provided by the manufacture, not GES.
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Solution
We propose that Akebono should replace their current systems (RTU 5 and RTU6) with new
systems The current systems have incurred tens of thousands of dollars in costs due to necessary
repairs and will continue to require ever increasing amounts of repairs as the systems get older.
This coupled with the fact that these systems utilize a refrigerant that is currently being phased
out, makes it clear that these systems need to be replaced.
We considered two options for the replacement systems, Daikin, the manufacture that produced
the current systems, or their competitor, Trane. Based on our research, purchasing new systems
from Daikin a better option for two reasons:
1. GESs quote for the installation of new Daikin systems was $12,000 less than the quote
for the Trane systems
2. Multiple components of the Daikin system are superior to the corresponding components
of the Trane system as outlined in the method section.
To further ensure that Akebono achieves the best possible outcome, we propose that they take
advantage of the following services.
Consumers Energys incentives for HVAC systems that meet their environmental
standards. The Daikin systems meet for these requirements.
Gem Commercial Credit Inc.s lease to own program.
The Consumers Energy incentive will save Akebono thousands of dollars and Gems Lease to
own program will ease the financial burden that purchases of this size can pose to businesses.

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Schedule
March 28 April 1

April 4-8

April 11-15

April 18-21

April 22-25

Researched possible report topics


o Topic: create a proposal for GESs client
Akebono Brakes Company HVAC
Primary Research
o Conducted an interview with Richard
DeKeyser (our liaison from Guardian
Environmental services)
Secondary Research
o Documents provided by Mr. DeKeyser
o Web sources
Wrote project memo
Group meeting to discuss research
Assign new assignment to each member
o Alyssa compare the cost of the Trane
system and Daikin system
o Jay Begin writing the Introduction and
Problem sections of report
o Monday compare the benefit of keeping
the existing Daikin system or upgrading to a
new system
o Donald compare the Daikin and Trane
systems based on quality/differences in
equipment.
Write Progress Report
Group meeting to divide up remaining sections of
report
o Alyssa: Detailed comparison of Trane and
Daikin systems
o Jay: Detailed cost analysis of possible
options
o Create solution section outlining our
proposed course of action
Write rough draft for peer view
Peer review in class
Discuss the comments from other classmates how to
improve
Group interview with Richard DeKeyser
Continue progress with final draft
Review final draft of report as a group
Submit report to Professor Malesh
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Appendix A (GES documents)

April 4, 2016

Quote: 163 - D

Akebono
SUBJECT: Replace RTU #5,#6
Work Detail

Remove 2 Rooftop HVAC units, haul away and dispose of per EPA
guidelines
Supply 2 new Daikin/McQuay units
Lift onto existing curb
Reconnect electrical, gas, duct, BMS
Program Building Management System to show new RTUs
Lifting of units to be performed on a Saturday
City permits for Mechanical and Electrical
One year workmanship warranty
5 year compressor parts; 10 year heat exchanger parts
Check, Test and Start.

Total Investment.$194,400
Per your request price breakdown for accounting purposes only:
-transportation$2,900
- crane..$12,000
- unit costs..$162,000
- labor.$11,000
- Removal and disposal of the old units6,500

NOTES:
1. Owner to provide free access to work area.
2. Price valid for 30 days
3. No temporary heating/cooling in this proposal.
4. Neither party shall hold the other responsible for any indirect or consequential damages of a
commercial nature such as, but not limited to, loss of revenue or use of equipment or
facilities.
5. Payment schedule 10% down
70% on delivery
20% after substantial completion. Check, Test and Start
complete. Net 45 days.
Respectfully,
Guardian Environmental Services, Inc.

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Rich DeKeyser
Sales Engineer

Appendix A (GES documents)

Equipmemnt Deteail
Mark: (RTU-5) Daikin Applied Direct Replacement Packaged Rooftop Unit Qty (1)
(1) Daikin Applied Model RPS070D Packaged Rooftop Units to match existing unit, complete with the following:
10.0 EER
Replacement for the existing RPS070CSA (Serial Number: 37D009002)
460/3/60 Voltage
R410A Refrigerant
2 1 # nominal insulation with full solid liners
0-100% Economizer with comparative enthalpy control and motorized actuator
Microtech III discharge air control (DDC controls, BACnet MSTP Card)
Premium efficiency 7.5 HP return fan motor with factory installed VFD and air foil type fan
Premium efficiency 30 HP supply fan motor with factory installed VFD and air foil type fan
Spring isolators on supply and return fan motor
4 Stages of cooling
Hot gas bypass on first refrigerant circuit
Hi turndown 20:1 modulating gas burner
Single thru the door disconnect switch
Stainless steel drain pan
Duct sensor
Refrigeration service valves
Supply and return air smoke detectors
Field powered 115V GFI receptacle
Fantrol, which allows operation to 45F
2 Disposable MERV 8 filters (One set)
One year parts only warranty
Five year compressor parts warranty
Ten year heat exchanger warranty
Please note that the Daikin Applied replacement unit being quoted will fit onto the existing roof curb.
The return air opening will be 38 x 87 and the supply air opening will be 28 x 81 to match the
existing openings. The replacement unit will match the existing unit height, length and width.

Appendix A (GES documents)

Mark: (RTU-6) Daikin Applied Direct Replacement Packaged Rooftop Unit Qty (1)
(1) Daikin Applied Model RPS050D Packaged Rooftop Units to match existing unit, complete with the following:
9.7 EER

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Replacement for the existing RPS050CSA (Serial Number: 37D00901)


460/3/60 Voltage
R410A Refrigerant
2 1 # nominal insulation with full solid liners
0-100% Economizer with comparative enthalpy control and motorized actuator
Microtech III discharge air control (DDC controls, BACnet MSTP Card)
Premium efficiency 10 HP return fan motor with factory installed VFD and air foil type fan
Premium efficiency 30 HP supply fan motor with factory installed VFD and air foil type fan
Spring isolators on supply and return fan motor 6 Stages of cooling
Hot gas bypass on first refrigerant circuit
Hi turndown 20:1 modulating gas burner
Single thru the door disconnect switch
Stainless steel drain pan
Duct sensor
Refrigeration service valves
Supply and return air smoke detectors
Field powered 115V GFI receptacle
Fantrol, which allows operation to 45F
2 Disposable MERV 8 filters (One set)
One year parts only warranty
Five year compressor parts warranty
Ten year heat exchanger warranty
Please note that the Daikin Applied replacement unit being quoted will fit onto the existing roof curb.
The return air opening will be 38 x 87 and the supply air opening will be 28 x 81 to match the
existing openings. The replacement unit will match the existing unit height, length and width.

Appendix A (GES documents)


April 4, 2016

Quote: 163-2 Trane

Akebono
SUBJECT: Replace RTU #5,#6
Work Detail
Remove 2 Rooftop HVAC units, haul away and dispose of per EPA
guidelines
Supply 2 new Trane units
Supply and install adaptor curbs
Adaptor curb will raise the unit approx. 30 high, making the top of the unit at
approx. 10

15

Reconnect electrical, gas, duct


Program Building Management System to show new RTUs
Lifting of units to be performed on a Saturday
City permits for Mechanical and Electrical
One year workmanship warranty
5 year compressor parts; 10 year heat exchanger parts
Check, Test and Start.

Total Investment with adaptor curbs.$206,400


Per your request price breakdown for accounting purposes only:
-transportation$4,900
- crane..$15,000
- unit costs..$162,000
- labor.$18,000
- Removal and disposal of the old units6,500

NOTES:
Option to remove curb and install new this would entail a structural engineer review and
possible welding of new supports underneath the roof, two crane lifts and the affected area
would be with out heating and AC for 2-3 days. Price add for removing existing curb and
installing new
Total for new curbs.$25,000 total for (2) units

Respectfully,
Guardian Environmental Services, Inc.

Rich DeKeyser
Sales Engineer
Cell 734-216-0560

Appendix A (GES documents)

Equipmemnt Detail
TRANE
RTU-5 : 70 Ton Packaged Industrial Rooftop (SFHLF704)
RTU-6: 50 Ton Packaged Industrial Rooftop (SFHLF504)

DX Cooling with Natural Gas Heat


R410A Development sequence
460 Volt-60 Hertz-3 Phase
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4:1 Modulating high gas heat capacity


100% Exhaust - 10 Hp with Statitrac
0-100% Economizer
Econ Control w/comparative enthalpy
2.00" [51mm] Spring isolators
M8 Hi-Eff TA / None
30 Hp FC
VAV- Discharge Temp Ctrl-Supply and Exhaust/Return Fan with VFD with out Bypass
Standard ambient control
Nonfused Unit Disconnect Switch
Hot gas bypass valve
IRU w/ galv - w/ std panels
BACnet communication interface module
Factory-Powered 15A GFI Convenience Outlet
Stainless Steel Sloped Drain Pan
2nd-5th Year Replacement Compressor Warranty
1 year parts warranty
10 year HEX parts warranty
Field installed smoke detectors

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Appendix B (Daikin Energy Efficiency Documents)

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Appendix B (Daikin Energy Efficiency Documents)

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References
Consumers Energy. (2016). Mechanical Icentives. Retrieved from
https://www.consumersenergy.com/eeprograms/BHome.aspx?id=5425
Gem Commercial Credit Inc. (2016). Frequently asked questions. Retrieved from
http://www.gemcredit.net/Pages/FrequentlyAskedQuestions.aspx
Environmental Protection Agency. (2016, January). Phaseout of Ozone-Depleting
Substances. In epa.gov.

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