Three key trends we’ve learned about the HVAC industry

The HVAC service industry hasn’t evolved in the last 25-years although equipment has seen massive changes.

HVAC service is trending towards disruptive changes and here’s why!

By: Zach Denning

HVAC equipment has changed drastically in the last 25-years. Technicians are being stretched outside their comfort zones with job requirements similar to that of IT professionals. Owners and managers are finding it harder and harder to differentiate between providers leaving the bottom line as a primary motivator for selection criteria.

Even the way equipment is being installed and services has altered with the advent of technology as a driver of efficiency. Building automation (BMS) and “smart units” are enabling service providers to try new approaches to resolving typical temperature issues.

Here are some of the major trends in the industry and what to expect:

The HVAC industry has become a commoditized market

Despite HVAC becoming more complex and increasingly efficient, owners and managers are having a harder time differentiating providers. Terms like “value engineering” are now represented by the lowest bidder dropping key design elements to win projects – Irregardless of how those changes impact Total Cost of Ownership (TCO).

The influx of new HVAC design and installation firms has also been a key driver. Every year over 11,000 new HVAC contractors enter the market with an average closing rate of 15% – Further adding to market confusion for end users and diluting value.

HVAC Preventative Maintenance (PM) contracts haven’t evolved in 30-years

Building automation has undergone massive overhauls in the last 25-years with the adoption of processors equivalent to mobile technology. Almost every piece of equipment in commercial buildings has some form of monitoring or control essential to discovering and ratifying issues.

The standard PM contracts doesn’t address technology as a value driver. In fact, it hasn’t changed since equipment ran on air-driven controllers – Controllers that aren’t electronic!

• 75% of all tenant complaints are HVAC related
• 60% of those issues are software or building automation related

This means that 45-50% of all issues reported by your tenants can be identified and repaired remotely without ever seeing a technician. “Virtual service” or monitoring-based contracts are beneficial for both parties as they lower customer costs, contractor overhead, and repair times.

Skilled technicians have become a scarcity

The Millenials and generational technology gaps haven’t been kind to the HVAC industry. Established technicians are finding it hard to transition into psuedo-programmer roles necessary to properly maintain equipment and supporting technology. Building owners and tenants are suffering the cost-impact of repeat HVAC issues from inaccurately conceived solutions as technicians fail to find the root of software-related problems.

Even worse, Millenials are choosing white-collar technology jobs over blue-collar labor like HVAC and construction. The labor pool of HVAC technicians is not only worsening, it’s also shrinking!

What changes can we expect to see?

Technology has been the primary driver in the evolution of HVAC standards. Yet, most service providers are choosing to combat labor shortages and skill deficiencies with price wars instead of innovation.

Adopting new technologies to supplant physical presence for service opens up new opportunities for maintenance contracts and new hire criteria. Maintenance contracts based around remote monitoring and repair not only reduce overhead, they allow providers to choose from a new labor pool – One predisposed to technology that can be taught HVAC fundamentals!

Be forewarned, the HVAC installation and service landscape is headed for major disruptive changes beneficial to both building owners and contractors!

My name is Zach Denning and I’m the CEO and owner of EnerDapt, Inc. We’re an HVAC engineering firm that utilizes cloud-based technology to bridge the technical and financial gaps commonly found in HVAC management. Our OCMS EnerVise platform keeps customers knowledgeable about their building including HVAC life-cycle costs, forecasted maintenance & upgrades, and equipment replacements.   You can reach me at zdenning@enerdapt.com or visit our website at www.enerdapt.com