Back to Case Studies HQ How did Engineering Excellence help Elder Beerman? Tom J. Winstel gives his view... Adapted from an article that appeared in Retail Stores magazine, by Tom J. Winstel, President and COO of Engineering Excellence. Tom is a Certified Energy Manager (CEM) with 22 years of experience designing HVAC facilities management solutions for building owners.			Elder-Beerman: A Case Study of Planned Unit Replacement Elder-Beerman Stores Corporation, a Midwest retailer and a division of Bon-Ton Department Stores, Inc., faced major facilities management challenges three years ago. "Back then, both internal and external costs were too high for managing our HVAC assets," says David Utrata, Vice President of Operations and Store Administration at Elder-Beerman. Elder-Beerman was self-performing the maintenance for its 71 stores. With no system in place for preventive maintenance and planned unit replacement, on-demand service and utility costs per store were increasing at an alarming rate, and the retailer was faced with an aging HVAC fleet of equipment. Elder-Beerman's management looked for a reduction in spending, flat-line costs, and more control of its facilities management budgets. The solution they found was Engineering Excellence, Inc. Elder-Beerman managers had decided to get out of the day-to-day HVAC business, in order to allow more time to focus on its core business, retailing. They needed a strategy to outsource HVAC facilities management planned unit replacements, and shift maintenance and repairs to an outside partner. The challenges that lay ahead included trying to budget and control costs. For too long the retailer had deferred capital spending on its aging fleet of rooftops and other HVAC equipment. Engineering Excellence was chosen as the best supplier -- able to deliver both fast and effective service for all the existing stores, and a comprehensive equipment replacement plan, with flat costs. Now, three years into the plan, the picture looks much brighter and Elder-Beerman's vision has become a reality. "We are now in the third year of the plan and it is tracking to our vision of enhancing Elder-Beerman's bottom line with consistent cash flow and a flat 5-year budget. We have also significantly enhanced the retail buying environment for our customers -- internal and external," says Utrata. "If we had stayed with the status quo, over a 5-year period, costs would have snowballed with an avalanche effect and with nothing to show except an older fleet, higher costs, and lost sales due to store discomfort -- not a pretty picture." In hindsight, the grand plan was an interesting challenge. Elder-Beerman needed a national HVAC facilities management firm to evaluate and consult with the retailer to develop its strategy and to execute a turnkey solution. They selected Engineering Excellence, right in their own home turf, but recognized nationally today as the Contracting Business Magazine "Commercial Contractor of the Year" (2005) National Facility Management Having selected a partner, the biggest challenge was knowing where to begin. Like most retailers, striking the right balance was critical. How much of its budget should be devoted to internal efforts? How much should be outsourced to management, maintenance and repair services -- while still allocating capital to replace the aging fleet of HVAC equipment? Engineering Excellence developed a customized unit replacement matrix and assisted the Elder-Beerman team in weighing key evaluation factors, including historical financial costs per store, existing store comfort levels, design of space served, age, type and cost of pending repairs, energy cost avoidance, future repair cost avoidance, and improvements for saved energy and preventive maintenance costs. Detailed Audits = Detailed Management Information Where internal data was missing or inconsistent, site surveys were needed up front to lend accurate information to conceptualizing the plan. Engineering Excellence calls these audits "Rooftop VIEWs" and "Complete Facility Audits" . These surveys provided the necessary ingredients to prepare a report to capture information for planning retrofits and tasking programs for maintenance. The survey also captured detailed equipment information, sighting conditions of the equipment, service repairs needed, and preliminary architectural and design criteria. The result from Engineering Excellence was a comprehensive 5-year plan and fee quotation. Engineering Excellence guaranteed its fee for replacing all of the equipment, managing operations, and maintenance for all of Elder-Beerman's stores for a "flat-line" cost per year for 5 years. Quarterly review meetings were established to review "on track" performance with senior Elder-Beerman executives. In the first year, many units required "just-in-time" replacement in addition to planned unit replacements. This, too, was part of the plan. EEI's Service Management team used proprietary formulas for deciding repair verses replacement decisions as the first year maintenance tasking discovered repairs -- formulas based on long experience with each type of equipment in the retail setting.   When replacements were justified, new commercial units were installed as part of the customization plan. Energy Efficiency The Engineering Excellence plan also specified equipment to meet ASHRAE 90.1 guidelines for enhanced energy efficiency. Features vary widely on manufactured rooftop units today, presenting retailers with a bewildering array of options for reducing ongoing operating costs. Engineering Excellence provided answers, with consideration of tangibles such as the actual equipment lifetime operating cost savings, and intangibles such as design criteria and store comfort requirements. Working directly with the HVAC manufacturer under a specialized partnership program, the Engineering Excellence plan was able to assure first-year start-up and parts warranty coverages that were seamless to Elder-Beerman and its internal customers. The 5-year strategy reduced the average age of over 14,000 tons of HVAC equipment from 15 years of age to less than 10. Humming Along Smoothly Today, ongoing updated asset information is automatically accumulated, and updated by Engineering Excellence's proprietary Intellitrak™ software. Routine calls are dispatched, mutli-step retrofit projects are completed, and the precise costs of each individual unit are tracked. Keeping all of this information accurate and up-to-date is critical to the enhanced decision-making inherent in the Engineering Excellence plan. Early on, Elder-Beerman established specific hurdle rates, or return-on-investment criteria, for Life Cycle Cost decision-making. This is normally dictated by the CFO of a particular retailer as a part of the facilities management team setting capital spending criteria and direction for any program.   With this information in hand, costs for maintenance, service repairs, and installed capital equipment costs can be predicted in forward-looking plans. This data can also be modeled with energy data into a life cycle cost model incorporating the retailer's desired outcomes. Elder-Beerman is not alone... in the kind of situation they faced. Many retailers struggle with a myriad of technical decisions: what HVAC rooftop equipment should be repaired versus replaced? When will energy cost savings justify a purchase or upgrade? Without good benchmarked data, only guesses are available. With the Engineering Excellence strategy of audits & analysis scheduled maintenance lightning fast service calls nationwide by technicians who adhere to the precise standards of the EEI national tasking library, energy consultation and planned unit replacement... the savings are tangible and the comfort of both store customers and facilities managers is assured!