Hey folks! Phil Zito here and welcome back! In this post, we are going to be diving into looking at cost savings related to proportional versus floating controlled actuators. Actually, we're going to dive a little bit deeper based on some conversations that I've had with customers lately around the parts shortage. We're going to talk through some strategies of dealing with the parts shortage, because that seems to be very top of mind for a lot of people.
So, first thing we'll dive through is this concept of good, better, best in relation to costs associated with products. Then we'll expand that out to look at all of these parts shortages that are going on right now, and how we deal with those on our projects. That's going to become really painful in just about a month. I know it's painful now, but about a month from now when all the schoolwork starts to kick off, and you're waiting 16 weeks for controllers, that's going to be a pain point.
Alright, so let's first go through this proportional versus floating control. So, proportional control quite simply is you get a 0 to 10, or 4 to 20 output from your controller; 4 to 20 milliamp, 0 to 10 volts DC, those are the most common. You'll get these outputs, and these outputs will drive a proportional response on an actuator. Okay, so that is kind of where this proportional concept comes in.
Now, floating control is where you actually use two binary outputs with a shared common, typically. When you drive binary output one, it will drive the actuator clockwise, and then when you drive binary output two, it'll drive it counterclockwise. You have a timing on the logic block inside the controller, and that logic block will determine how long you should stroke the counterclockwise or clockwise commands to open or shut the actuator. That, in turn, will also remember where you are at with the actuators so that it can properly control.
Now, why would you use one over the other? Well, I'm not going to quote cost because I don't want to make this post something that's tied to the prices of this specific time. But suffice to say, in proportional controllers, what we typically have is this device inside the proportional actuator, that takes that 0 to 10, 2 to 10, 0 to 5, 4 to 20 milliamp signal, whatever it is, and then induces a command basically onto the actuator motor, that then tells the motor what percentage to go.
There are a lot of ways it's done. Most commonly, it's done by affecting the power, the amount of power, usually the frequency, that is able to drive the motor, and thus it drives it to a certain percentage, and then it stops driving it. Usually, it'll hold it kind of in place, and sometimes it holds in place, but sometimes you have spring return. There's a variety of different methods.
Suffice to say, that little device inside the actuator adds an additional anywhere from $20 to $40 of cost, at the time of this post. So, we're talking usually like, if an actuator is 90 bucks for floating, and a proportional actuator’s $120-$130, then you're talking anywhere from a 20 to 25% cost increase. That doesn't seem like a big deal, right, to get that benefit of that proportional control, which is more precise, and additionally is less likely to get out of calibration like floating control can tend to do.
The challenge becomes, however, that if you have 1000 of these devices, and you've got a 20%-25% cost premium 1000 times, let's just use $20, that's $20,000 in additional material cost that you're adding to a job. So right off the bat, you can reduce your cost, and that's cost that's not with any markup or margin applied. So initially, right off the bat, you can reduce that cost by 20 grand on 1000 actuators, which, on large shops is not hard to see. Oftentimes, these large plan and spec jobs can come down to, who can be 1 to 2% less than their competitors in selecting them for the job. So, you know, these cost savings can become pretty important.
Now, that being said, let's talk about cost savings and products, and this product shortage, because while I was just going to cover proportional versus floating control, I feel like this product shortage is timelier.
So, depending on who you're working with, the product shortage is putting you into a scenario where you have anywhere from a 12–16-week lead time on products, on average, with some folks seeing lead times of almost up to half a year. That's insane.
So how can you deal with this? Well, if it's sensors, it's relatively easy, right? There's so many sensors, there's BAPI, there's ACI, there's Setra, etc, depending on who you're using. So, you can try to find equivalent sensors. How I approach it is, our students use the CWE2 for CO2, to be able to do 4 to 20, and 0 to 10 as part of their wiring exercises. The CWE2, depending on the model version, you can get pretty quickly, within a couple of weeks. Another model takes a couple months.
So being able to ask yourself if you really need all of these capabilities, analyze, what the catalog sheets have and what capabilities the sensor has, I can start to realize that by selecting specifically, a different sensor, I can go reduce lead time. So that's my first tip to you.
Whenever you're sitting there, and someone tells you initially, you have a high lead time, you need to look at other products in that family and ask if you would have the same lead. Sometimes, the additional cost, and sometimes they're even less cost, but sometimes the additional cost is going to outweigh the potential for having that lead time delay. Now you may say to yourself, that's additional cost that I have to add to the project that I wasn't planning on adding.
That's why I'm a firm believer that a lot of your scope letters, and I’m not a lawyer, but your scope letters that are going out into the market right now should have something to the effect of, “we reserve the right to replace this sensor with customer approval at cost plus 10 due to the lead time shortage.” Put that in there and then just simply have a process where when you need to replace the sensor with something else that you can actually get, you can go to the customer and you can see with the customer that they give you approval on that specific sensor.
All right, so another thing that we need to consider here in regard to our products is we need to start to think about the controllers. This is where things get a little squirrely, because we can get our sensors. That's pretty easy.
One tip that I've seen from several of our customers that they're doing is they are using IOM modules. Now there are pros and cons to this, and IOM module is an input/output module. The pro of an IOM, in a lot of cases, is it does not necessarily have the same CPU chip that the main controllers have. Because of that, the lead time on IOMs is less than the lead time on controllers.
So, you'd say that you’re just going to put in a ton of IOMs and call it a day. Now there is a con to IOM, especially if you're using them. A lot of our customers are using them, where you have a centralized controller, and then you have a remote IOM, so you may be doing a central utility plant controller, and then you have an IOM in an enclosure sitting out with the cooling towers. It's a remote IOM module. Now, there is the potential for damage to that communication bus.
There is the potential for damage to that controller. That could cause that IOM to no longer function and could cause you to lose a portion of your central utility plant. Additionally, now you have two potential products that you need the stock. From a continuity perspective, you have a controller product, but you also have an IOM product that you need the stock.
However, that being said, if you can't get product, and/or you can get limited product, using the IOM might be a solution for you because that input/output module enables you to be able to reduce your dependency on chip-based controllers, which are the ones that are the major delays.
An additional thing I've seen several of our customers doing is that they are looking at alternatives that are still manufacturer specific. So, you have Honeywell and Honeywell has a slew of products, right? For example, they have EBI, they have Honeywell WEBs, they have, you could argue, any Tridium product is technically a Honeywell product. So, depending on how the spec language is written, and who is written as a qualified product, you may be able to do alternates.
So, especially if it's a Niagara spec, and I'm not sitting here advocating Niagara specs, I'm just saying that they seem to have the most diverse set of controller products on the market. So, for example, a lot of our students will use CIPer 10s for our courses, but they can't get a CIPer 10, so they use an EDGE 10, or they'll use a Lynxspring 854. So, they'll use alternative products.
That's another thing, if you are not flat spec to a specific OEM that does potentially open you up to being able to source other products. So, just because it says Honeywell WEBs or something like that, does not necessarily mean that it is set in stone. That is something that you can do what's called an add-alternate, where you basically submit a request to add an alternate and you explain that it uses the same framework, and then you can potentially get approval.
Additionally, things like BACnet VFDs, things like BACnet flow sensors, BACnet rooftops, etc, those are things that you need to consider does adding a BACnet option to this add a time delay that is high enough to delay the project that I can justify the cost of manually wiring things. Sure, you get a lot more data from a BACnet flow sensor. Sure, you get a lot more data and control from a BACnet rooftop, but you can still largely implement your control sequence with a manual controller and IO onto that rooftop. It's going to cost a little bit more, but that is an add alternate that you can make. So, you could go down that path, and that is a solution for dealing with this problem, right?
An additional thing I want to cover is the cost of fuel and the cost of shipping product. So, I have, almost as long as I can remember, been an advocate of factory-packaged controls; both factory-packaged, like the embedded controls, as well as factory-packaged, shipping your controllers to like Titus, or whoever does your boxes, and then having them mount them on the box in the factory and shipping them out labeled. I'm a big fan of that.
However, what I have been finding, talking to a lot of our customers, is that the cost of them often receiving the material, and then shipping it to the manufacturer, is a cost that is becoming quite expensive, because of fuel. Now, naturally, your brain and my brain went through this too. I was like, why don't you just ship it to Titus or whoever? Why does it have to come to the customer first?
Well, in a lot of cases, the actual contracts, and I'm not an expert on this, I'm just going based on what I've heard, so I could be wrong. But a lot of the contracts, as I understand them, require the contractor to receive the product first because they are the approved person who can buy that product from the distributor. Then they are able to transfer it to a manufacturer.
You may say yourself, but I ship product to job sites all the time. Yeah, you do ship products to job sites all the time, but there's still technically a contractor on that job site who's approved to work with that OEM’s product, and thus they're receiving the product. So, it's no different than if they receive it at the job site versus if they receive it at their actual site.
So, I'm seeing that shipping product to equipment manufacturers does have additional cost. But I found out one thing from talking with one of our customers, and hopefully he's not upset for me sharing this, but there are some equipment manufacturers that have specific products in stock. They have their own controllers, or they have stock of controllers. So, if you're having trouble getting controllers, suggestion may be to call that equipment manufacturer and ask if they have stock, and they could utilize their stock as factory mounted to provide product to you much quicker than your potential distributor could get that product to you.
Product strategies are something you really need to focus on right now. There are product shortages, they're going to get worse. I know they are building some semiconductor fab plants. I know they're supposedly building like three of them here in Phoenix, and that's going to help, but at the same time, you need to be aware that there are material shortages and product shortages and implementing some of these strategies should help.
What I would like to see from the greater community, and where I think we could all come together is if you have any strategies or tips that you're using to source material, definitely share it. Let folks know because, as an industry, we thrive on being able to execute our work, and get building automation systems in place so that people can see the benefit of building automation systems.
There's talk of rolling blackouts in Texas and the Midwest. It's insane. There are talks of record temperatures. What are those things of rolling blackouts and record temperatures have to do with us? Well, building automation is going to enable our customers to save energy and really ensure that they're controlling their climate within their building. So, we need to be able to work together to help folks be able to run their buildings, because the more effectively people can run their buildings, the more building automation systems are going to be put in place.
Something I'm going to start doing personally over the next couple of weeks, is I'm going to dive into a series on energy savings and energy saving strategies, because I feel that's a value add that you'll be able to sell to your customers, or your sales team will be able to sell to your customers. I really want us to be able to effectively communicate things like measurement and verification, continuous commissioning, retro commissioning, IPMVP, Model A, B, C. We should be able to communicate those things, and we should be able to explain the value of those things. While the construction industry is an 18-month market cycle, typically, and our product delays are going to even further extend the build cycles of these buildings. I believe we are going to see a contraction of construction.
I also believe we're going to see an inflation of costs. I mean, we're seeing right now an inflation of utility costs. I mean, I was just reading the today about the new Ford electric vehicle and how it needs 800 volts to charge it in like a couple hours. You know, imagine that, imagine a bunch of these EVs sitting on the grid. What is that going to do? Our grid is not prepared for that.
So where are the folks going to turn to try to pull efficiency out of the grid? They're going to look at buildings and they're going to look at residential. You can only put so many LEDs in a house, you can only put so many HighSEER units in a house, you can only put so many PVs on a house and back feed into the grid.
Where folks are really going to start to focus in on is commercial buildings, schools, hospitals, etc. They're going to start to look at these buildings, and ask how can we make them more energy efficient? Unlike a lot of kind of just crazy green hoopla, I can actually find myself getting behind energy efficiency for that reason, because the reality is, we have an old grid, we have undersized production. We're going to have increased temperatures and we're going to have all of this electric vehicle load being placed on our grid.
So, because there's talk of giving incentives for EVs and stuff like that, even more than what's already given, what does that do? That increases the cost of our energy, which is going to really shock a lot of owners. At the same time that all of this is going on, you are having wages go up like crazy, right? You have Verizon, I think they're paying like 18 bucks minimum wage to anyone, it's insane.
So naturally, controls contractors are going to find themselves having to increase their wages, because cost of living is going up. By them increasing their wages, it’s going to increase the operational cost to owners, because owners aren't budgeting for this. So, now they're going to hit double whammy, right? Higher utility costs and also a higher service and labor cost, and a higher material cost.
So, one way we can really help our owner customers, is by thinking of some strategies that we can help reduce costs. Those are going to be energy, there's going to be analytics, and that's going to be operational efficiency. So, you're going to see us starting to really heavily focus on those three topics over the next couple of months.
All right, sorry about the tirade there for a bit. But it's something that is often on the very top of mind. I hope this helps you understand this topic a little bit better. Please leave any comments or questions below.
Thanks a ton and take care.