The Smart Building Business Case - Part I


In the past few years, smart building technology such as IoT has been evolving at lightning pace. Explained simply, smart buildings use a combination of technologies to automate building management. Sensors feed the management systems with information about changes in occupancy and temperature. The systems allow facility managers to automate and manage the different variables of a building’s operation and the collected data is stored and analysed over time so that adjustments can be made. While bringing many benefits, turning buildings into smart buildings requires investments. So, what is the business case for making investments in smart buildings?

Read the second part which focuses on the strategic and operational space management of making investments in smart buildings.  

Value Proposition of Smart Buildings

In traditional belief, the greatest incentive to invest in smart buildings are asset value and energy savings. Building automation and integrated control systems can generate from 10 to 40 percent savings in energy costs alone. However, if only energy cost savings are considered, a much bigger value proposition is overlooked.

Employees spend at least 40 hours at the office each week, totalling 2080 hours every year and human capital accounts for about 90% of a company’s operating costs. The real estate firm JLL suggests applying the 3-30-300 Rule™ - $3 per sq ft per year for utilities, $30 for rent, and $300 for payroll. Using the 3-30-300 model JLL claims that the greatest financial savings from optimising a workplace do not lie in energy but in productivity. Primarily, smart buildings benefit the people who occupy them, which in turn produces significant positive impacts on the company’s bottom line. In numbers, this means 43% of the total value comes from enhanced employee productivity, 41% from increased employee retention, 7% from improved employee wellness, 7% from utility savings, and 2% from maintenance savings (The financial case for high performance buildings).

The productivity gains can be achieved by making workplaces physically comfortable, enabling fewer distractions and the ability to concentrate fully on tasks. Furthermore, it has been proven that there are direct links between human-focused, intelligent building systems and a company’s ability to recruit the brightest talent. Not to forget, active participation and signed consent of the employees are vital to a system’s success. However, if all things are considered, the promise of energy efficiency, better access control, greater comfort and environmental responsibility all come down to a high return on investment (ROI) for smart buildings.

What Locatee Offers

Locatee Analytics offers a big data analytics platform enabling smart and occupant-oriented office buildings. It enables a building owner/FM/CREM to know exactly what is going on in the building – energy usage, foot traffic, occupancy rates, maintenance requests, etc. – to make real-time and cost-saving decisions for future opportunities that cover your companies’ individual use cases. Read our case studies from Biogen and Post here, to discover the different use cases.

Key Takeaways

The development of technology has increased the importance of smart buildings and investing in them offers great opportunities. First and foremost, a dynamic, smart workspace is responsive to the needs of the people who work there, creates a better work environment and in turn, increases people’s productivity. Investing in smart buildings does require high assets, however, it also offers the opportunity for great returns.

Contact us to discuss your business cases.

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