Facility Management
November 1, 2021
Last Updated On:
April 22, 2022

How To Estimate Commercial HVAC Upgrade Costs

You guide, tools, and insights to help determine the cost and benefits of updating your HVAC system.

Last Updated On:
April 22, 2022

The ongoing COVID-19 pandemic has caused many facility managers to look into the cost of updating the heating, ventilation, and air conditioning (HVAC) system(s) in their buildings to improve air quality and keep them free from harmful particulates and pathogens.

An HVAC upgrade can be a worthwhile investment. Still, there are many variables in determining whether your organization can update its entire HVAC system or needs a new one. There is no one-size-fits-all solution to improving air quality in a building.

First, you need to determine if an HVAC update is worth the investment that will pay off in short-term and long-term energy efficiency and safer conditions. To help you out, we have put together a guide to help you determine the cost and benefits of updating your HVAC system.

Reasons to Update Your HVAC System

There are many reasons for updating your facility’s HVAC system:

  • You are trying to hit Energy Independence, and Security Act (EISA) benchmarks. The act “requires that all federal metered buildings subject to energy reduction goals must be benchmarked for energy performance using the U.S. Environmental Protection Agency’s Energy Star Portfolio Manager or a similar tool.” So, you will need to consider federal and state regulations and follow guidelines recommended by the Sustainable Facilities Tool.
  • Your system may be more than ten years old, has frequent problems, and the work that needs to be done is difficult or too costly. These problems could also be an indicator of whole-system failure or parts needing updating or replacement.
  • You want to improve air quality in the building you manage. The COVID-19 pandemic and sick building syndrome have highlighted the importance of good indoor air quality (IAQ) and indoor environmental quality (IEQ, which also includes comfort) on building operations and the health and safety of employees and customers.

One solution is to add an HVAC induct with ActivePure technology for air purifiers. The technology is guaranteed to provide cleaner air throughout your building.

ActivePure HVAC Induct Air Purification

HVAC Replacement Costs 2021

Next, we’ll look at the cost of replacing parts of an HVAC system. The same factors apply when installing a new system, including the complexity of replacement, the amount of the existing system you are replacing, and the age of the system.

The average cost of installing replacement aluminum ductwork, insulation, ten vents, and two returns is $4,000 per 300 linear feet. However, you can expect to pay as much as $12,000 for the same amount of ductwork retrofitted for an existing building.

Using these numbers, you can estimate the cost of ductwork based on the square footage in your facility.

How Much Does It Cost to Update My HVAC System?

The cost of an upgraded HVAC system will depend on many factors, including the reason for the upgrade and system age. In general, however, you can expect an HVAC update will cost less than a replacement or brand-new system.

Here are some average costs to update an HVAC system:

  • HVAC unit replacement: $5,000 to $10,000, or $25 to $60 per square foot (depending on the unit size and brand).
  • HVAC ductwork replacement (standard): $12 to $25 per linear foot (more for specialty induct).
  • Labor (install or retrofitting): $75 to $150 per hour
Technician Analyzing HVAC System.

Another way to look at it is through the cost per update based on the type of building:

  • Recreational buildings: $17 to $22 per square foot.
  • Two-pipe office buildings: $15 to $23 per square foot.
  • Four-pipe office buildings: $23 to $28 per square foot.
  • Two-pipe residential: $15 to $18 per square foot.
  • Four-pipe residential: $18 to $21 per square foot

It’s essential to consider every aspect of your building when costing out an HVAC upgrade to get an accurate estimate. Here are some things that will figure into the cost:

  1. Heating plant: Identify the boiler capacity, pumping scheme, and size to build your heating plant. You may also need a water treatment plant, expansion tanks, duty valves, gauges, and other parts.
  2. Cooling plant: The right cooling plant will be based on the chiller type and its capacity. You’ll also need to determine the pumping scheme and sizes, water treatment system, and specialty parts.
  3. Air-handling unit: The air-handling unit is based on the building’s air-handling requirement in tons per CFM (cubic feet per minute). From air-handling capacity, you can choose your parts.
  4. Piping mains: Piping estimates will depend on the make/brand, the building size, and the desired air distribution.
  5. Piping branches: Pipe branches depend on the type and size of coils. Large ones, for example, will require more than one connection.
  6. Sheet metal: Parts of your HVAC system, including the ductwork, air diffuser boxes, exhaust fans, grilles, and registers, will be covered with sheet metal.
  7. Insulation: You may need to insulate plumbing and ductwork to protect your HVAC system in colder temperatures. Your insulation will be roughly 6% to 12% of the total piping, but this will vary based on your building’s location and thermal needs.
  8. Temperature controls: Most building HVAC systems will need occupant controls; with an HVAC upgrade, you’ll need to look at your controllable system as a whole in terms of cost.
  9. Other: Additional costs may come from getting your HVAC system examined for a LEED certification and air purifier upgrades.

Also, note that your HVAC system will need plumbing, and these costs are not included above.

Calculating Life Cycle and Energy Efficiency Costs

When researching commercial HVAC pricing or trying to convince your CFO not to push the HVAC upgrade off for another year, you need to assess the life cycle costs associated with energy efficiency to determine the worth of the upgrade.

To do so, compare the cost of each HVAC part operating under “standard-efficiency” and “high efficiency.” Create a checklist and come up with your estimated lifecycle comparison costs for each element.

When you determine the cost of each life cycle scenario, it will become easier to justify the expense.

HVAC Life Cycle And Energy Cost Calculation Table

Justifying HVAC Updates Through Financial Terms

As you research updating an HVAC system, take time to document the reasons you need the update (see earlier examples) to present to your CFO.

Your CFO needs to know the actual cost and financial benefits of the update instead of a vague estimate based on a Google search. Provide them with a clear executive summary to help them understand all the variables, costs, and benefits.

As you begin to research options, reach out to local HVAC contractors to get estimates. Since estimates can vary by thousands of dollars, it is critical to acquire several for comparison.

Try to identify the cost-benefit ratio of each estimate based on the work to be done. You will want to break down each assessment into parts, labor, and contingencies—15–25% for unforeseen expenses and time delays. Also, show how other changes to the building or operations could impact the HVAC upgrade benefits and timeline.

Your analysis should include HVAC zoning, comfort, and future flexibility. For example, if energy efficiency is a top priority, you could also include government grants and rebates.

By taking these steps, you can present accurate upfront costs to your CFO. If you want to improve air quality, include potential savings from improved personnel productivity and health. For instance, as far back as 2002, one study determined annual productivity loss in the United States from sick building syndrome was $50–100 million, with $5–75 billion potentially preventable.

In addition, you should be able to demonstrate energy savings and real estate and operational expense savings for both the short and long term.

Finally, always present a plan B—especially if you need the upgrade for air purification. While not ideal, gradual improvements are always better than no improvement at all, especially when it comes to the health and safety of your employees and the public.

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