Example #3: Improved Building Value
Although this additional benefit might not apply within the lighting ECM example, we include an example that demonstrates the calculations below.
This additional benefit is only recognized if the building is solid. Similar to any piece of equipment, its value is partially dependent on the operations and maintenance expenses (for example, a hybrid car has less annual gas expenses, so it has additional market value). Thus, if a building owner is experiencing less operations and maintenance expenses, the building will be worth more when it is solid.
If an ECM saves $150,000 per year, those savings go directly to the bottom line. The building value would increase by a factor of 10 – the capitalization factor is 10% -- and would be calculated as follows:
- Increased Building Value = ($150,000)(10) = $1,500,000 (a one-time benefit when the building is sold.