Category: Blogs March 22, 2022
By , contributing editor
Let’s face it: when management looks at pumps, they see costs, not savings. To sell them on new pump system projects, facility managers must show how their proposed investments will boost dollars-and-cents performance. Here are seven tips to do just that:
Remember, it’s a competition. No matter where you work, there are many ways to improve facility operations. That means your proposals will be competing with other plans. Management expects a positive return on investment (ROI) and will favor plans that yield the largest, fastest returns. To line up funding, you must show your pump system will reduce costs and boost performance (and profits, if you are a manufacturer) as well or better than those other proposals.
Speak the right language. When selling management on anything, you must speak their language. Management wants to know the ROI in terms of cost savings and (if applicable) profitability. Why? Because financial metrics put your project on a level playing field with other potential investments.
There are many ways to identify the dollar impact of your proposal, some are more complex than others. These range from the simple payback (or break-even) period to more sophisticated metrics, such as net present-value and internal rate of return. Make sure you understand the metrics managers will use to evaluate your plan before proposing it.
Pick the right priorities. Make sure you understand corporate priorities. Some companies, for example, have committed to sustainability and want to reduce energy use and carbon. Others focus on improving plant competitiveness. Priorities and their financial implications frequently change. Russia’s invasion of Ukraine, for example, has prompted many companies to focus on energy cost reduction. Make sure you understand your company’s strategic priorities, because the more of them your project satisfies, the more likely it will earn approval.
Emphasize lifecycle costs. Replacing one pump with another is a one-time cost. Yet that initial pump typically accounts for only 10 percent of its total cost over a 20-year operating life. Energy use (40 percent) and maintenance (25 percent) make up nearly two-thirds of its total lifecycle cost. The only way you can show that your pump project will save money for years to come is to focus on those lifecycle costs. You can look at HI’s publication, Pump Life Cycle Costs: A Guide to LCC Analysis for Pumping Systems – 2nd Edition, to learn how to do these calculations.
Upgraded pump systems also keep your entire water treatment facility or manufacturing plant running more smoothly. In addition to lowering operating costs, they also enhance reliability, reduce the risk of stoppages, reduce waste, advance environmental compliance, and improve worker safety. By mining your maintenance records for time and costs associated with these issues, you can begin to quantify some potential gains.
Form a team. It takes a team to launch a major project. That starts with finding someone in management willing to invest in energy efficiency. Make sure you understand his or her metrics for financial success and what resources you can tap to fund the project. Bring your maintenance and operational team on board. They can help you spot and resolve issues early. This is essential if you are introducing new technology, such as smart or variable speed pumps. While they can yield big energy savings, many see anything new as a risk. Your colleagues may need to see case studies and talk with people who have completed successful implementations before they are comfortable with your proposal.
Build credibility. Prophets are often without honor in their own country. That means you may have to build your credibility before someone funds your project. One way to do this is by finding a third party to validate your recommendations. Potential allies include consultants, other end users, and equipment suppliers. Electrical utilities are especially helpful because they may also know about financial incentives to help fund your project. Also, make sure to take advantage of online savings calculators, such as HI’s Pump Savings Calculator at Free Tools – Pumps.org . Another way to build credibility is to build a record of success. Break your project into smaller chunks. Start with something that has a high probability of success and show measurable positive results. This will pave the way for future achievements.
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June 20, 2022