Questions -

Q1. A building owner is planning a renovation to an existing building, at an MARR of 12%. As part of this renovation, they have two options:

a) Retain the current HVAC equipment, which has a current market value of $12,000. Its operating costs next year will be $3750, and these costs will increase by 35% each year. Its salvage value will decrease by 20% each year.

b) Obtain a new, more energy-efficient HVAC system at a cost of $18,000. It will have operating costs of $3300 in the first year, which will increase by 30% each year afterwards. Its salvage value will decrease by 24% each year.

Do the following:

a) Determine whether the current system should be replaced now.

b) Determine the replacement strategy considering a 3-year service life.

c) Research the implications to renovation projects of replacement of MEP equipment such as that posed in this problem to improve energy efficiency. (Please use at least 2 full-text references to discuss.)

Q2. A village on Long Island is planning a new water supply scheme, and is considering two options:

a) A 15-year system with an initial cost of $400,000. The system will have to be supplemented with a similar system in year 15. Supporting equipment will be replaced every 30 years for a total cost of $75,000. For the first 15 years, operating costs will be $31,000 per year, then will increase to $62,000 per year. They will also be expected to increase by $1000 per year after year 21.

b) A one-time system with an initial cost of $550,000. The system will be operated at half-capacity in the first 15 years, incurring operating costs of $35,000 per year. These will increase to $55,000 per year in year 15, when the system will move to full-capacity operation. Supplementary equipment will have to be replaced every 30 years at a cost of $150,000.

Do the following:

a) Based on a rate of return for the village of 10%, make a recommendation to the village on which system to use based on a life-cycle analysis.

b) Determine, by researching, whether initial costs or operating costs are generally more crucial to economic decision-making based on life-cycle analysis. (Please use at least 2 full-text references to discuss.)

Q3. Consider the methods shown in the table below for making steel connections in the field. Do the following:

a) With an MARR of 10%, determine which method is most economical, based on rate of return analysis.

b) Research the implications of trying to replace skilled labor in the construction market with more equipment-based methods that may use less-skilled workers. Is there an impact to quality, and are the replacements generally worthwhile economically? (Please use at least 2 full-text references to discuss.)