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Trying to Determine the ROI of Changing to a High-Speed Insulated Door

Six Sigma – iSixSigma Forums General Forums Methodology Trying to Determine the ROI of Changing to a High-Speed Insulated Door

This topic contains 7 replies, has 5 voices, and was last updated by  Chris Seider 2 months, 3 weeks ago.

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  • #241271

    farisrodhi
    Participant

    684A68FD-91FB-40E1-8426-83F9D83AE2E8Hi, Im faris from Malaysia.

    Some help needed from subject matter expert.

    First, I’m find an opportunity to reduce cost by installing high speed insulated door for cold room as what current practice is we are using metal roller shutter door and the door will close during lunch time and after working hours only as the door will consume time to close and open. Drawback from that, the cold air will flow out and I believe the a/c will consume more electricity to maintain the area temperature.

    However, I find it’s a challenge on how to quantified the saving so I can present in numbers if we invest when we can get the ROI.

    I read through some article online about cold energy flow but the method / calculation not clear and not for this scenario.

    Hence this is the purpose of this forum to get some help from others on how I can quantify this saving and measure it so I can have the ROI and hard saving.

    Attached photo of the cold room entrance.

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    #241289

    Mike Carnell
    Participant

    @farisrodhi I could give you my version but that is probably not going to be your best answer. If we can get a person @venerablebead to show up he would do this right (@katiebarry I probably got his name wrong – Help?). If that doesn’t work I would call the door manufacturer and have then send a field service person out to figure it out.

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    #241291

    Katie Barry
    Keymaster

    @mike-carnell  So close! @venerablebede is what you were going for.

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    #241292

    farisrodhi
    Participant

    Hi @mike-carnell & @katiebaryy thanks for the reply and mentioning the right person to this thread. Hope to get his reply =)

    1
    #241294

    Robert Tripp
    Participant

    @mike-carnell, Thanks for the mention; @katiebarry thanks for completing the connection.

    @farisrodhi, maybe this would work:

    a) Talk to accounting to see what is the current rate (per kWh) you are paying for electricity – during normal working hours.  Watch out: rates can be different at different times of day.

    b)  Spend several hours during normal working hours counting the number of times a forklift uses the passage where you plan to install the door.

    c)  Estimate how fast the new high-speed door will be able to open and close to allow someone to pass through.  Multiply that by the count and divide by the time (in hours) over which you collected the counts in (b).  This will give you an estimate of the expected average time the door will be open per hour during active business hours when the high-speed door is installed.

    d) Now the tricky part – talk to your facilities engineer or your HVAC contractor or the power company to see if there is a way you can measure kWh power usage of your HVAC system.  Let’s assume there is a way to do that.

    e) Now go measure the power usage of your HVAC system – only during active times – with the current door design (always open).  Try to choose several hours during days of fairly average outside temps (hopefully not too hard to find since the daytime temps probably don’t vary a whole lot between summer and winter in your part of the world) and calculate kWh usage from your measurements over time.  Divide this by the time (in hours) you used to measure the kWh. This is your kW, or RATE that your HVAC system consumes energy when the door is open.

    f) Measure the kWh usage of your HVAC system over a few day-night continuous cycles for a few average days of operation (i.e. 8AM Monday to 8AM Friday).  Make sure you start and stop your data capture at the same time then divide your data by the number of hours over which you collected data to get the consumption RATE (in kW) when the door is open some of the time and closed some of the time for normal working days. Think of this is the average  total rate of power usage during the day-night cycle of normal working days.

    g) Estimate the total % of time (over day and night) that the door was open during the time used to calculate your result in (f).

    h) Take the average total usage rate (f), subtract the product of the open usage rate (e) times the % of time the door is open (g).  Then take this result and divide it by the % time the door is closed (1-% time open) to get the usage rate when the door is closed.  The formula would look like this: Usage Rate closed =  (f-(g*e))/(1-g).

    i) Now take the result of (c) – average time the high-speed door will be open per hour during active hours – and multiply it by the number of active hours in a day.  Then subtract that result from the number of active hours to get the additional hours the door will be closed per day during working days, using the high-speed door.  This is the incremental time/day that the door will be closed using the high-speed door and the formula would look like this: Incremental Closed Time/day = Active hours/day – (c*active hours/day).

    j) Go to accounting and find out the budgeted working days per year.  Multiply that by the result in (i) to get the total incremental hours the door will be closed in a year.

    k) Take the difference between the Usage rate when open (e) and the usage rate when closed (h) and multiply hat number by the expected incremental hours closed per year (j).  This will be the total kWh saved using the high-speed door.  kWh Saved = (e-h)*j

    (l) Multiply (k) by the cost/kWh (a).  This is your annual savings.

    (m) Annual ROI% = 100*(annual savings/cost to install), payback = cost to install/annual savings.

    It’s a snap, right?  Conceptually, not too bad – but you may have an issue measuring the usage rates with the door open vs. closed if you can’t get some kind of a meter to do it.

    Also, remember this is an estimate and I think that if the savings calculation errs, it would be more likely too high than too low (due to the fact that the rate for the door closed was estimated using time periods when it is closed for awhile with no activity).  So you may want to consider exploring how low the incremental savings could go and still have the installation be financially attractive.  Is it still attractive if you cut the savings by 30%, 40%, 50%?  If the attractiveness of the spend is not very robust to decreases in savings (10-20%), you may need to look for some other intangible benefits to justify it.

    Good luck…

    VB

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    #241298

    farisrodhi
    Participant

    WOW WOW WOW!

    Thanks @venerablebede for a very clear and detail explanation. I will try to do the step by step and get to all of you if this successful. As you mentioned the tricky part to measure the HVAC power usage will be a challenge to implement this. However, thanks for clear explanation and I will do the study as shared. Thanks =)

    1
    #241306

    Mike Carnell
    Participant

    @farisrodhi Hope this helps you figure it out.

    @katiebarry Thank you for jumping in and making the connection. Looks like it worked out well.

    @venerablebede Great job. Knew you were the right person for this. Hopefully it can serve as more of a template for people in general. Some of the financial modeling stuff you see on line is very short sighted.

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    #241341

    Chris Seider
    Participant

    See if you can get some “credible” projections on energy savings from the high speed door closer vendor rep and then use a subset of @venerablebede ‘s analysis.

    This may save some work but of course @venerablebede full technique will work.

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