True Costs to Replace

This week I would like to discuss a problem near and dear to my heart: the argument of replacing vs repairing equipment which is influenced by the technician’s ability to troubleshoot.  Whether you are a maintenance manager or business owner, I will bet you have encountered this scenario in your career:


You call a service company because a large piece of equipment is not functioning properly.  In this example, we will use a chiller’s compressor.  A technician arrives, goes through the system, runs some tests, then tells you that the problem can be fixed, but it would be cheaper to replace the chiller’s compressor rather than repair it.  You decide to replace the compressor, after all, he is the expert on these systems.  And then you are introduced to the real costs of a replacement.  To show the reality of these costs, I will use an experience from my career as a facility operations supervisor.  My career was built from the ground up as a maintenance mechanic in the HVAC trades, as a building operations supervisor, and now as a business owner.  By the time I made supervisor, I knew the industrial HVAC trade better than most contractors we hired.  At this point I was learning more about budgets and equipment life expectancies rather than getting grease under my nails.


When our facility’s chiller compressor broke down, as a mechanic, I knew it could be rebuilt.  However, as a facility manager, I knew we didn’t have enough man-power or time to dedicate to rebuilding the compressor.  I called the local service company specializing in the equipment and requested a diagnosis and repair.  The technician advised it would be cheaper to replace than to rebuild the compressor.  I received an estimate for approximately $35,000 and worked with our contracting department to move forward.  But it was the start of summer and our building still needed cooling.  In comes a temporary cooling system for $7,000 per month, needed for 4 months to cover lead time, installation, and start up.  After installation, $3,000 in refrigerant, and one more week to repair leaks ($7,000 more in temporary unit because it is charged by the month, not the week).  The final replacement resulted in a no-warrantied compressor because the service company wanted an additional $13,000 to change out some other parts in the system, which of course was declined.  Total cost, approximately $72,000 for a compressor replacement in addition to a few leaks found and repaired, and a new hot gas bypass valve.  I wonder how much we could have saved if the resources were available for a compressor rebuild.


The replacement vs repair argument is subject to many variables that takes great experience to understand.  Service technicians often advise for system replacements betting on the fact that the problem will go away with new equipment.  Unfortunately, replacement may not cure the underlying problem.  For example, a new compressor will not last a year in operation if the controls are not set right.


As a business owner or facility manager, look for the red flags such as vague explanations of the problem, promises of “it’s cheaper to replace than repair,” statements like “your system is outdated and we have a better one,” or if your technician sounds more like a salesman rather than a repairman.  Demand to know what specifically is wrong with your equipment and ask for both repair costs and replacement costs.  Explore whether a repair is more economical than a replacement.  You know your equipment’s value and facility’s needs, not the technician.  You be the judge.