Home / Insights / IoT ushers in predictive maintenance of HVAC systems

insights-espresso-icon article

IoT ushers in predictive maintenance of HVAC systems

Espresso-live Speakers
by Ajay Shriram Raju , Research Analyst, Facilities Management
19 April 2018


Given the high importance of maintenance in Heating, Ventilation, and Air Conditioning (HVAC) systems, HVAC maintenance usually makes up a big chunk of a procurement organizations’ indirect spend. Preventive maintenance remains a widely popular engagement model, while buyers find it difficult to achieve cost savings without compromising quality service. While predictive maintenance has been around for quite some time with its benefits of energy and maintenance costs savings well-established, high initial investments and a low return of investment has been a dampener. However, with the advent of smart technologies, Internet of Things-based predictive maintenance could be a game changer within the HVAC industry. This article explores the feasibility of implementing smart technologies in HVAC maintenance and intends to create awareness among buyers to gain a competitive edge.


HVAC systems contribute almost 40 percent of the energy consumption in a typical commercial facility and therefore, efficient operation of HVAC systems and their maintenance is always a priority for facility managers.

A typical HVAC maintenance is reactive in nature, where technicians have a list of service requests to complete for a day. A technician has to identify what has led to the failure and carry out the maintenance accordingly. Reactive maintenance wastes valuable labor time and effort.

This traditional process is set to change with the help of IoT technologies. Smart buildings and equipment are able to ‘self-monitor’ themselves and intimate the facility managers when maintenance or any attention is needed. In addition, technicians are aware of what has gone wrong and what needs to be done before they leave for the site. This technology, coupled with predictive data analysis, proactively identifies maintenance tasks before they become costly failures. This optimizes both the usage of labor hours and maintenance costs of the HVAC assets.

What is IoT based predictive maintenance?

IoT based predictive maintenance monitors the equipment’s operating conditions and directs the jobs that must be completed to maintain the machines at optimum levels. Ordinarily used sensors are incorporated on the HVAC equipment’s and are linked to the Internet through Wi-Fi. The data from these sensors are stored in cloud based devices, are analyzed through big data tools and the results are summarized in a desktop or mobile application using Internet for facility managers to act upon in real-time. For example, data from vibration and ultrasonic sensors are compared to previous data from the same equipment and any slight variation can be detected, while the potential malfunction can be predicted and warned. In this way, a potential problem can be identified before failure, in other terms, ‘predicted’ and corrective action can be taken.

What is IoT based predictive maintenance?

*The energy savings potential is a comparison between equipment with smart technology installed versus equipment with no monitoring devices. Considering implementation in a phased manner, year 1 usually gives lower savings.

Can smart technologies overcome the hurdle of low ROI?

Can smart technologies overcome the hurdle of low ROI?

Only large commercial buildings (more than 100,000 sq ft) were able to justify the upgrade to Building Management System (BMS) as the return on investment (ROI) was too low for others. On the other hand, Internet of Things (IoT) technologies can be installed in any type of facility ranging from less than 10,000 sq ft to an integrated network of buildings.

ROI from implementing IoT monitoring in building assets

ROI can range from more than 2 years to as fast as 10 months, which is much quicker than traditional systems where ROI can take 4 to 5 years.

Investment for IoT




Input costs

Size of building (sq ft)





Average cost of implementation (per sq ft)





Total initial investment





Cost savings from IoT








Average annual energy cost savings (in percent)







Average energy bill of $2.32 per sq ft

Annual HVAC maintenance cost savings (in percent)







Average maintenance cost of $1.80 per sq ft

Total annual cost savings








Return on investment (years)

2y 8m

1y 6m

2y 3m

1y 1m




Return on Investment (years) = (Total Initial Investment / Total Annual Cost Savings)*12

Source: IoT @ Intel, June 2016 and Beroe Analysis

Scaling up of IoT technology to other utilities and facilities management

Connecting Legacy Systems

Buildings with various BMS systems can be simply connected to the analytics software and its data can be combined with other data to obtain a single output. Instead of completely replacing BMS systems, IoT technologies can be used along with legacy systems as an added feature.

Smart Lighting

Lighting makes up almost 15 percent of a building’s energy costs, making it the second major consumer of energy after HVAC. By connecting lighting to the smart building technology, lights can be switched on and off at optimal intervals and lighting levels cn also be varied without any human intervention. HVAC systems and lighting are inter-dependent. For instance, more sunlight coming in will reduce the lighting costs, but this means that HVAC systems need to be increased, raising the HVAC costs. The IoT system can be scaled up to an extent where it does a comparative analysis of the HVAC and lighting energy consumption and adjusts the smart windows to let in the sunlight accordingly to lower energy costs.

Facilities Management

Smart technology can also be scaled up to impact day-to-day facilities services. For example, light and voice sensors in a meeting room can intimate when the meeting is completed and cleaning of the meeting room is required. The software automatically issues a work order for cleaning, thus eliminating human intervention in the process. It also helps to optimize human labor effort by issuing work orders only when needed. The status of these work orders can be remotely monitored by facility managers from their work stations or while on the go through mobile applications.

Case Study: Microsoft

Location: Microsoft’s Main Campus at Redmond, Washington with 125 office buildings

Solutions Implemented: 2 million new data points commissioned on building equipment. Buildings with existing BMS systems were connected with an analytics blanket, which can collect data from every building and merge it into a single output in the operations center.


  • Performance of the assets was easily analyzed and reports compiled within minutes, which previously took weeks. Resulted in improving employee productivity.
  • 48 percent of the faults were corrected within 60 seconds.
  • Overall energy savings of about 10 percent per annum with ROI in less than 18 months.
  • Improved labor efficiency with 32,000 work orders per quarter.


IoT technologies signal a paradigm shift in the way maintenance is undertaken for HVAC systems, from reactive to predictive maintenance. Predictive maintenance reduces labor and maintenance costs, while increasing the longevity of the HVAC equipment. IoT technologies are cheaper to install and can be economically installed in any building type, which was not possible with the traditional BMS systems. They are also scalable to other building assets, such as lighting and security, and can transform the way facility services are managed.

The implementation of IoT solutions should be undertaken in a phased manner. It is recommended to implement a ‘limited’ pilot project over a small geography as this would help to iron out process gaps and unforeseen requirements. Training of employees to use the system and any organizational re-structuring needed must be done in this phase. For the final rollout, scalability is a key challenge, which must be planned ahead and vendor selection must be done to suit the company’s geographical reach. Appropriate employee training must be provided to ensure smooth implementation.

Upgrading a facility involves significant up-front capital, for which approvals may not be easy to obtain. Opting for third-party financing can be highly beneficial in the current business environment. Many OEMs have tie-ups with financing companies to boost their sales.

Facilities management and building maintenance are traditionally labor-intensive and labor costs make up a huge chunk of the final costs for the organization. Smart solutions reduce human touch point in the process and buyers can leverage these innovations to drive the next level of cost savings.


Linkedin Twitter Facebook
Leave a comment

Please enter a valid name

Post your comment

Please select captcha


Get more stories like this

Subscirbe for more news,updates and insights from Beroe

Get Ahead with AI-Enabled Market Insights Schedule a Demo Now

Schedule a Demo Now