Paul Edwards and Mauricio Uribe | Compressed Air Consultants
Part I of this article discussed reframing your facility’s compressed-air issues with a return on investment in mind to avoid unnecessary expenditures. This article describes what a compressed-air system audit entails and how it can help you identify issues in your system and prioritize solutions.
A compressed-air system audit is the first step in eliminating waste and inefficiencies in your compressed-air system. An air audit should be a comprehensive look at all costs associated with a particular facility’s compressed-air system and how those costs can be reduced. In this way, an air audit is a road map for how the plant’s air system should evolve in both the short term and the long term.
It’s often said that a well-formulated question amounts to 50 percent of the answer. If you or your compressor supplier don’t know the right questions to ask during a compressed-air audit (starting with what you want the audit to accomplish), the audit results may not be particularly helpful (and probably won’t solve any of your compressed-air issues). A compressed-air system audit should be performed by an experienced, professional auditor, who knows how to identify a system’s vulnerabilities and inefficiencies in order to lay out a prioritized action plan that effectively tackles their root cause and exploits cost-reduction opportunities. Without an audit, many plants will opt to purchase additional compressors to address a compressed-air problem, but this requires additional capital, installation, energy, and maintenance costs while failing to address or eliminate the problem’s root cause.
An air audit also provides the knowledge a plant requires to make better business decisions concerning its compressed-air supply at all levels. Most of the engineered waste (waste from deliberate initiatives created by compressed-air users to work around a real issue) arises from a lack of understanding of the problem at hand. At the same time, ignorance of actual compressed-air costs prevents companies from looking at more efficient, alternative solutions.
Unfortunately, for many companies, an air audit is whatever an expert tells you it is. This approach almost automatically guarantees that money that your company or plant could use elsewhere will be left on the table. Rather than passively seeking proposals for an audit, you should define for potential bidders your minimum expectations for the audit while allowing those bidders to offer additional ideas you may not have thought of.
Having clear objectives
In most audit inquiries we receive, the company’s goals are muddled. Often, there’s a single underlying issue driving the desire for an audit — the pain of workarounds has become so bad that something finally needs to be done.
Most compressed-air systems aren’t managed efficiently, but by being proactive and engaging both your equipment and service suppliers, you can build an air audit road map to lower costs. If you don’t have a clear understanding of all the potential goals a project could achieve, there’s nothing wrong with asking for help in developing the scope of work when searching for an audit provider. The scope of work is an agreement about the work to be performed on a project. If you have a singular goal, such as ensuring that new production equipment won’t tax the existing system, then it’s more than reasonable to limit the scope of work even though that might have a lower return on investment (ROI). ROI measures the amount of money spent on maintaining a major financial investment in relation to the investment’s original implementation costs. This information is then used as a performance measure to determine the investment’s efficiency.
Therefore, it makes sense to define the audit with a goal of reducing costs in any of these questionable areas where it may be possible. The plant should define its specific goals in each of these areas and then require the bidder to explain their recommended scope of work and how that would achieve the company’s goals.
Considering the variables
When thinking about the scope of work for a compressed-air audit, two variables that are important to consider are the breadth of the audit’s goal and the audit’s depth.
Breadth of the audit’s goal. First, determine whether the audit should be designed to deal with one specific issue or to develop a long-term plan. For example, assume you want to incorporate a new piece of production equipment into your process, which will increase demand to a compressed-air system that you’re concerned is already taxed. If that production equipment is being delivered sooner rather than later, it may make sense to limit the audit’s scope so that you can understand the compressed-air system’s capacity before the production equipment arrives.
Depth of the audit. The second variable to consider is how deeply the audit should examine your system, which can be broken into two broad categories. The first category concerns how much of your compressed-air system the audit will encompass. For example, should you focus solely on the compressor room or on leaks? What about applications that may be using excessive amounts of air? What about the pressure drop in the piping system? In most material handling systems, it pays to look at the entire system, especially when devising a long-term plan for system evolution. This would include looking at the compressed-air supply, distribution, and demand as well as the infrastructure that supports the technologies in the various areas. That infrastructure is broadly defined as procedures and people.
For example, if you want to reduce your facility’s electricity consumption, is it better to turn off unnecessary lights or leave them on and just install more efficient light bulbs? With light bulbs, as with compressed-air systems, it’s good to start with demand. If your consultant is only focused on installing a better compressor in the compressor room and not on how to use your existing compressed-air capacity more efficiently, you’ll be missing one- to two-thirds of the potential savings.
The second category concerns the depth of the data the audit should develop in terms of which and how much data to collect. An example of this occurred at a mine processing facility, as shown in Figure 1. When auditing that facility, a compressor was found to be oversized by a factor of five. In this particular case, the client not only spent too much money on the equipment but also ran an oversized power supply up half a mile of rugged mountain terrain. The project should have cost $50,000 but instead cost in excess of $200,000. When asked how the compressor was sized, the salesperson replied that he just matched the size of the portable compressor that was running the site at that particular time. Clearly, this is an exaggerated case, but it illustrates the point that insufficient data collection and analysis can lead to very bad economic consequences.
What an audit looks like
A compressed-air system audit usually has three stages: preaudit, field stage, and analysis.
Preaudit stage. The preaudit stage is when the audit scope and objectives are defined. As mentioned previously, this is necessary so that the scope of work is specific to your compressed-air system issues and your goals are in focus throughout the entire audit. Usually, this stage is effectively done via a preaudit conference call or meeting that includes people with plant operations knowledge. However, major or highly complex audits might require an on-site preaudit.
Field stage. The field stage is when inspections and measurements take place. This stage includes installing sensors and data loggers and inspecting the compressor room, compressed-air distribution, and compressed-air points of use.
Analysis stage. The analysis stage is when the auditing team creates a model using the collected data from the field stage to understand the system’s behavior and how that’s reflected in terms of cost. From that, an optimal solution based on the existing system is developed.
Once the audit analysis is done, the auditor generates an output report and presentation of their findings. At a minimum, the report and presentation should include the following:
Fully costed action plan. A fully costed action plan should detail the recommended equipment, installation, and services, as shown in Figure 2. One area to scrutinize very carefully is the estimated installation cost, especially its electrical component. Electrical estimates are often significantly low, as the industry doesn’t always have a good appreciation of how expensive these costs can be.
ROI calculation. The payback or ROI calculation should show the savings broken down by category based on the audit’s initial objectives, as shown in Figure 3.
Figures. Drawings and diagrams should be presented (as required) to explain all aspects of the system’s operation.
Plant-issues write-up. The report should include a written description of all the issues the plant faces, which ultimately becomes the backbone for the system evolution. If funding the project will take a year, the write-up can be used in the future to remind everyone why you’re doing what you’re doing. The write-up can also become the training backbone for all employees, which is a critical step in changing the plant culture and necessary if you want to retain the savings.
The previous information should be part of the purchase order, which contractually guarantees that the auditor will provide you with this information.
What an audit shouldn’t look like
When setting up a compressed-air system audit, there are two traps to avoid, both of which have selling equipment as the primary goal and reducing costs as the secondary goal. This distinction is critical, and you have to look at the ROI calculation to understand why.
The first trap is the adviser who has a vested interest in selling you their equipment. They’ll determine which of their equipment will reduce costs up to the point that the ROI is met. Please note that not every audit in our industry is done by competent and honest advisers. To put this into perspective, if an auditor is going to “prescribe” the medicine to fix your facility’s compressed-air system issues, does it make sense for the auditor to own the pharmacy they’re sending you to? Unfortunately in some cases, plants end up going to the “pharmacist” for their compressed-air system diagnosis.
This first scenario is a trap because the adviser could either inflate the total equipment price or increase the scope to sell more equipment to the maximum extent your ROI requirements would allow (as opposed to maximizing the project return).
An independent adviser, on the other hand, doesn’t have a vested interest in selling equipment. They’ll still use the same ROI or payback requirement, but they’re free from the bond of focusing on selling their products. This allows them to focus on reducing system demand as well, and in my experience, the vast majority of audits miss opportunity on the demand side. Also, independent auditors have access to any product from every original equipment manufacturer (OEM) and service provider and can access those products for all areas of the compressed-air system.
The second trap is the automated survey. An automated survey for a compressed-air system audit is an online questionnaire that an equipment supplier sends out in an attempt to diagnose your system’s issues without actually inspecting the system. To be clear, these automated surveys are better than a compressor salesperson picking a solution out of a hat, but they’ll never give you an optimal solution from a financial perspective. By design, the survey’s solution is always to sell equipment. For instance, there are compressors out there operating in what’s called “modulation mode.” When one of these compressors is analyzed, the result that inevitably comes back is “buy a variable-speed drive compressor.” What the supplier neglects to tell the customer is that there’s a switch on their current compressor that can typically result in a 50 to 80 percent savings of the drive at no cost. Now, the real world isn’t that simple, as there can be reliability issues with just flipping a switch. However, the automated survey process doesn’t allow you to make a fully informed decision by design.
An unofficial survey of independent auditors provided rough estimates of the percentages of audits conducted by advisers with a vested interest in the outcome. Independent auditors estimated that between 90 and 99 percent of the audits they see by compressor companies include suggestions for new compressors. To be fair, equipment that‘s getting long in the tooth and utility incentive programs in part drive those numbers. However, when asked what percentage of audits conducted by independent auditors result in recommendations for new compressors — and there’s no incentive program or old equipment — the range given was 5 to 20 percent.
Finally, some companies are promoting remote audits. This is a shining example of the imprecise use of the word “audit.” These services can provide some of the value that a live audit provides, but until there’s remote viewing with a high degree of freedom that allows the auditor to explore every nook and cranny of a system, a remote audit will never supplant a live auditor on-site. For example, a kiln at a cement manufacturing plant has a camera that allows operators to view the inside of the kiln during operation. This camera requires one supply of compressed air to create a barrier that protects the camera lens from overheating and a second supply of compressed air that operates a cylinder that retracts the camera to protect it in the case of an internal positive-pressure event in the kiln. At one cement plant, an in-person audit revealed that these compressed-air supply lines had been switched, which could have led to the camera burning up and costing $10,000 or more to repair. A remote audit alone wouldn’t have caught such a mistake.
A comprehensive compressed-air system audit can help you optimize your system beyond solving current issues or achieving a cost reduction within a couple of business cycles. An independent auditor can lay out long-term solutions in advance for different scenarios that will materially impact both cost and productivity. However, ownership of the process ultimately lies with you. It’s your process and your money — keep it that way. It isn’t that difficult if you keep an open mind and ask the right questions.
Part I of this article discusses reframing your facility’s compressed-air issues with a return on investment in mind to avoid unnecessary expenditures.
Part III of this three-part article describes the necessary steps to implement a postaudit plan to sustain your compressed-air improvements and savings.
Paul Edwards is founder and president of Compressed Air Consultants (CAC), which he founded as an independent audit firm 18 years ago after starting up the audit business portion of a major compressor company. He has a BS in mechanical engineering from the University of Virginia in Charlottesville and is a nationally recognized speaker in several organizations that serve the powder and bulk solids industry.
Mauricio Uribe is an auditor at CAC and has been with the auditing team for more than 5 years, primarily conducting international audits. He’s the founder of CrowsNest, an independent auditing company established 18 years ago in Santiago, Chile. He has a BS in mechanical engineering.
Compressed Air Consultants • Charlotte, NC • 704-376-2600 • www.loweraircost.com
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