HVAC maintenance services require supplies and equipment (including chemicals) and manpower.  The supplies of these chemicals and equipment will be from sources, such as distributors, IFM providers and from OEMs.  An increase in infrastructure development projects has led to an increase in sales of the HVAC equipment and HVAC cleaning supplies / products, creating a tight demand / supply situation for manpower.  The HVAC Services Cost Array Analysis is designed to provide a breakdown of costs associated with Predictive and Reactive HVAC maintenance activities.  Updates will occur at least semi-annually, but more frequent as market conditions change based upon market variability, criticality of events and velocity of market conditions, such as inflationary increases / resource and material availability.  

Overview HVAC Maintenance Services

HVAC Maintenance Costs - 2024 

Wages - 39%

Profit - 6-8%

Materials - 32%

SG&A & Other - 24%

Price Trend 2022-2025 Annual CAGR                       5.25 - 6.3%

Crude oil prices  have dropped from their peaks, but remain highly volatile - record highs of $120 per barrel in summer 2022, bottoming out at $66.74 per barrel in March 2023.  However, crude oil prices have since returned to growth - $74.20 per barrel (Jan 24) 

Price Pressures / Environment  

Cost Breakdown & Key Points

High Life Cycle Costs

• High costs associated with energy and utilities and constantly evolving regulations especially on energy efficiencies are impacting
• As regulations become more stringent with every passing year, most equipment needs to be upgraded before their stipulated lifetime is completed
• A lack of a universally accepted standard is also one of the major challenges for this market 
• HVAC related equipment and AHUs (Air Handling Units) in general are highly specialized. High investment costs are a major deterrent for new players entering into the market
• Suppliers need to have fully-fledged infrastructure in place to deliver the AHU’s but also provide apt after sales support in terms of maintenance, service and retrofitting / upgrading systems continuously

• SG & A & other 

High investments in R&D and introduction of innovative products have impacted on costs forcing suppliers to increase the prices of HVAC products to increase profit margin 

• HVAC materials & fixtures 33%

• Average wages - administrative & HVAC services 32%

HVAC companies are investing heavily in providing training to their employees, on new technology updates (such as heat pumps), in order to have a highly-skilled workforce to manage maintenance services effectively

Manpower shortages are putting pressure for higher wages.  26% of the HVAC labor force is within 10 years of retirement.  Labor wage increases 5-20%, OEM’s having the highest increase. Service industry paying overscale wages for highly skilled technicians ~10%.  The actual burden rate for for 3rd party wages (based on US charges) is 39%

Outlook & Opportunities

Adopting new technologies can help reduce costs:

• Integration of HVAC systems with Building Management Systems enables a central control system, where all the electrical appliances of the building are connected.  These systems record the real time data for energy consumption, energy requirements and the utilization rate of the various systems in the building.  Integrating HVAC systems into a BMS can control the air flow, which will reduce the energy consumption.  Acquiring  real time data for the HVAC system also provides details about the condition of equipment and the need for repair or replacement.  HVAC technicians should have technical skills to integrate the HVAC systems into the BMS
• IoT based HVAC systems with IoT integration can provide real time data to the control room.  Technicians can observe the working conditions of the HVAC systems and provide maintenance even before the breakdown of the system.  Understanding the analytical data and executing pre-emptive maintenance requires significant knowledge about the HVAC system and the control system, hence technicians have to be highly trained to understand the working conditions of individual pieces of equipment and the system as a whole

Key Cost Driver Information sourced from Beroe Advantage Procurement 2023 - HVAC Maintenance Services and actual 3rd party billing rates 

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Preventative Maintenance

Wages - 39%

Profit - 18%

Training / Tools / Vehicles - 20%

SG&A & Other - 24%

Reactive Maintenance