The Problem: Time Squeeze

End of the line. The Hamilton, a large co-op on East 40th Street, ran into a supply-chain in problem while replacing its chiller. The chiller — supported by two gas-fired boilers making steam that it uses to produce cooling — had been installed in the early 1990s and was reaching the end of its useful life. The building had a rough 2022 cooling season, and the board knew that a replacement was in the cards. 

Power to spare. We wanted to provide a level of redundancy so that if something happened to a small component of that unit, it wouldn’t be shut down during repairs and be unable to provide cooling to the building. To do that, we opted for 12 modular chillers to replace the building’s single big chiller. Each modular chiller is 30 tons, so that’s about 360 tons of cooling that the building is going to have. If a building, say, needs 300 tons on the hottest day of the year, we like to install maybe an extra module or two to make sure that if something happens to one module, there’s a backup to pick up the load, which is what we did here.

Thinking ahead. The co-op decided to replace the chiller sometime last September. I reached out to manufacturers to get an idea of what the equipment lead times were looking like, and it turned out that we were looking at anywhere from 20 to 30 weeks. In a typical project, the equipment is included as part of the bid package from contractors. The equipment is put in their proposal and is part of the contract. So I told the board: “Listen, I think the best thing is for us to pre-purchase the equipment from the manufacturer directly instead of waiting for us to do a competitive bid process to select a contractor and having the contractor purchase it. This way, we can just get ahead of that lead time.”

A tight schedule. The board agreed, so we then had a small competitive process with a couple of different manufacturers. The co-op elected to go with Airmark chillers. The decision was not fully based on pricing; it was also about which manufacturer was able to provide us a lead time that would work for the building. By the time we purchased the chillers, it was early November, and the chillers were promised to be delivered by April. The contractor that was selected is going to mobilize fairly quickly so that we have a working installation and cooling is provided to the building by the middle of May. If we had waited to finish the bidding process for a contractor and then have the contractor make the purchase, there’s no way that we would’ve made the deadline of installing the new chillers in time for the 2023 cooling season. 

Ownership switch. There was a concern about warranty issues, so the board said: “Look, we’ll make the initial payments on the equipment so we can get going on the timeline for the delivery. But once a contractor is selected we want them to own the equipment.” So the contractor reimbursed the board, and the cost of the equipment was factored into the contractor’s fee. We have done this type of pre-purchase on a couple other projects and had buildings just own the equipment outright. But I prefer it the way we did at the Hamilton, because from a warranty standpoint it’s easier managing the project if the contractor owns the equipment. And I think contractors also prefer it that way. But every building and board will make those decisions as they see fit.

It’s all in the timing. I always tell boards that if they’re going to replace their chillers, they shouldn’t wait until the end of the cooling season to engage an engineer to do the design process. Given the lead times that we’re seeing, it’s important to try to start that process as early as you can in the summer. The mental timeline that I’ve always had is to have contracts signed by Thanksgiving for cooling projects, but that doesn’t work anymore. You need a couple of extra months to make sure that equipment is here and that there is ample time for construction.

If you’re doing a cooling project, whether it be a chiller or cooling tower replacement, you want to make sure that construction starts sometime in the winter. So an ideal timeline is to start in January, because there’s no cooling need and you’ll have a solid four months of construction. Similarly, if you need to replace your heating plant, you want the construction process to be happening sometime in the summer.