On Big Capital Projects, the Only Certainty Is Uncertainty

A building at the corner of 69th Street and Second Avenue that used Con Edison steam for heating, domestic hot water, and cooling hired us to look at the economics of switching these three items to natural gas. We put together a plan, specifications, and contractor’s bids to do so.

Con Edison brought a gas line into the building, and we were able to switch its heating and domestic hot water to gas. The cooling part required that we place a new gas-fired chiller on the roof. This machine would be twice as efficient as the one the building had, which was a low-pressure absorption chiller. Buildings built in the 1960s had these kinds of chillers, which are probably the most inefficient way to cool a building that you can imagine. But because of delays, the board was faced with a big decision.

The Second Avenue subway line was being built, and we were told repeatedly that the Con Edison folks as well as Second Avenue subway people would be out of our way when we needed to rig the air-conditioning system onto the building. But delays happened, and the board had to make a very big decision before the cooling season arrived: take a chance that we would be able to bring the new chiller onto the roof, or use the old equipment (and steam) for one more season.

Using the old chiller meant investing another $35,000 or so to keep it working – and of course losing the savings a gas-fired chiller would provide.  This dilemma created a lot of angst among the board members. We weighed all the pros and cons, had meetings with Con Edison and the Second Avenue subway people, but in the end we all came to the same conclusion: There was no way we were going to get this done. So the board delayed the new chiller project for a year.

You can do a project and have a lot of contingency plans to cover every foreseeable problem, but you also have to be ready to handle things that you just didn’t foresee. It was a good board from this perspective, because the members understood that these were things that were out of everybody’s control, so we needed to work together to make sure that the building was going to have cooling for the coming summer. And we did.

Michael Scorrano is managing director and founder of En-Power Group.