Are all the same KPIs offered by PropTech really the same?

In real estate, as in so many other things, safety must come first. That’s why we have so many regulations and standards for construction, especially for large complex commercial buildings.

After the construction stage, your tenants or employees move in and you have to start thinking about their satisfaction and the costs related to this. We know you have been thinking about that a lot already, during the design stage, but now it becomes real. The best technologies have been installed in the building and the most experienced technical teams have been hired to run the systems in the most efficient way. But still there are complaints about things like indoor climate, energy consumption and internal layout.

You also find that hundreds of PropTech companies are knocking your door, calling and emailing, wanting to be heard. A lot of them talk about the same KPIs (Key Performance Indicators), such as energy savings, indoor climate or predictive maintenance. Some promise you 20 % energy savings, some promise 30 %. Some promise 40 % of total energy savings and some, even 50 % of HVAC (Heating, Ventilation, Air Conditioning) energy savings.

Here are just a few examples taken from the websites from five different countries (in the UK, Germany, France, Italy and Estonia):

“With our R8 Digital Operator You can achieve ESG goals and save up to 30 % in energy costs!”
“Our AI saves up to 40 % of HVAC energy.”
“Our AI saves 20 % energy costs and provides 100 % comfort.”
“Save energy, maximize indoor comfort and reduce maintenance costs with us.”
“Our solution brings you 30 % energy savings and 90 % comfort.”
“Save energy and reduce CO₂.”
“We reduce energy costs and improve users’ comfort.”

The most interesting point about this list is that these companies are not all offering the same service. Two of them control your HVAC remotely with AI. One can do it with their own new hardware. One is about a demand response service without any impact on indoor climate or energy savings. Two are monitoring and analytics platforms, providing you with information. Another one is offering you new IoT hardware.

Let’s step back. Do you need a Proptech solution at all? If so, how best to understand, which of these offers would really help you?

Most organizations use KPIs to measure the performance of their buildings’. Where there is a KPI, there is normally an objective to improve it.

But how? Let’s take energy consumption per sq meter of Net Internal Area as an example KPI. Approaches to improve this could include:

• improving the building physically (e.g. improved insulation, installing more energy efficient heating and lighting)
• improving data quality (e.g. completeness, timeliness and accuracy of energy data and the way it is collected)
• improving the building control regime (e.g. having reduction targets, moving from looking just at what has happened to also what is likely to happen and planning accordingly (e.g. an approaching weather front, a public holiday or a company event in the building).

While, all of these things will help, we believe in the value of AI (Artificial Intelligence). During the last few years AI has developed considerably all around the globe. For example, based on the experience we have had with BMS’s (Building Management System) in many large and complex buildings, you would need to make – let’s approximately 10,000 setpoint changes per month in your building’s BMS. This will reduce the total energy consumption by around 20 % and increase the comfort of occupiers at the same time.

Would it be humanly possible to bring those results? Clearly not. The challenge is, that no human operator, could ever work-out the optimal settings or do it quickly enough to make all of those changes in the time available. In our example – every 24h they would need to calculate and then make an average of 333 adjustments (10,000 / 30 = 333). But a good AI-based control system can do all that work and deliver the results for you without the human effort. The subscription for such a solution can often be funded from the savings obtained, without the need for any hardware or investment.

How then, do you compare the options? First of all, try to understand if the new potential solution is competing with your existing solution or really adding a value to it. Sometimes it is worth investing in a technology upgrade, especially if the lifespan of the existing solution is approaching obsolescence. But in many cases there is no point in that.

Secondly – use criteria relevant to your business to identify the solution for you. For example: estimated kWh savings p.a., IRR (Internal Rate of Return), Net Present Value of savings, your preference for a hardware based solution vs a SaaS one, 100 % monitoring vs 100 % control, 100 % manual vs 100 % automatic, ROI (Return of Investment) etc. There is no one right solution, as it depends on your needs. What is most critical for you? The more criteria you can handle, the better decision that you can make.

And finally – try to understand the impact across a range of KPIs that you can achieve with the solution. For example, energy savings alone are easy to focus on but what will the impact be on occupier comfort and the condition of the plant (yes, there is an impact)? Would ‘Demand-Response’ payments from the grid, be sustainable without controlling your building’s technical systems for energy savings and indoor comfort (no, this is not sustainable)? What if you could improve a whole set of KPIs at the same time, rather than just focus on one?

There is a lot of work to do. It is a good moment to start today 😊

Written by Imre-Gustav Vellamaa and Trevor Miles. Vellamaa is a Member of the Management Board of the PropTech company R8 Technologies and Miles is the UK Area Manager of R8 Technologies. Article initially published in Kiinteistouutiset.fi