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How to Figure Construction Labor Rates with Burden

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How to Figure Construction Labor Rates with Burden

There are two types of Construction Labor Burdens, one is mandatory and the other we’ll call additional Indirect Labor Burden. We’ll explain the difference and show you how to figure construction labor rates with burden. Applying the mandatory burden rate is basic math dependent on the current rates dictated by government agencies. There are no options with these cost and they’re directly related to the employees earned wages.

If you Prefer to Watch a Video of this presentation, scroll to the bottom for the Video or Click this link —-> Construction Labor Rates with Burden

Additional Indirect Labor burden rates are not dictated by law but are required for you to recover the cost of certain aspects of running a construction company, often referred to as indirect cost, a part of operating expenses.

Construction Labor Rates with Burden
Construction Labor Rates with Burden

Labor wages are built from the three categories of Labor, 1) Employees Base Wage & Benefits, 2) Mandatory Labor Burden, and 3) Additional Indirect Labor Burden

#1 Wages and Benefits (Base Wage)

  • Base Wages
  • Vacation
  • Health & Welfare
  • Union Benefits

#2 Mandatory Labor Burden (Mandated by Law to Pay)

  • Workers Compensation Fund (Can be self-insured)
  • FICA
  • FUTA (Federal Unemployment Tax)
  • State Unemployment Tax
  • Liability Insurance (Can be included Elsewhere)

#3 Additional Labor Burden (Cost to be Recovered)

  • Vehicles (Lease payments, Maintenance, Gas, Repair, etc.)
  • Small Tools
  • Uniforms
  • Cell Phones, iPads, etc.
  • Training
  • Warranty Cost
  • Travel
  • Supplies
  • Non-working Hours

There are several ways to handle these additional cost when running a construction company. A company can either add these cost to the labor rate as we’ll show you in a minute, or you can add them as a percentage of a line item on your estimating spreadsheet. Here are the steps to take.

Step #1 – Determine the Annual Cost for Each Category

Depending on how you plan to calculate the various categories of cost, or based on the capabilities of your accounting system, cost should be broken out in as fine a detail as makes sense for your company. Here is an example for three Foreman that are provided with company vehicles.

Example:

  • Vehicle Leases $12,000 x 3 = $36,000/Year
  • Vehicle Insurance = $3,600
  • Vehicle Maintenance = $2,500
  • Vehicle Fuel = $15,000
  • Total Annual Vehicle Cost = $57,100
Vehicle Cost Recovery - Labor Burden
Vehicle Cost Recovery – Labor Burden

Step #2 – Determine Billable Hours (Hours Paid vs Billable Hours)

Company employees will be paid for days that they’re not at work (Vacation, Holidays, Sick Time), and for days working but not billable (Training, Meetings, Misc.). The net will be the employee’s billable hours. Using the previous year’s billable hours as a starting point, add your projected billable hours for the current year for all the employees you are calculating a burden rate for. Here is a quick look at the 3 Foreman we used in the above vehicle example, and the two ways to look at this; the right way (billable Hours) and the wrong way (paid hours).

  • Employee Paid Hours = 2,080 x 3 Foreman = 6,240 Hours
  • Employee Billable Hours = 1,600 x 3 Foreman = 4,800 Hours

If Burden Recovery Based on:

  • Paid Hours ($57,100 / 6,240 Hrs. = $9.15/Hr.)
  • Billable Hours ($57,100 / 4,800 Hrs. = $11.90/Hr.)

You can see that if you used the paid hours to try and recover the cost of furnishing a vehicle for these employees, you would end up short of the cost. Actual Billable Hours x $9.15/Hr. = $43,920, a difference of <$13,180>. 

The correct method is to use billable hours, which is 23% less than paid hours, or stated differently you have an employee utilization rate of 77%.

Billable Hours / Paid Hours = 77%

Step #3 – Calculate Labor Burden Rate

Take the total cost for any category and divide it by the total billable hours applicable to that category. In the example above we were only looking at Foreman Vehicles, and how much cost we needed to added to their hourly rate to recover the cost of furnishing the Foreman with those vehicles. ($57,100 / 4,800 Hrs. = $11.90/Hr.)

This can be done for any department where you can track the cost, and then divide those cost into the billable hours for those employees to derive at a labor burden rate. 

Three Methods of Cost Recovery

The following three methods of cost recovery are the ones we have seen most commonly used from small to large contractors. Smaller companies tend to lack the accounting software and personnel to track cost by categories. They might use of a flat percentage rate, like adding 30% to direct labor, or add these cost to their overhead percentage, which is mixing overhead expenses with operating expenses.

Three Common Methods of Cost Recovery in Construction
Three Common Methods of Cost Recovery in Construction

For an example let’s say a small company has the following cost that they want to recover, this is in addition to the Mandatory Labor Burden which is easily calculated.

Operating Expenses

  • Vehicles $57,100
  • Small Tools $10,000
  • Uniforms $3,200
  • Cell Phones $8,500
  • Training $2,800
  • Total $81,600

Project Revenue & Cost for Previous Year End

  • Total Revenue $1,200,000
  • Project Cost $1,000,000

Total Billable Hours

  • (3) Technicians with Trucks 4,800 Hrs
  • (2) Helpers (No Vehicle) 3,200 Hrs
  • Total Billable Hours of 8,000 Hrs

Overhead Method

The expenses we are talking about are related to “Operating Expenses” as opposed to true “Overhead Expenses”. But, for smaller companies that lack the accounting system required to track cost according to some categorization, the use of the overhead percentage makes for a quick calculation. They take all their indirect expenses, and divide it into total project cost, to come up with an additional percentage to add on top of their normal overhead percentage.

$81,600 Operating Expenses / $1,000,000 Project Cost = 8.16%

Labor Burden Method

With this method there are several approaches as we already demonstrated one of them using the vehicle cost above divided by the billable hours of the Foreman. ($57,100 / 4,800 Hrs. = $11.90/Hr.). The second method is to take the total ‘Operating Expense and divide it by the total billable hours including the helpers. We prefer the first method as being more accurate, because it’s the Foreman who are benefiting from the vehicles and it is their hours that dictate the usage of the vehicle, but here is what it might look like as an overall labor burden to every category of labor.

$81,600 Operating Expenses / 8,000 Billable Hours = $10.20 / Hour

% Category Method

With the “% Category Cost” method, total the cost related to a particular category, such as small tools or warranty cost, and then divide that into one of the cost items in your estimate, whether total cost or total labor cost to get a percentage to use when bidding new work. For example adding 1% of total labor on each bid to cover the cost of small tools. Here we use total project cost.

Small Tools $10,000 / $1,000,000 Project Cost = 1%

Or if you had a project manager that was costing you $50,000/year you could add 5% to every bid to cover this cost based on the company performing $1,000,000 in cost a year.

Project Manager $50,000 / $1,000,000 = 5%

With any of the three methods above there is a chance of not recovering your full cost. This occurs in each of the three methods because of the following;

Cost Recovery Methods

#1 Overhead % – The company can fall short of full cost recovery because they didn’t meet their sales goals, and didn’t perform the total amount of work in gross dollar amount to recovery the predicted cost.

#2 Labor Rate Burden – The company can again fall short of total cost recovery because they didn’t charge enough billable hours during the year to recover the cost. Remember the labor burden is based on a number of billable hours occurring in the year, if that doesn’t happen, then you fall short of recovering your cost for those items.

#3 Category Cost – the same thing happens to category cost when the category used for the calculation doesn’t hit the amount used to forecast the threshold for full cost recovery. If you figured small tools at 1% of your labor cost and you didn’t have as much labor this year as expected, than you won’t recovery your small tools cost.

Labor Burden Recovery Fund

The construction labor burden isn’t part of the employees take home pay, but part of a pool of money to be recovered for the cost of various items of the trade needed to carry out the business. You can have a labor recovery fund for various departments or categories of cost, for instance; Foreman Trucks, Shop Fabrication, Detailing Department, Project Management, Small tools and equipment. These are just a few of many possibilities. 

Cost Recovery Categories for Construction Companies
Cost Recovery Categories for Construction Companies

The important thing to know is what these cost are annually, so that you can account for them in your hourly rate or as a percentage of cost on your estimating spreadsheet. The companies accounting system should be able to tell you what you have spent on various cost categories, we’ll call them Cost Recovery Buckets. If you have a Vehicle Cost Recovery Bucket, then you’ll need to fill that bucket by the end of the year with enough money to pay for all the cost associated with the vehicles you provided your employees for that year.

Other Methods of Cost Recovery

There are different ways being advocated for figuring construction labor rates with burden, with the most common being the addition of a percentages of your direct labor cost. For example, some contractors may just add 30% to their direct cost (Wages with Benefits) and call it a day. But is this accurate; are you sure you have recovered all your cost? For smaller companies this might work, but as you grow, the buckets of cost to recover start to grow and will need a deeper analysis.

Labor Burden Review and Tracking

It’s important to track and review your labor burden calculations on a regular basis. The time interval will depend on the size of your company and the ability of your accounting software to report the proper information. You may want to review the numbers every quarter, or semi-annually, but the more frequent the better to allow you to make adjustments as needed to meet the actual cost.

Were you under recovered, or did you work more hours than forecasted and have a surplus in your recovery account?

How to Establish a Labor Burden Rate for Your Company

You may need to calculate more than one labor burden rate based on the various classifications of workers or departments. For instance, you might have Electricians, Plumbers, HVAC Technicians, and then within each of these trades there maybe various levels of experience that warrant an increase in their labor rate for various benefits, such as providing all Foreman and Journeymen with trucks. This would then require you to recover the cost  of the vehicle and the associated cost of maintaining and operating the vehicle.

You might also want to calculate the burden rates based on departments, such as, Sheet Metal Fabrication Shop, Detailing Department or Warehouse and Shipping. The point is to understand the cost of providing the particular benefit and then recover the cost by adding a labor rate burden to that category of labor or use a percentage of cost line item on your estimating spreadsheet. Each company will look at this differently based on their modes of operation and the sophistication of their accounting system to track these cost.

There are various cost of running a construction company that may not be covered by your overhead and profit margin. Labor burden is cost in addition to your wages and fringe benefits. Knowing your labor burden will help you set the correct labor rate for all your work.

Summary

Having a good accounting system will make calculating construction labor rates with burden easier. Be sure your accounting software allows for categorization of cost according to your needs. Understanding all the indirect cost associated with your labor is important in running a successful business. The important thing is to understand these cost and develop the most accurate way of tracking and measuring them before the year is over and it’s too late to make an adjustment. One of the ways to add more money to your recovery fund is to perform more billable hours than anticipated.

Construction Labor Rates

What is a BTU or Ton of Air Conditioning

MEP Academy Instructor
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What is a BTU or Ton of Air Conditioning

The capacity of everything from refrigerators to air conditioners is rated in BTU’s or Tons. So what is a BTU, and how do they relate to Tons of Air Conditioning?

You’ll find a Video of this article if you prefer to watch, just scroll to the bottom.

Definition of a BTU

First of all what does a BTU stand for, “British Thermal Unit”

The definition of a BTU is “ The amount of heat required to raise the temperature of one pound of water one degree Fahrenheit”. It doesn’t matter whether you are adding heat or taking away heat from water, it’s the same definition and calculation.

What is a BTU in Refrigeration or Air Conditioning
What is a BTU in Refrigeration or Air Conditioning

One Ton of Refrigeration or Air Conditioning

So, how did they come up with the term Tons. This comes from the fact that a TON (2,000 Lbs.) of ICE will absorb 288,000 Btu’s in 24 hours. And, since everything is rated by the hour, we divide by 24 hours to get the equivalent of 12,000 Btu/Hr.

288,000 Btu’s / 24 Hours = 12,000 Btu’s/Hr.

What is a Ton of Refrigeration or Air Conditioning
What is a Ton of Refrigeration or Air Conditioning

It’s still hard to wrap your head around just how much a BTU is in relationship to everyday common items around you. So. Here are some interesting facts about various outputs of BTU’s.

Heat (BTU’s) Generated by People

One of the factors contributing to the heat gain of a space is people. Depending on what people are doing they generate various amounts of Btu’s. The more active, the more heat (Btu’s) added to the space. (See diagram below)

Total Heat Generated by People in Various Levels of Activity
Total Heat Generated by People in Various Levels of Activity

Heat (BTU’s) Generated by Lights

With the transition away from Incandescent lights there is a corresponding savings in the heat output. A 100 watt Incandescent lightbulb puts out about 341 Btu/hr, while an equivalent lumens LED of 15 Watts produces 51 BTU/Hr.

BTU's Generated by Lighting
BTU’s Generated by Lighting

Of course when doing a Heating and Cooling load there are more factors involved, but this gives you an idea of how various activities and items generate heat (Btu’s).

Refrigerators, Air Conditioners and Gas Stoves

When looking at Refrigerators, Air Conditioners or Gas Stoves, and you see the Total BTU’s, but realize that this is the amount of heat that can be absorbed or produced within an hour. It’s BTUH (BTU’s per Hour). 

How Air Conditioners are Advertised

You can see that Air Conditioners are advertised using three different indications of its size.

How Air Conditioners are Rated and Advertised
How Air Conditioners are Rated and Advertised

 

#1. The first one there shows that it produces 24,000 Btu’s, which is a 2-Ton unit as we learned earlier. Take the 24,000 Btu’s/(12,000 Btu’s/Ton) = 2-Tons

#2. The second example shows that it’s a 3-ton unit, so we know that this produces 36,000 Btu’s/Hr. Take the 3-Tons x 12,000 Btu’s/Ton = 36,000 Btu’s

#3. The third example indicates that it produces 24k BTU, which in this case “k” stands for thousands, so this is a 24,000 BTU/Hr. air conditioner, or a 2-Ton unit. (24,000 / 12,000 = 2)

Refrigerators

With refrigerators there is almost no mention of capacity in terms of BTU’s or Tons. Instead it’s all about the width, or cubic volume of the interior space. How much food can you get in the refrigerator. You don’t worry about the BTU’s as its assumed that whatever size refrigerator you buy will be able to handle the heat from whatever you decide to put in it.

Refrigerator Ratings
Refrigerator Ratings

Gas Appliances

With gas stove tops or other gas appliances it’s important to check out the BTU rating of the total unit, and for each of the individual burners. As can be seen in the sales image below, the advertised information is related to the appliances size. Of course the size is important when selecting a stove top or gas appliance, but so is its BTU capacity. The larger the BTU burner capacity, the faster your food will cook. 

Gas Stove Top Ratings
Gas Stove Top Ratings

Check the specifications of the appliance to see what each burner is rated for, could be anywhere from 500 to 18,000 Btu’s per burner, a big difference. You can see in the image above that the burners vary in their diameter, which is indicative of their Btu capacity.

BTU Calculation Example

For example, if you had a Gas Stove and one of its burners was rated for 5,000 BTU’s, you could calculate how long it might take to heat your water, realizing and ignoring that there are losses to the surrounding space. Not all heat gets absorbed, but just for simplicity this is how the calculation would work.

Starting with 2 Lbs. of water at 65F, and wanting to raise it to 210F, just before the boiling point of 212F.

BTU’s = Weight of Water (Lbs.) x Temperature Difference

BTU’s = 2 Lbs. x (210F – 65F)

BTU’s = 2 x 145

BTU’s = 290

290 BTU’s / (5,000 BTU/Hr.) = 0.058 Hrs. or 3.48 Minutes

So, what is a BTU or Ton of Air Conditioning? We now know that a Ton of Refrigeration or Air Conditioning is equivalent to 12,000 Btu per hour.

Watch the Video of “What is a BTU or Ton of Air Conditioning”

How Variable Frequency Drives Work in HVAC Systems

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How Variable Frequency Drives Work in HVAC Systems

We’ll discuss the basics of How Variable Frequency Drives (VFD’s)Work in HVAC Systems, also referred to as Variable Speed Drives (VSD’s), which are used in the Mechanical Construction Industry for the control of motors that run fans, pumps, and compressors. We’ll discuss where VFD’s are used in the MEP Construction Industry, Identify the key components of a VFD and how to select a Variable Frequency Drive.

If you prefer to watch a Video of this presentation than scroll to the end this article for our YouTube Video.

Be sure to shutoff any electrical power when working with a VFD.

Motor control equipment and electronic controllers are connected to hazardous line voltages. Extreme care should be taken to protect against shock and possibility of a fatality.

Where are VFD’s used in the Mechanical Construction Industry?

Pump Control with VFD’s

The use of VFD’s to control the motor speed of pumps is widely used in commercial construction projects. There are various control strategies, and as the image shows this one uses a “Differential Pressure Transmitter” to control the speed of the pump, which controls the flow (GPM) based on demand. 

How to control pumps using Variable Frequency Drives VFD's
How to control pumps using Variable Frequency Drives VFD’s

As the HHW control valves open due to an increase in demand for heating hot water, the pressure drops in the piping which is sensed by the Differential Pressure Transmitter. The transmitter sends a signal to the Variable Frequency Drive to speed up (increase flow – GPM), causing the pump to push more water through the pipes. The opposite happens when the heating hot water valves start to close because the space is warm enough. The valves start closing causing an increase in pressure in the piping which is sensed by the differential pressure transmitter. The transmitter sends a signal to the Variable Frequency Drive to slow down the pump motor, reduces the flow (GPM).

Checkout these Variable Frequency Drives here

Fan Control with VFD’s

The theory is the same for controlling the speed of the fan motor. There is some form of monitoring of the supply air duct which will cause an adjustment to the speed of the fan. In the scenario below we show that a “Static Pressure Sensor” is located two-thirds of the way down the main supply air duct. The sensor will pick up changes in pressure within the duct.

Controlling a Fan Motor using a Variable Frequency Drive - VFD
Controlling a Fan Motor using a Variable Frequency Drive – VFD

As the Variable Air Volume (VAV) boxes begin to open their dampers because of an increase in cooling demand, the pressure in the supply duct drops. When the pressure in the supply air duct decreases, the Static Pressure Sensor sends a signal to the Variable Frequency Drive to increase the speed (RPM) of the fan motor, causing an increase in CFM. The opposite happens when the VAV box dampers begin to close because the spaces are cold enough. As the dampers begin to close the pressure in the supply air duct increases, causing the Static Pressure Sensor to send a signal to the VFD to slow down the motor of the fan, reducing the amount of CFM. See our video on Variable Air Volume Systems.

Compressor Control with VFD

Chillers come with various options for variable speed control. Check with your Chiller manufacture for chillers with Variable Speed Drives. As the load in the building decreases, the chiller can change the speed of the motor that turns the compressor, thereby reducing the energy consumed.

Compressor motor on a Chiller using a Variable Frequency Drive - VFD
Compressor motor on a Chiller using a Variable Frequency Drive – VFD

By reducing the speed of the compressor the output tonnage of the chiller is matched to the demand. Variable Speed Drives (VSD) come mounted in an enclosure mounted on the chiller.

Checkout these Variable Frequency Drives here

Old Methods of Volume Control

To control the volume of air (CFM) or water (GPM) using constant speed motors required putting an artificial load on the system. This method of flow control waste energy. Fans used dampers to impose flow restrictions, while pumps used valves (throttling) to dial back the GPM flow of water or just bypassed the water. These methods generate restrictions to flow that waste energy. Controlling the varying flow requirements with a VFD saves on this lost energy.

In the HVAC industry the use of Variable Air Volume System is very common. To control the various cooling and heating load fluctuations during the year the Air Handler fan will vary the volume (CFM) delivered to the space. The same applies to the Chilled Water, Heating Hot Water or Condenser Water flow (GPM) through the pipes as the load on the building changes through-out the year. In older HVAC piping systems with constant flow pumps the use of 3-way valves was common. Instead of reducing the flow (GPM), the water would bypass the coil through the 3-way valve. Obviously this is a waste of energy as the pump is just circulating water that is not needed.

What Is the Purpose of a Variable Frequency Drive VFD?

The main purpose of a Variable Frequency Drive (VFD) is to vary the speed of a motor by varying its frequency and voltage to provide for energy savings. By increasing the frequency you can increase the speed of the motor, and by decreasing the frequency you can decrease the speed of the motor, it’s basically that simple. 

Many of the existing motors that control mechanical equipment were originally designed to run at constant speed, which isn’t energy efficient. These older motors were either in the on or off position and used some form of artificial resistance to control flow.

Variable Frequency Drive - VFD
Variable Frequency Drive – VFD

How to Choose a Variable Frequency Drive VFD

Selecting a Variable Frequency Drive can be very simple when you know the Voltage, Current and the Power Rating.

When bidding a plans and specifications project the mechanical engineer will have sized and documented the required VFD on the equipment schedule. If you’re doing a Design/Build project or Retrofit where you’ll be responsible for the selection of the variable frequency drive, then knowing the basic’s for selecting a drive is crucial. If you’re not comfortable with selecting a Variable Frequency Drive there are many VFD suppliers that will help you choose the correct drive.

Checkout these Variable Frequency Drives here

Here are a few things to consider when selecting a Variable Frequency Drive (VFD) for an existing motor on your project. Values are from example motor nameplate below.

  • Full Load Amps (FLA) 40-37/18.3
  • Horsepower (Hp) 15
  • Voltage (V) 208-230/480
  • Speed (RPM) 1775
  • Motor Type – (Inverter-duty Rated)
  • Method of Control I/O (Static Pressure Sensor, Differential Pressure Transmitter)
  • NEMA Enclosure type. (Inside, Outside, Exposure to elements) 

The first place to start on an existing motor is the motor name plate. This is where most of what you need can be found. Hopefully the building engineer hasn’t removed them or painted over them.

Motor Nameplate
Motor Nameplate

Motor Nameplate

The motor name plate may indicate more than one voltage and its corresponding amperage. The above name plate indicates 230 and 460 volts, with a corresponding 37 and 18.3 amps. The higher the voltage the lower the amps.

Full Load Amps (FLA)

The full load amps (FLA) is one of the important aspects of the Variable Frequency Drive VFD selection process. For existing motors this number will be on the motors nameplate, and shown as 40-37/18.3 on example nameplate. Why three values? Each FLA corresponds to what voltage is used, either 203 Volts (40 FLA), 230 Volts (37 FLA) or 460 Volts (18.3 FLA)

Frame Number

The NEMA frame number can be two or three characters and represents the distance from the center of the motor shaft to the center bottom of the mounting plate. Such as in our example of a frame number of 254T. This equals 254/16 = 15.875” 

Method of Control

If the VFD is for controlling a fan in a VAV Air Handler, then the controller may be a “Static Pressure Controller”, see our Video on Variable Air Volume Systems that explains this further. If for a pump, may be your using a “Differential Pressure Controller”. Whatever system variable is being measured the Input and Output (I/O) signals need to be setup in the VFD.

NEMA Enclosure Type

The Variable Frequency Drives are usually located in Mechanical Rooms or Outside near the equipment. Depending on the type of environment that surrounds the VFD, there are various solutions for the enclosure type as indicated by the NEMA number. The most common in the Mechanical industry is NEMA 1, 3R and 12. 

Variable Frequency Drives - VFD's (Small to Large Horsepower Drives)
Variable Frequency Drives – VFD’s (Small to Large Horsepower Drives)

NEMA 1 Rated enclosures are made for Indoors with no water protection. NEMA 3R is rated for Indoor or Outdoor use, and where rain, snow or ice may form. NEMA 12 is rated for Indoors and with dust, lint and other dirt circulating in the air, along with minor water splashes. There is an enclosure for any environment.

Since VFD’s produce heat during operation, this must be part of the consideration when selecting a ventilated enclosure versus a cooled enclosure. Avoid locating a VFD on a heated wall or in direct sunlight. 

Checkout these Variable Frequency Drives here

Variable Frequency Drive – VFD Components

Bypass

The bypass provides a means for circuiting around the drive and providing power to the motor. You have to be sure that in bypass mode the motor still has some form of overload protection. Purchasing a Bypass adds substantial cost to a VFD. If its not needed or you can afford some down time with the equipment, then avoid purchasing a bypass or if you have several VFD’s of the same size, just purchase an extra drive for emergency replacements.

Variable Frequency Drive with Bypass
Variable Frequency Drive with Bypass

VFD Keypads and Control Panels and Remote Monitoring

If the location of the VFD is inaccessible or inconvenient for the maintenance staff, you could mount the VFD’s Keypad remotely. You may need additional cabling, so check with the VFD manufacture.

Navigating is easy using the control panel to set various parameter values. Various VFD manufacturers drives have the capability of copying settings from one drive to others. The control panels provide a touchscreen graphical display in various sizes from 3.5” up to 15”

Look for optional remote monitoring that allows you to view and control the drive from any location with web access.

The available menu items will vary by VFD manufacturer and how they are displayed, but there are some basic common features. There will be a way to adjust the speed, bypass the VFD if provided with a Bypass, alarm and fault indicators, on/off/auto, indication that either the I/O Terminal/Keypad or Communication Bus is chosen for control of start/stop – signals.

Input Line Reactors and Harmonics

To protect the VFD from the utility companies possible power fluctuations an input line reactor is installed. The Input line reactor also helps mitigate the harmonics associated with the use of variable frequency drives.

Physical Size

Small drives can be anywhere from 12” in height to over 60”. The weight of a small drive can be 10 pounds to over 500 pounds for larger drives.

VFD Cooling Requirements

There are two methods to keep Variable Frequency drives cool; air-cooled and liquid-cooled. Liquid-cooled is used on larger VFD’s, so most likely you’ll be dealing with air-cooled drives. Cooling is required to remove heat from the semi-conductors and ancillary devices used in the VFD.

The VFD’s require space around them for the proper flow of air through the cabinet to allow for cooling the drive. Be sure to check the mounting instructions to avoid overheating a drive and causing premature failure. Small VFD’s require anywhere from 40 CFM to over 1,000 CFM for larger drives. Check the drive manufacturers requirement for space around the drive and their method of cooling the unit. The area around the air-cooled VFD should be kept clean, dry and free of dust.

Three Main Components of a VFD

The following are the three main components that convert AC Voltage to DC Voltage and then back again using a simulated AC Voltage.

Three Main Components of a Variable Frequency Drive - VFD
Three Main Components of a Variable Frequency Drive – VFD

Converter (Rectifier)

The converter takes the incoming 3 phase Alternating Current (AC) power and converts into Direct Current (DC) power.

Filter

The filter smooths out and rectifies the DC voltage.

Inverter

The inverter rapidly switches the Direct Current (DC) on and off to create a pulsating voltage that mimics AC voltage. By controlling the rate of switching the frequency can simulate AC power applied to the motor to control its speed. So, basically switch from DC back to AC.

Controls Integration

The VFD’s have the ability to communicate over Ethernet with ModBus TCP or EtherNet/IP, also LonWorks, ModBus RS-485 interface and various other protocols. This gives your building automation or controls system the ability to monitor the status of various functions such as speed (RPM), Amperage (Amps), and any system faults or errors. 

There are options to add additional digital or analog input and output modules to expand on the ones provided with the base unit.

VFD Building Codes and Standards

Some standards such as California’s Title-24 building code require VFD’s on aal HVAC Fans and Pumps with a Horsepower (HP) greater than 10 Hp. Be sure to check with your local code jurisdiction for these requirements. Also, motors that are manufactured over 1 Hp are required to be compatible for variable frequency drives applications per the National Electrical Manufacturers Association (NEMA).

There are various other rules and regulations related to motors that are beyond this scope, such as the Department of Energy (DOE) Small Motor Rule, to 10 CFR Part 31 Energy Conservation Program (1/4 to 3 Hp), and guidelines established by the Energy Independence & Securities Act (EISA)(Minimum efficiencies for motors over 1 Hp).

Benefits of a VFD

Saves Energy

The main reason is to save energy by adjusting the speed of the motor to better match the varying load of the equipment. Motors consume a large portion of the energy used in buildings, so any improvement makes a big difference. Instead of running motors at full speed all the time, the use of VFD’s allows for saving energy when motor speeds can be reduced. This is also accomplished because a VFD won’t pull a high amperage draw like traditional motors rated for their Lock Rotor Amps (LRA), thereby saving the facility on electrical demand charges. 

Ease of Installation and Operation

Variable Frequency Drives are easy to install on a wall or mounted in a cabinet. The drives are very simple to operate and to adjust the speed or other settings.

VFD Rebates & Incentives

Check with your local utility company for rebates and with taxing authorities for tax incentives. The investment for the installation of VFD’s usually pays back in a short period of time. After the payback period the investment in VFD’s begins to provide an annual cost savings that increases net income for the business.

VFD Maintenance and Equipment Life

By avoiding the constant speed motors inherent need to cycle on and off to provide control of system requirements, you can extend the life of your equipment. The VFD provides for soft starts that provides better protection of the motor, belts, gears and wearing of the bearings. 

With a reduction in speed of a pump, there is a reduction in the forces within the pump casing which is carried by the pump bearings, so reducing speed increases bearing life. In addition, vibration and noise are reduced and seal life is increased, provided that the duty point remains within the allowable operating range.

With air-cooled VFD’s they need to be periodically inspected and their air-filters cleaned.

Motor Speed (RPM) – Affinity Laws

By adjusting the frequency (hertz) of the motor we can either slow down or speed up the fan, pump, or compressor. This is in direct relationship to the affinity laws where adjusting the speed (RPM) affects Flow (CFM or GPM), Pressure and Power. Checkout these video’s on Infinity Laws or this one on Variable Air Volume Systems using VFD’s.

Affinity Law #1 (Flow)

When adjustments are made to the speed of the motor, the flow is directionally proportional. So, if you cut the speed (RPM) in half, then you’ll cut the air or water flow (CFM, GPM) in half. A 50% reduction in speed is equivalent to a 50% reduction in flow. This applies to closed loop water systems.

CFM1 = CFM2 x (RPM1/RPM2) or GPM1 = GPM2 x (RPM1/RPM2)

Affinity Law #2 (Pressure)

The relationship of speed to pressure has a greater effect upon pressure when reducing the speed. For every adjustment in speed, there is a corresponding reduction in pressure to a quarter of what it was. So if you adjust the speed by 50% you get a 25% of the pressure

Pressure1 = Pressure2 x (RPM1/RPM2)2

Affinity Law #3 (Power)

This is where the greatest effect occurs when reducing the speed (RPM) using a VFD. When reducing the speed by half (50%) you’ll have power at one-eight. By reducing the speed of the motor attached to a fan, pump, or compressor you’ll save a greater proportion of power. The power is proportional to the shaft speed, cubed as shown in the formula below.

Power1 = Power2 x (RPM1/RPM2)3

Motor Starting Methods

There are various methods used to start motors with advantages and disadvantages for each. Using a Variable Frequency Drive provides for smooth starting and stopping.

The typical motor starter causes an inrush of current (amps) that is around 6 times higher than what is required when running the motor at full speed. The use of various soft start options still lack the ability for speed control of the motor. This is where the use of a Variable Frequency Drive provides for a soft start and the ability to control the speed of the motor for energy efficiency.

Other Names for Variable Frequency drives (VFD’s)

The following are various names used to describe the same thing as a VFD

  • Variable Speed Drives (VSD)
  • Adjustable Speed Drives (ASD)
  • Adjustable Frequency Drives (AFD)
  • Frequency Converters
  • Inverters

Summary

The use of a VFD will save energy and money, provide better control and reduce maintenance cost. The payback should be short depending on run time hours, utility cost and variable flow profile.

How Variable Frequency Drives VFD’s Work

How a Variable Air Volume VAV System Works

MEP Academy Instructor
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How a Variable Air Volume VAV System Works

Variable Air Volume (VAV) is the most used HVAC system in commercial buildings. In this article we’ll discuss the Variable Air Volume system and single duct VAV boxes with reheat coils. The Air Handler varies the amount of air flow (CFM) at the overall system level based on the demand required by the zone level VAV boxes, which vary air flow based on their local demand.

To watch the Video of this presentation, scroll to the bottom.

The VAV box regulates the flow (CFM) to a zone in relationship to the demand of the temperature sensor in the space. 

Variable Air Volume System with VAV Boxes
Variable Air Volume System with VAV Boxes

Variable air volume is more energy efficient than constant volume flow because of the reduction in fan motor energy due to reducing fan speed (RPM) at partial load. As the cooling or heating demand is reduced because of a mild temperature day, the VAV Air Handler system can reduce the amount of air flow (CFM) by reducing the fan speed. 

Air Handler Unit with VFD

The air handler will deliver a constant temperature of 55ºF (13 ºC) supply air to the VAV boxes. While the supply air temperature stays constant the volume (CFM) of air will vary based on the total demand of all the zones on the system. There are several control strategies to adjust the speed of the fan which we’ll discuss below.

As the VAV boxes open or close due to demand called for by the temperature sensor in the space, the pressure in the main supply air duct will either increase or decrease. This pressure change is picked up by a static pressure sensor in the main supply air duct.

As the pressure increases in the main supply duct because the VAV boxes are closing their dampers and are adjusting their dampers towards the minimum open setting, the air handler supply fan VFD slows down the fan. The opposite will happen due to the VAV boxes opening because of increased demand and the dampers are opening, in this case the VFD will cause the supply fan to speed up when the pressure in the main supply air duct drops.

Duct Static Pressure Sensor controlling Supply Fan Speed
Duct Static Pressure Sensor controlling Supply Fan Speed (Sensor is located 2/3rds the distance down the main supply duct)

The VFD will try to maintain the speed (RPM) of the fan so that the static pressure in the duct at the location of the static pressure sensor maintains some minimum set-point, such as 1.25” sp. The static pressure sensor sends a signal to the VFD and the speed of the fan is adjusted according to the set-point required.

Basic Functions of a VAV Box

The VAV box at the zone level will operate in one of three modes: Cooling Mode that varies the flow rate (CFM) to meet a temperature setpoint; a Dead-Band Mode where the temperature setpoint is satisfied and the box is at minimum flow (CFM); and a Reheat Mode for when the space requires heat.

VAV Terminal Box Modes of Operation – One Strategy

As you can see in the diagram above the VAV Damper goes from a minimum of 30% open, whatever the minimum required to meet ASHRAE 62, all the way to the damper being 100% open.

There are basically three modes in this control strategy. Mode #1 Is the Cooling Mode where the heating hot water control valve is closed and the VAV damper modulates from 30% to 100% open in order to satisfy the temperature sensor. Next is Mode #2 Dead Band Mode is when there is no need for cooling or heating, so the damper stays in its minimum position to meet the ventilation requirements of ASHRAE 62. And Mode #3 is the Heating Mode where the VAV box damper remains in the minimum position and the heating hot water valves modulates open to satisfy the heating requirements of the space.

Function and Components of a VAV Box

The VAV box has a damper at its inlet moved by an actuator that is controlled by the controller that takes its command from a temperature sensor. The process is very simple. When the temperature sensor in the space calls for cooling it sends a command to the VAV box controller which then adjust the supply air flow rate (CFM). The adjustment is done by an actuator rotating the VAV box inlet damper either open or closed in increments.

  • Airflow Sensor – is used to adjust the damper position by measuring the air flow at the inlet of the box. The airflow sensor measures total pressure and static pressure to determine the Velocity Pressure which helps the controller determine the CFM through the inlet of the VAV box. Velocity Pressure = Total Pressure – Static Pressure.

Variable Air Volume VAV Terminal
  • Actuator – Based on the airflow the actuator will power the rotation of the damper to meet the space demand.
  • Damper – adjust airflow (CFM) based on the temperature sensor and airflow sensor input.
  • Reheat Coil – Depending on the zone, there may be a reheat coil that provides heating from heating hot water, steam or electric. The use of electric is limited in some jurisdiction due to energy codes.
  • VAV Box Controller – Taking input from the temperature sensor and the airflow sensor the controller will send and output signal to the damper or heating hot water valve to modulate open or closed. Controls can be pneumatic, electronic, or direct digital control (DDC). Pneumatic is an older form of control and is being replaced by the more energy efficient DDC system.
  • Other components used on various other versions of the VAV box, such as fan powered boxes would include fans and filters.

Zoning and Building Loads

Before we get any deeper into this subject we need to cover the basics of zoning. Zoning is how the Engineering divides up the building into separate VAV zones, with each zone getting its own VAV box. To keep cost down its best to limit the amount of VAV boxes used, as each box adds additional cost for material, labor, controls and electrical.

After a heating and cooling load is completed on a building, the spaces will be divided up into zones. Each individual zone will have similar load profiles and be served by the same VAV box. A typical individual zone maybe offices that share a southern glass exposure or interior spaces. Look for a Zone drawing in any set of mechanical plans that has a large area broken down into zones. (See example of a Zone Map Drawing below)

VAV Zone Drawing
VAV Zone Drawing

The idea of zoning is to breakdown large areas of a building into smaller zones with similar load profiles. When a zone on the south facing portion of a building is calling for maximum cooling, the north facing zones may be in minimum cooling or heating mode. Zoning allows different spaces the ability to provide cooling or heating and vary the flow (CFM) depending on the demand of that zone’s temperature sensor. 

All the zones on a floor of a high-rise maybe fed from the same air handler, but each zone can adjust its CFM according to their specific needs. Depending on the size of the floor plate, there maybe two Air Handlers per floor, or for smaller floors the Air Handler may feed more than one floor. The Air Handler can be located on the floor within a mechanical room or located on the roof. 

The supply air main is considered the high side of the system. The high side being the main supply duct from the air handler to the inlet of each VAV box. The main is considered upstream of the VAV box, while downstream of the box is considered the low-side supply.

The air handler will provide 55 F degree (13 Celsius) supply air to the VAV box. The Variable Air Volume VAV box will then determine how much air (CFM) to pass through to the space based on the demand of the space. The air handler is sized to meet the maximum block load of the area it serves. The block load is basically the peak heating or cooling load of all the zones combined. It is not the total CFM of all the peaks of each zone, but the total based on the worst month, day and time of year where the total block is at its maximum load.

Zone Map Example – VAV Dampers in Various Percentages of Open

Each zone above is reacting differently to the early morning sun. Some zones are in cooling mode with their dampers at different percentages of being open, while other zones are in heating and one zone is off and receiving minimum air for ventilation. This is a very basic diagram of how zones may differ and why it’s important to consider how spaces are grouped together, as each space may have a different solar exposure and cooling load profile. As the sun travels across the sky the zone dampers will open or close depending on their need for heating or cooling.

Corner spaces are often difficult to include with other spaces because they have two exposures. It’s like living on the corner in your block, you have two streets. Looking at the image we can see that there are two cooling zones between corner spaces that are on the south exposure that could be grouped into one zone, Zone #5 below. The same is true for the two zones between corner spaces on the North exposures, Zone #2. If you had interior zones they would be separated from any exterior zone because interior zones are often exclusively in cooling mode due to internal heat gains and the lack of heat loss from any exterior surfaces.

ossible Grouping of Spaces for VAV Zoning
Possible Grouping of Spaces for VAV Zoning

Cooling Mode

During cooling mode, the Variable Air Volume VAV box will modulate between a minimum CFM setpoint and the calculated design maximum cooling CFM setpoint based on the zones peak cooling demand. When the hot summer arrives and the sun shines through windows and conducts heat through the walls and roofs, the need for cooling will be sensed by the temperature sensors in the space which will call for the VAV box to open its damper and let more cold air into the room. Or, if you’re in a room located within the interior of the building, like a conference room, then the heat from the people, lights and plug loads will cause the temperature sensor to initiate an opening of the VAV box damper for more cold air.

VAV terminal Box with Reheat Coil – Maximum and Minimum CFM

Heating Mode

For exterior zones and in certain cases interior zones there will be a reheat coil or an electric heater attached to the VAV box The reheat coil can be served by heating hot water, steam or electric. When in heating mode, the flow (CFM) through the box will be at a minimum setpoint to avoid wasting energy. Remember that the air handler is sending the VAV box 55 F degree (13 Celsius) supply air which was most likely cooled by chilled water from a chiller. 

This primary supply air will also bring a percentage of mandatory ventilation air (Outside Air). In some systems the supply air temperature could be increased to a temperature that is just cool enough to cool the most-demanding zone with its VAV box set to maximum flow, thereby saving additional energy.

The heating hot water valve will modulate open providing a range of heating hot water flow (GPM) to meet the heating load. The minimum CFM setpoint can be somewhere between 30% and 50% of the maximum cooling setpoint. Minimums are set by some code jurisdiction so that the minimum ventilation rate is always achieved. In California see Title-24 Sec 120.1 Requirements for Ventilation and Indoor Air Quality. See Ventilation section next.

Using electric heat is not approved in various jurisdictions. Check your local code for approved sources for the heating requirements. 

Building Automation System

We’ll mention two control strategies for optimizing energy efficiency using a VAV system. These are the 1) Constant Static Pressure Control Method, and 2) Static Pressure Reset. (Required if there is a DDC system to the zone level)

When the VAV boxes are connected to a building automation system that monitors the function and status of the boxes there are various options for control. This is based on using a DDC system.

#1 Constant Static Pressure Control Method

Usually, a pressure sensor is installed 2/3 rds. of the way down the main supply air duct. When VAV boxes start closing their dampers because they need less cooling an increase in pressure will occur. When the static pressure in the supply duct increases due to the VAV boxes closing their inlet dampers the static pressure in the main supply air duct increases.

The pressure sensor in the duct will send a signal to the Variable Frequency Drive (VFD) causing the supply and return fans to slow down or reduce its RPM. If the pressure in the duct decreases because the VAV boxes are opening due to the need for additional cooling, the pressure sensor will send a signal to increase the fan speed (RPM). 

The pressure sensor is set to maintain a constant pressure in the main supply duct which often causes excess static pressure to be provided when compared to option two below. The reduction in the fan speed provides energy savings.

#2 Static Pressure Reset

The use of this strategy is required by Title-24 (California) and ASHRAE 90.1 for system that have DDC to the zone level. The static pressure setting in the main supply duct is reduced to a point where one VAV box damper is nearly full open. This is the zone that requires the most pressure. This would require that the VAV box actuators can report their damper position, best performed with an analog output. Look for Trim and Respond logic for more information. 

VFD Control using Static Pressure Reset
VFD Control using Static Pressure Reset

These options provide a good opportunity to save energy by reducing the fan speed and possibly increasing the supply air temperature in small increments with continuous polling. If the supply temperature can be reset above the economizer set point, then the compressors can stage off and the cooling can be provided by modulating the return air and outside air dampers to deliver the desired supply air temperature.

Using a DDC control system with VAV boxes that have a flow station and temperature sensor at the supply air discharge the system can determine the amount of reheat.

Q = CFM x 1.08 x Delta-T

Q = Btu/Hr

1.08 = A constant based on standard air conditions

Delta-T = (Discharge Air Temperature – Primary Supply Air Temperature)

The building automation system can track and trend over long periods of time the following: Damper position, static pressure, reheat valve position, airflow rate (CFM), supply air temperature, zone temperature and occupancy status.

There are other types of VAV boxes not discussed here such as: Fan Powered VAV Box, VAV Mixing Box (Dual Duct Systems), CAV (Constant Air Volume).

Ventilation ASHRAE 62

Ventilation air (Outside Air) is required for all occupied spaces according to ASHRAE standard 62.1. When using VAV boxes the minimum volume setting of the box needs to ensure the larger of the following:

1. 30 percent of the peak supply volume;
2. Either 0.4 cfm/sf or (0.002 m3/s per m2) of conditioned zone area; or
3. Minimum CFM (m3/s) to satisfy ASHRAE Standard 62 ventilation requirements. VAV terminal units must never be shut down to zero when the system is operating. Outside air requirements shall be maintained in accordance with the Multiple Spaces Method, Equation 6-1 of ASHRAE Standard 62 at all supply air flow conditions.

Summary

The use of Variable Air Volume (VAV) has been shown to save energy when combined with a supply fan VFD’s. As the demand in the spaces fluctuate the VAV box dampers open or close proportionately and the air handler fans respond through various control strategies. Variable air volume systems save more energy than a constant volume system.

How a Variable Volume VAV System Works
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