Cost Benefits Analysis - Two Available Options for Lighting - Case Study Example

Cost Benefits Analysis Name: Course: Table of Contents Introduction 3 Background 3 Legislation and Standards 4 Cost – Benefits Analysis 5 Recommendations 7 Conclusion 8 References 8 Introduction Usually, before an organization plans a course of action to follow, it is advisable to perform an analysis that compares the expected benefits with the expected negatives so as to make an informed an economically viable decision (Boardman, 2006). This process is what is called a Cost – Benefits Analysis. It involves summing up all the expected outflows or burdens that will accrue as a result of the execution of a planned course of action as well as all the expected positives or benefits that are to be realized by the new action. The difference between the two is normally very critical in helping that particular organization or entity to make an informed decision on whether the planned action is actually the right one for the organization at that time (Boardman et al., 2006). In this case, the department in which I am the Health Information Manager intends to do some changes in its lighting system. Currently, the department has 50 light fixtures containing 2 T8 fluorescent tubes and the department operates between 7 am and 11 pm. It is assumed that once the said period is complete, all lights are turned out and therefore the after – hour access and light usage are negligible. With regard to this therefore, this paper seeks to perform a cost – benefits analysis that can provide an in – depth examination of the replacement of 100 fluorescent lights with LEDs in the department that I am tasked with heading. Background In this department therefore, there are a lot of lighting issues that ought to be streamlined. Like it was mentioned in the introductory remarks, the department in question currently has 50 light fixtures that contain 2 T8 fluorescent tubes. Additionally, the department operates between 7 am and 11 pm. Past this time, an assumption is made that all lights are turned out and therefore, the light usage as well as access then is null and void. According to Cole, (2011), ideally, LED lighting has been attributed to quite a number of benefits (at least as far as common knowledge and rumours are concerned). It is in the public domain for example that LED lighting has accurate colour temperature, it is cost – effective as well as environmentally – friendly. Following those considerations, there is need for the department to replace 100 fluorescent tubes with LEDs so as to cut on costs. The question however is: Is this decision entirely cost – effective really? Essentially, it is believed that LEDs usually have a lower wattage compared to their fluorescent tubes. Since the latter are the ones being used, it is assumed therefore that there is higher power costs currently incurred in the department. This answers (at least in part) the reason why LEDs are proposed to replace the 100 fluorescent lighting. In terms of replacements, fluorescent lighting has a lot of replacement costs compared to LEDs. It could so happen that the department currently incurs high replacement costs due to the fluorescent lighting that it uses. There is therefore the need to try out an even better lighting system such as the proposed LEDs which have been known for their almost null replacement costs. Legislation and Standards For various office and screen – based tasks, different rules exist that are aimed at ensuring the proper performance of the operators under these tasks. To begin with, the maintained illuminance provided by the general lighting for SBEs can be less than the recommended paper – based office tasks if the operator has only to read the information displayed on the screen. On the other hand, it is required that if the operator has to frequently refer to input text or is probably required to take notes, the lighting system should provide a maintained illuminance over the task area of not less than the value recommended for such tasks (Environmental Protection Agency, 2011). Additionally, the illuminance on the resulting task from the use of local lighting should not be significantly greater than the recommended value in order to reduce the adaptation problems for SBE users. According to Environmental Protection Agency et al., (2011), it is also a requirement that where only general lighting is needed to provide both task and background or environment lighting, then the illuminance throughout the room ought to be less than the maintained recommended illuminance for that particular task. According to Section 8 of AS/NZS 1680.1:2006, a luminaire selection system or a glare evaluation system is supposed to be used as alternative systems for the control of discomfort glare from electric lighting. Finally, the maintained illuminance for the general lighting should not be less than 240lx assuming that a combined system of local lighting and general lighting is employed and task illuminances of 600lx or greater are provided (Ribarich, 2011). Cost – Benefits Analysis In establishing the costs and benefits of the two lighting options introduced earlier herein, several factors that matter (whether financially or otherwise) are going to be compared for each of the two options. The factors that are going to be of significance in performing this analysis include, but are not limited to Total Bulb Replacement Cost, Replacement Maintenance, Ballast Replacement Cost, Ballast Maintenance/ Labour, Life Span, Fixture Cost, Bulb Price, Bulbs per Fixture, Total Bulb Price, Total Bulb Cost plus Fixture Price plus Cost of Ballast, Number of Bulb Replacements, Cost of Bulb Disposal, Cost of Ballast Disposal, Total Watts per Fixture, Annual Energy Cost, Total Number of Units in kWh, the Wattage and finally, the Total Cost in 10 years. These comparisons are clearly summarized in Table 1.1 shown below: Parameter Explanation LED Lighting Fluorescent Lighting Total Bulb Replacement Cost On average, this implies $5 per every replacement of a bulb $0 $4,000 Replacement Maintenance This is approximately $41/ hour, half an hour per ballast times 100 ballasts plus the set up costs $0 $11,972 Ballast Replacement Cost 50 ballast replacements at $42 per every ballast replacement $0 $38,325 Ballast Maintenance/ Labour This is approximately $43/ hour, half an hour per ballast times 100 ballasts plus the set up costs $0 $12,556 Life Span Number of Years taken by the bulb 5 1 Fixture Cost 100 bulb fixtures with 50 Ballasts $750 $2,000 Bulb Price Approximate Price of a bulb $75 $5 Bulbs per Fixture The Number of Bulbs that can be done in one fixture 4 4 Total Bulb Price Is the product of bulbs per fixture and the price of one bulb and the total bulbs divided by the bulbs per fixture i.e. 25 $7,500 $500 Total Bulb Cost+ Fixture Price+Cost of Ballast Is the total amount of money required for the entire fixture of the 100 bulbs $8,250 $2,500 No. of Bulb Replacements For a period between 1and 5.5 years 0 400 Bulb Disposal Cost Is approximately $1.41 per bulb multiplied by approximate number of bulb replacements $0 $564 Ballast Disposal Cost 50 ballasts multiplied by $3.1 $0 $155 Total Watts per Fixture Is the number of bulbs multiplied by the number of watts per bulb 1,500W 3,200W Annual Energy Cost $0.21per kWh multiplied by 16hrs multiplied by 365 days multiplied by 11.5 years $2.11554 Million $4.513152 Million Total Units (kWh) Total kWh for every 100 bulbs in a fixture 4,245,022 8,399,000 Wattage The number Watts per every bulb 15W 32W Total Cost (11.5 years) This is the total Cumulative cost for the entire fixture for the 100 bulbs within a period of 11.5 years $ 2.11554 Million $ 4.513152 Million Table 1.1: Cost – Benefit Analysis of LED Lighting verses Fluorescent Lighting Recommendations Having done a cost – benefit analysis of the two available options for lighting, it would only be prudent to come up with the following recommendations with regards to the replacement of 100 fluorescent lights with LEDs. To begin with, it is evident that in terms of wattage i.e. 15W, LED replacement bulbs are definitely more efficient compared to the fluorescent bulbs (Cole et al., 2011). It is therefore recommended that for the conservation of the available power, LEDs should be used at the expense of their fluorescent counterparts. Secondly, it is also recommended that when choosing to use any other light source, the directionality for a given time frame of that particular light source should be factored in. This is critically important in producing contrast – reducing reflections in the task area (DiLouie, 2011). Finally, it is also recommended that for luminance of surfaces in visual field of patients in hospitals, the mean luminance of any luminaire that is to be left on at night must not exceed 30 cd/ m2 (Ribarich et al., 2011). Conclusion In conclusion therefore, it is worth noting that when doing a cost – benefit analysis with regards to lighting, a lot of attention has always been focused on the cost (financial) part of the equation. This however, as has been seen in the cost – benefit analysis performed above, should not be the case. There are so many other (unfortunately usually unrealized) factors that have to be put under consideration such as the health implications of the chosen lighting system (Barton, 2011). In this case, LEDs have been generally seen to have far much outweighed their fluorescent counterparts in virtually all aspects. Table 1.1 summarizes it all. References Australian Government, (2006). Introduction to Cost–Benefit Analysis and Alternative Evaluation Methodologies and Handbook of Cost–Benefit Analysis, Finance Circular 2006/01. Barton, J. (5 January 2011). Better Use of Light Bulbs Act (H.R. 91). Retrieved 24 March 2011. Boardman, N. E. (2006). Cost-benefit Analysis: Concepts and Practice (3rd ed.). Upper Saddle River, NJ: Prentice Hall.  Cole, P. (2011). The 2009 IECC: Increased Inspections and Testing Lead to Increased Energy Savings. Retrieved 17 April 2011. DiLouie, C. (2011). ASHRAE Publishes 2010 Version of 90.1 Standard. Retrieved 17 April 2011. ENERGY STAR, (2011). ENERGY STAR ® Program Requirements for Solid State Lighting Luminaires. Retrieved 17 April 2011. Environmental Protection Agency, (2011). Light Fixtures for Consumers. Retrieved 25 March 2011. Ribarich, T. (2011). How compact fluorescent lamps work--and how to dim them. Retrieved 25 March 2011. Read More