Buy, rent or replace: how the sum changes at five years

Specification and supply

The purchase price is the most visible line and almost never the biggest. The others only show when you put them in a row.

Why the wrong line always gets compared

Two supplies are almost always compared on the price per light point, and not because it is the most important line: because it is the only number both of them declare. It is a criterion of availability, not of relevance, and it produces exactly the result you would expect from such a criterion.

But an installation lives for years, and in those years it consumes energy, needs maintenance, loses parts and at some point has to be replaced. The purchase price is the first of the lines in order of time and almost always the last in order of size.

Choosing on it means optimising the smallest of the six, and it is why two installations with the same initial cost end up costing twice one another without anybody having got a multiplication wrong.

The six lines, and why they do not behave alike

Putting them in a row serves first of all to see that they are different objects, not six numbers to add. Each has a frequency and a degree of certainty, and those two properties decide how it has to be handled:

• The price is one-off and certain: negotiated once and then fixed
• The energy line is recurring and predictable: the only one that can be calculated exactly beforehand
• The maintenance line is recurring and uncertain: governed by access, not by price
• The replacement line is one-off and postponable — until it is not
• The cost of capital is continuous and appears in no quotation
• The room out of service is one-off, violent, and chosen by the calendar

Energy is calculated, not estimated

Of the six, energy is the only one that can be written beforehand with precision: installed power times hours of operation times tariff. It is not a forecast, it is a multiplication — and precisely for that reason it is the line worth being pedantic about.

Hours of operation are the part most often got wrong, and not through technical failure: theoretical hours get used instead of real ones. A corridor lit twenty-four hours and a breakfast room lit four do not compare, and in a hotel both exist on the same floor.

Maintenance depends on where the fitting is

Two identical fittings, one at three metres and one at eight, do not have the same maintenance cost. The difference is not the part: it is the equipment and the people needed to reach it, and in a hotel also the hour at which it can be done.

It follows that the maintenance figure has to include the access equipment, not only the spare — and that an installation with a few difficult fittings costs less than one with many easy fittings plus two impossible ones. It is a calculation that takes half an hour on the survey, and almost nobody makes it.

Replacement: one-off, postponable, and then sudden

The fourth line has a property that makes it treacherous: it can be postponed, and postponing it costs nothing — until it costs everything at once. Nobody replaces an installation that works, and when it stops working the decision is no longer a choice.

The only lever on this line is to bring forward the question rather than the spend: to know in how many years replacement is expected, and what happens to the spare in that period. Whoever knows can choose the moment; whoever does not know endures it, and in hospitality enduring it almost always means working in high season.

Tied-up capital costs something even when idle

There is a line that appears in no quotation because it does not belong to the supplier: tying up a sum to buy means not having it for something else. On a small supply it does not count; on a whole installation it counts as much as any of the other five.

It is also the line that opens the third route. Bought, the installation is an investment that gets depreciated; taken on an operating lease, it is a rental sitting among operating costs and not consuming the credit line. It is not an accounting preference: it changes who can sign, and in a hotel group that can be worth months.

The room out of service, which neither quotation contains

The sixth line is the biggest of all in hospitality, and it appears in no supply quotation because it belongs to none of the suppliers: it is the revenue of a room or a hall that cannot be used while the work is done.

It has a property the others do not: it is chosen. The same supply, done by zones off season, can cost less than half the same one done as an emergency in July — with identical fittings. It is the only lever in the sum that depends solely on how early you start looking at it.

Buy, rent or replace: three questions, not three answers

The three routes are not compared in the abstract: they are compared on a building, with its hours, its access and its calendar. Three questions separate them, and none is about price:

• how many hours a year it stays lit, and in which zones
• what it costs to reach the most difficult fitting, and how many times a year
• in which window that zone can be shut, and what that window is worth

How to write a request that produces comparable numbers

For two quotations to become comparable, they have to contain the same lines. It is the only thing the buyer can impose, and it costs five lines in the request:

• installed power per zone, not total
• hours of operation declared per zone, with the assumption written down
• the cost of access to the high fittings, and who bears it
• what happens to the spare in six years, in writing
• whether a rental form exists, and what it includes

The same installation, in two different buildings, gives two different sums

The six lines do not weigh the same everywhere, and one factor reorders them: how many hours a year it stays lit. In an office the light works perhaps two thousand hours; in a hotel with a lobby and corridors many points never switch off.

It follows that the same fitting, bought at the same price, produces very different sums in two buildings — and that a comparison read from one case does not transfer to the other. It is also why the numbers circulating in presentations are no use for deciding: they describe a building that is not yours.

The operating lease: what it includes, and what it does not

The third route is the least understood, and the useful question is not what it costs but what is inside it. The rental can cover the supply alone, or also installation, planned maintenance and replacement of failures — three very different contracts under one name.

The two lines to ask for are always the same: who comes out when something breaks, and what happens at the end of the term. The second in particular changes the whole sum: the installation stays, goes back, or gets bought out. Whoever does not ask finds out in year five, which is exactly the horizon of this article.

Phasing changes all six lines

Almost no building is refurbished all at once, and splitting it is not neutral: it changes the price (small batches cost more), it changes maintenance (two installations coexist for years), and it changes consistency — two batches months apart may not be the same white.

The only line that phasing improves is the room out of service, and that is why it is done. It is worth saying so explicitly at the moment of choosing: you are buying operational calm and paying for it in unit price and in coherence. It is almost always a good bargain, but it should be known, not endured.

Who does the sum, and with what data

A five-year sum can be done in half a day, and the data needed is all inside the building: the survey of points, the hours of operation per zone, the real tariff from the last bill, and the list of fittings that are hard to reach.

None of that data belongs to the supplier, which is why the sum cannot be done by whoever sells — not out of bad faith, but because they do not have the data. The buyer can do it alone, or ask somebody who does it without selling the installation: two routes, and in both the numbers stay with whoever owns the building.

The guarantee is not a seventh line: it touches two

A long guarantee looks as if it removes maintenance from the sum, and almost never does: what it covers is the part, not the labour and almost never the access. On a fitting at eight metres the part is the small half of the spend, and the guarantee leaves the large half untouched.

So one question makes a guarantee readable: does it cover the call-out too? If the answer is no, the guarantee acts on the fourth line — replacement — and not on the third. They are two different lines and belong in two different boxes, otherwise the five-year sum comes out lower than it will be.

What really changes at five years

The exercise of putting the six lines in a row is not there to find the exact number: it is there to discover that the order of two quotations reverses, and to discover it before signing rather than after.

When that happens — and it happens often — neither quotation was wrong: one was incomplete, and the incompleteness was in the request, not in the answer. It is the only part of this sum that depends entirely on the buyer.

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