ASRAC Pumps Working Group

Engineering Analysis Update

BUILDING TECHNOLOGIE

May 27, 201
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The upcoming slides will cover the following:

 Updates made to End Suction and Inline analyses sin

conclusion of the April 30th meeting

 Results of the VT‐S analysis Results of the RS‐V analysis

 Update to MSP vs. Efficiency Relationship

Engineering Analysis Updates
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1. Percent of models eligible to be polished was adjust

- End Suction: From 6% to 3.6%

- Inline: From 6.5% to 3.9%

• Comments from C. Cappellino (May 4, 2014) suggeste

were over‐estimating the efficiency gains available fro

polishing impellers.

- Available gains from polishing were effectively cut in ha

we will not be polishing volutes. EU study on polishing 

as guidance.

2. Additional capital conversion cost required to chan

advanced casting reduced by approximately half

• Corrects an invalid assumption in the original method

- The original method scaled up the total pattern and too

when only the impeller pattern and tooling costs shoul

up.

End Suction and Inline Updates
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3. Hydraulic Redesign cost decreased by 15%

• Original HI survey included “Cost of Capital” category

- 20% of the total cost

- 25% of the Redesign, Tooling, Testing, and Marketing Cost.

• Defined as "Cost of money to finance upgrades, and Inven

Rework Transition, Inventory for legacy support.)"

• Cost of money is covered by the WACC discount rate.

- Because this is covered in the WACC already, any financing c

backed out.

- We propose leaving in 25% of the provided “Cost of Capital” 

and attributing this to Inventory costs, which would likely im

- We proposed backing‐out 75% of the provided “Cost of Cap

value, which works out to 15% of the total Hydraulic Redesig

– That put the cost of financing at 18.75% of the up

» Between 3 and 4 years worth of financing cos

WACC of 11.8%

End Suction and Inline Updates
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4. Updated number of End Suction and Inline pump models in th

based on HI Survey data

• End Suction Changed from 2050 to 2398

• IL changed from 739 to 808

5. Cost of redesign per‐unit adjusted to decrease linearly from P

PER10

• Previously modeled the manufacturers’ plans to redesign to 

any standard less than or equal to PER 40

• Changed to model the actual cost of redesigning to PER 10 o

to fairly examine economic justification for those efficiency l

End Suction and Inline Updates
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6. Updated model counts based on newly released HI data

7. Costs at each EL now based on the exact percent of models fa

as the average design cost for the actual population of failing 

• Results are now more precise

End Suction and Inline Updates
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Summary of Results: Total Cost of Redesign to Industry (AggregateEnd Suction and Inline Updates

ESCC/ESFM

Efficiency Level

PER 10

($MM)

PER 25

($MM)

PER 40

($MM)

PER 55

($MM)

PER 7

($MM

April 30, 2014 $24.4 $65.1 $110.7 $213.1 $34May 14, 2014 $12.3 $49.0 $111.1 $213.9 $35May 27, 2014 $12.2 $48.6 $108.9 $207.3 $33% Diff. (4/30 to 5/27) ‐50% ‐25% ‐2% ‐3% ‐

IL

Efficiency Level

PER 10

($MM)

PER 25

($MM)

PER 40

($MM)

PER 55

($MM)

PER 7

($MM

April 30, 2014 $10.60 $28.20 $47.90 $92.20 $150May 14, 2014 $5.0 $19.8 $45.0 $86.5 $14May 27, 2014 $5.0 $19.7 $44.6 $86.8 $14% Diff. (4/30 to 5/27) ‐53% ‐30% ‐7% ‐6% ‐

Please note: The original results, released on 5/2/14, and listed in the presentation “Final_Eng_Anal30_w‐revisions.pptx” contained a typographical error that shifted the columns of some of the result

titled April 30, 2014 presents the proper, correct results for that date.
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Summary of Results: Industry Cost of Redesign as % of End Suction and Inline Updates

ESCC/ESFM

Efficiency Level

PER 10

($MM)

PER 25

($MM)

PER 40

($MM)

PER 55

($MM)

PER 7

($MM

April 30, 2014 18% 47% 80% 155% 25May 14, 2014 9% 36% 81% 155% 25May 27, 2014 9% 35% 79% 150% 24% Diff. (4/30 to 5/27) ‐50% ‐25% ‐2% ‐3% ‐

IL

Efficiency Level

PER 10

($MM)

PER 25

($MM)

PER 40

($MM)

PER 55

($MM)

PER 7

($MM

April 30, 2014 22% 58% 98% 189% 30May 14, 2014 10% 41% 92% 177% 29May 27, 2014 10% 40% 91% 178% 29% Diff. (4/30 to 5/27) ‐53% ‐30% ‐6% ‐6% ‐

Please note: The original results, released on 5/2/14, and listed in the presentation “Final_Eng_Anal30_w‐revisions.pptx” contained a typographical error that shifted the columns of some of the result

titled April 30, 2014 presents the proper, correct results for that date.
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Additional considerations for the working group: Simplify the cost of redesign model:

• Remove polishing as a design option

- <2% of population is currently polished in the model

• Ignore the effects of changing to advanced casting

- This would reduce total cost by approximately 0.3%

End Suction and Inline Updates
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VT‐S and RS‐V Results
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Key Assumptions Only 2‐Pole models analyzed No models dropped

 All failing models hydraulically redesigned 40% of total MSP attributed to motor price

 70% shipments sold with motor

 Cost to redesign a model reduced linearly below PER 40

 End Suction/Inline Price‐Efficiency relationship applied to VT‐S

Results:VT‐S Results

VT‐S

Efficiency Level

PER 10

($MM)

PER 25

($MM)

PER 40

($MM)

PER 55

($MM)

PER 70

($MM)

Industry Cost of Redesign 2.5 9.3 19.2 37.8 61Percent of Revenues 8% 28% 57% 113% 184
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Key Assumptions All available 2‐Pole models are available as 4‐Pole

 Limited additional cost necessary to convert a 4‐Pole Model

• 10% of the already redesigned 2‐Pole (basic model) model

- 25% of marketing and testing cost.

 No models dropped

 All failing models hydraulically redesigned

 40% of total MSP attributed to motor price

 70% shipments sold with motor

 Cost to redesign a model reduced linearly below PER 40

 Marketplace baseline set at PER40 which is equivalent to EU MEI40

• No price efficiency relation applied, because PER40 is in the flat portion of the curve

Results:RS‐V Results

RS‐V

Efficiency Level

PER 10

($MM)

PER 25

($MM)

PER 40

($MM)

PER 55

($MM)

PER 70

($MM)

Industry Cost of Redesign 0.7 2.6 5.5 10.6 17Percent of Revenues 1% 4% 9% 18% 30
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Summary of All Equipment Classes

Total Cost of

Redesign

Efficiency Level

PER 10

($MM)

PER 25

($MM)

PER 40

($MM)

PER 55

($MM)

PER 7

($MM

ESCC/ESFM $12.2 $48.6 $108.9 $207.3 $33Inline $5.0 $19.7 $44.6 $86.8 $14VT‐S $2.5 $9.3 $19.2 $37.8 $6RS‐V $0.7 $2.6 $5.5 $10.6 $1Total $19.7 $77.6 $178.2 $342.5 $56

Cost of Redesign as

Percent of Revenues

Efficiency Level

PER 10 PER 25 PER 40 PER 55 PER 7

ESCC/ESFM 9% 35% 79% 150% 24Inline 10% 40% 91% 178% 29VT‐S 8% 28% 57% 113% 18RS‐V 1% 4% 9% 18% 3Total 7% 28% 64% 123% 20
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Updates: MSP vs Efficiency Relationship
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Basic methodology has not changed. The following cha

been implemented to improve precision.

 The MSP premium relationship (and ultimately markups) now 

pump’s relative market score (PER %), rather than absolute C‐V

• Relative market score (PER %) is more easily and accurately

comparable across equipment's classes

- Inline MSP vs. Efficiency (PER %) relationship is now mapped 

equipment classes more consistently

• Allows for more accurate analysis of the combined 2‐ and 4

data set

- Each pump is now assigned its specific PER %, which is dependent on 

- Previously all C‐Values were lumped together.

Updates: MSP vs Efficiency Relationship
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MSP vs Efficiency (PER %) RelationshipUpdates: MSP vs Efficiency Relationship