HVAC Costing Guide: How to Evaluate HVAC Installation Cost

Whether you’re a design engineer (consultant), project manager or business owner, costing is a big part of your work. As an engineer, we not only need to understand various HVAC systems, but we also need to know how to evaluate the cost so that we can advise our clients accordingly.

Business owners and managers also need to know how various HVAC works are priced. If there is any additional work later in the project, how do you justify the additional cost?

So, I’ll break down the installation of HVAC systems and provide the cost structure. These costing methods are commonly used and you can apply them accordingly. Let’s dive into it.

Note: All prices are for illustration purposes only.

HVAC Costing

HVAC installations have common methods in terms of the costing. For instance, how much does it cost for every square meter of a specific installation, or how much does it cost for one piece of a specific installation?

These methods or costing basis will ultimately form the tender price, schedule of unit rates or simple quotations. Understanding how the cost of each work is structured helps us to evaluate the price.

Major Equipment (Chiller, Cooling Tower, DX Split, etc)

Chillers, cooling towers, water pumps, air conditioning units and ventilation fans are the biggest cost contributors in a typical HVAC installation work. They can sometimes account for 50-60% of the total installation cost.

Major equipment like chillers are usually priced in terms of supply and install, meaning you buy the chiller from a manufacturer of your choice like Carrier or Trane, and then place the chiller at the designated location at the site.

With supply and install, you’ll be responsible for the condition of the chiller until you complete the work and hand it over to your client. Normally, you’ll still be responsible for the after-sale service of the chiller until the contract ends.

Apart from the lump sum quote from the manufacturer for the specific chiller model, the cost of a chiller can also be structured on a per ton basis, especially for a quick estimation. For example, RM 3000 per ton.

So, if you need a 500-ton chiller, the estimated cost is RM 1.5 million for supply and install. This is just for the chiller, not including the piping work and the air-side equipment (duct, AHU, etc.).

For smaller units like DX splits, VRFs and fan coil units, the supply and install cost should include all standard accessories like hangers, brackets and rubber pads.

Equipment like ventilation fans and pumps mostly need vibration isolators. You can either include them in your rates or price them separately.

Pipework

Piping is a major work in water-based systems like chillers and water-cooled VRFs. Generally, the costing is separated into 4 sections due to different materials:

Pre-Insulated Pipes

Pre-insulated pipes are carbon steel pipes with PU insulation and jacketing. They are commonly used for chilled water. The cost structure for supply and install is based on per meter run for each nominal pipe size. For example:

With supply and install, you order the pipes from a manufacturer and have them delivered to the site for you to carry out the installation work. This should also include the logistics, support hangers, fittings and welding work.

On the other hand, suppliers of pre-insulated pipes usually quote based on the number of pieces. Each piece could be 6 meters long. So, if you have a 50 mm chilled water pipe that is 30 meters long, you’ll need 5 pieces of 6 meters long pre-insulated pipes.

You can also choose between standard insulation thickness or high-performance which has thicker insulation. Surely, their cost will be different.

Bare Pipes

Bare pipes are made of the same material as pre-insulated pipes. The difference is they are not insulated. Bare pipes are used for condenser water and their cost structure is the same as pre-insulated pipes.

The material cost of bare pipes is a lot lower than pre-insulated pipes. However, their installation efforts are almost the same. Hence, the supply and install cost of bare pipes is only slightly lower than pre-insulated pipes, especially at below 100 mm.

Refrigerant Pipes

Refrigerant pipes are used in DX split and VRF systems. The supply and install costing for these pipes usually includes the pipe fittings, insulation, hangers and other standard accessories.

Plastic or metal covers are common for refrigerant pipes. They are usually quoted separately. So, you need to include the cost of the covers if your client demands it.

The cost of refrigerant pipes is typically based on per meter run at specific insulation thickness for a pair of standard pipe sizes. For example:

Refrigerant pipes are also separated by the type of refrigerant used. R22 and R410A run at different pressures. Thus, the copper pipe thickness is different and so does the cost.

When purchasing copper pipes, smaller sizes usually come in a coil form (15 meters) while bigger sizes come in a straight pipe form (6 meters). Similarly, you order based on how many coils or pieces you need.

PVC Pipes

PVC pipes are normally used for condensate water discharge. They can be installed either on the surface of the wall/floor or embedded in the wall/floor.

Condensate pipes embedded in the wall/floor are typically not insulated. Hence, their material cost is lower but the installation cost is higher. So, the overall cost for supply and install of embedded drain pipes is usually higher.

Valves

Valves are usually separated from straight pipes and fittings. There are numerous types of valves. Each type has standard sizes. The cost structure is normally based on the nominal diameter. For example:

Similarly, the rate should be supply and install, including the insulation work after installation.

Ductwork

Ductwork is one of the major contributors to the overall cost. At the same time, it is also one of the most complex works to do the costing because of the components involved.

Sheet Metal Duct

Galvanized iron (GI) is the most common material for air conditioning and ventilation ducts. The cost of sheet metal duct is based on the metal thickness, surface area and external finishes. For example:

Air conditioning ducts are also divided into externally insulated or internally insulated. The insulation type, density and thickness will all affect the cost. So, pay attention to the duct specifications.

Since the cost is per square meter basis, accurate duct area calculations are crucial. What’s more important is to specify the duct square meter that your price is based on. If there are any changes to the duct layout, you may be able to claim the additional square meter as per your contract rate.

Kitchen Duct

Kitchen ducts often use carbon steel as the material. They should be separated from GI ducts due to cost differences. However, kitchen ducts are mostly 1-2 variants only. Thus, their cost is straightforward.

Flexible Duct

Flexible ducts are priced per meter basis. The standard sizes are 100 mm, 150 mm, 200 mm and so on. The cost is separated into bare flexible ducts and insulated flexible ducts with 2-3 density and thickness grades.

Diffuser

Diffusers are priced mostly based on standard size, type and material. The cost structure for supply and install is per piece basis. For example:

• 600×600 mm 4-way directional diffuser (GI) = RM 120.00
• Jet diffuser 200 mm inlet connection (AL) = RM 300.00
• 2-slot linear diffuser 1200 mm with plenum box (AL) = RM 305.00

Typically, diffusers have standard sizes like 300×300 mm, 450×450 mm and 600×600 mm. Linear diffusers are either 600 mm or 1200 mm long. Jet diffusers depend on the round inlet size which is the flexible duct size.

In large projects, the cost of several standard diffuser sizes can be contractually bound. However, odd sizes are usually more expensive because of low volume. Thus, they can be quoted separately from the contractual rate at fair market value.

Grille

Grilles have even more variants and sizes than diffusers. Hence, their cost is commonly based on the cross-sectional area. For example, a 600×300 mm grille has 0.18 square meters of area. Thus, the cost can be structured as follows:

The cost should be supply and install, covering applications such as return air, exhaust air, fresh air and supply air. Weatherproof grilles should be priced differently.

There are multiple types of grilles. For example, louver grilles, double deflection grilles and linear bar grilles. Each type should have its own rate. You may also want to provide the cost for aluminium and GI materials.

Damper

Dampers also have many variants. They can be standard or fire-rated. The cost is different depending on the rating, type and performance. However, the cross-sectional area costing structure applies to dampers. Just further break them down into different variants such as volume control, non-return, fire-rated, opposed blade and etc.

Electrical Work

The installation of HVAC systems involves plenty of electrical work. From wires and conduits to starters and panels. If you include electrical work, your costing needs to cover that as well.

Wire / Cable

The cost of wires or cables is typically structured based on per meter run of various sets. For example, a DX split unit requires a live, neutral, earth, and a signal cable. Each cable is a single core. Hence, the set is 4 x 1c which implies 4 cables, each at 1 core.

With that, we can extend the cost structure to include conduit, trunking and cable tray. For example:

For smoke extraction and pressurization fans, fire-rated cables should be priced differently. Conduits, trunking and cable trays can be priced separately if needed.

Conduit, Tray & Trunking

PVC and GI conduits are usually priced based on their diameter. For example, 15 mm, 20 mm or 25 mm. In addition, you can also separate them into running on surfaces, concealed in walls, floors or ceilings.

The cost of cable trays and trunking are normally structured as per meter run basis for selected sizes. Cable trunking, for example, has standard sizes like 50×50 mm, 75×50 mm and 100x75mm.

The rate usually includes all the necessary accessories such as hangers, saddles and fittings.

Estimating the Cost of an HVAC Installation

When tendering, quoting or evaluating the cost of an HVAC installation, a reasonable breakdown of major work allows us to assess if the cost is too high, too low or within the market rate. For example:

For typical projects, we can use the costing rule of thumb to quickly estimate the price. The estimation is similar to the chiller cost per ton mentioned earlier. However, for the total price, we use a higher value to include all the pump, pipework, ductwork and other work.

For example, air-cooled chiller systems at RM 4000 per ton. So, if you need a total of 1000 tons, your total installation cost could be RM 4 million. Or, water-cooled chiller systems at RM 6500 per ton, for instance.

For smaller projects, “lump sum” and “per lot” are acceptable as there are fewer components within that specific scope. Furthermore, they tend to be completed within a few weeks, unlike large projects that require rationalization and progress claims that could last 3 to 4 years.

High-value work like ductwork and pipework can also be separated into per floor basis. For example, the ductwork price for a 10-storey building can be broken down into 10 floors, each reflecting its own quantity (how many square meters of ductwork per floor) and its corresponding price.

Breaking down the prices into floor-by-floor can aid progress claims. A large lump sum value can easily lead to over-claiming as verification is difficult. That said, breaking down prices after the tender award is feasible.

Preliminary Work

In large projects, the cost of preliminary work must be included. This involves mobilizing your staff, engineers and workers to the construction site prior to start work for a survey, meetings and possibly setting up a temporary office.

In the early stage of a construction project, only minor work is involved with HVAC. Some of the works are laying down concealed refrigerant and drain pipes, marking openings and etc. These are insignificant to the progress claim.

However, you still need to deploy your engineers, supervisors and workers to do the work.

If you didn’t cost in the preliminary work such as site supervision (eg: RM 50,000.00), permit and insurance (eg: RM 8,000.00), you’ll quickly run into cash flow problems.

Conclusion

Costing is a very important aspect of HVAC. The typical costing structures for various HVAC work are:

• Cost per ton – Chiller, overall price
• Cost per square meter – Duct, grille, damper
• Cost per meter run – Pipe, flexible duct, wire/cable, metal trunking
• Cost per piece – Valve, diffuser

A reasonable breakdown of a tender price or quotation is necessary for cost evaluation. And, preliminary work must be included in large projects to avoid cashflow problems.