The internet of things (IoT) offers electrical contractors powerful revenue-generating service opportunities and new challenges, according to a 2019 report published by ELECTRI International.

“Smart Buildings and Internet of Things Impact on Electrical Contracting” was developed by Hisham Said, associate professor of construction engineering and management at Santa Clara University. He created a roadmap showing ECs how to increase value, generate new revenue streams and develop their workforce in the smart building era.

The report defines a smart building as one having integrated systems that dynamically and cost-effectively deliver energy-efficient and productive environments. The IoT takes this concept to the next level by incorporating additional sensors that exchange data. Expansion is made possible by the strengthened processing power of embedded platforms, reliable operating systems for these platforms, standardized low-power wireless communication protocols and the growth of cloud computing platforms. As LED lighting continues a steady rate of adoption in existing buildings, it is likely to serve as a platform for deployment of lighting-related and additional sensors.

While the IoT conceptually promises extraordinary value to owners, several inhibitors have hindered adoption. With an energy upgrade such as new, efficient lighting, return on investment is fairly well understood and easy to calculate but not so much with the IoT. In fact, owners are often not able to articulate what they need. The facilities and IT departments will have to get on the same page regarding any device networking, especially with cybersecurity. Systems must be interoperable with coordinating software that is continuously updated, and the systems themselves should be functionally tested as part of ongoing maintenance.

ECs providing integration services in a smart building project will face the challenge of ensuring interoperability between different smart systems, which may be based on working with a select group of manufacturers whose systems are proven to seamlessly integrate and communicate. They will be tasked with streamlining systems that normally function independently into a single, efficient, smart-building solution. Cybersecurity will pose another challenge by applying standards, best practices and the ability to work with the owner’s IT department.

Though smart buildings are complex and challenging, they offer opportunities for ECs to provide value-added and higher-margin services. These services go beyond traditional installation to include ongoing performance monitoring and maintenance. The main challenge is that the biggest revenues will be found in services such as systems integration and performance monitoring, even though many ECs are currently unfamiliar with these services.

Many ECs have experience installing low-voltage wiring, building system controls and renewable-energy systems. Some maintain certified network designers and engineers on staff or on-call. The report asserts ECs should consider developing themselves as master system integrators—firms delivering smart buildings served by a single building system—to leverage this knowledge and experience into an even stronger role in the smart-building market.

A master systems integrator is focused on the big picture, with how to satisfy the owner’s project requirements by providing an overall integration architecture. Project responsibilities go beyond traditional installation services into the realms of design, engineering and project management. This would include producing smart building specifications based on owner needs. The master systems integrator would require a trained and certified workforce that is able to design a fully integrated smart building solution, including both IT/networking, building systems and controls.

Ultimately, the report says, a new mindset and shift in business practices will be required. In the short term, an EC evolving toward becoming a master systems integrator might partner with another integrator to absorb knowledge. They might support general and mechanical contractors to install building automation systems, configure networked lighting controls, and identify manufacturers whose products could work together in a smart-building solution. ECs might also offer performance monitoring and maintenance services and explore energy-efficiency rebates and alternative financing methods. They will need to develop their workforce and possibly spin off new specialized businesses offering various master integration services. Alternately, an EC might instead specialize in leasing and installing private wireless communication systems.

In expanding their businesses, the report concludes, ECs face “challenges related to the traditional project delivery approaches that prohibit integrated design settings, the need to offer facility management services that are outside the electrical contractor’s comfort and traditional business portfolio, and the need for more specialized workforce training than can be sustained under the current limited volume low-voltage work in most of the JATC local programs.”