Article - January 2001
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The REAL Costs of Poor Indoor Air Quality

Len Damiano
Contributing Editor

"Most feel that "lightning" will always strike someone else;"

The sad fact is that most building managers and mechanical design engineers ignore the potential for IAQ problems until they are in the middle of a crisis. Most feel that "lightning" will always strike someone else; that they have been using a particular design and/or components for "20 years", without a problem of this nature; or that "if we have a problem, we can address it quickly and avoid significant damages". They all sound familiar, akin to that list of "famous last words".

As history teaches us, crises are great motivators. At that point, it is generally too late to correct many IAQ problems without additional costs to everyone involved with the project: from the owner, to the architect and engineer, to all mechanical subcontractors.

contemporary "Leaders" in our industry tend to buck tradition and set trends. They anticipate potential problems, thereby avoiding the negative impacts of an "incident". They are able to accept small incremental costs initially in exchange for significant long-term benefits. These characteristics also describe some of the motivations that forward-thinking employers and building operators have.

I tend not to believe that the "competitive bid environment" is a valid excuse for the acceptance of less-than-satisfactory systems. When control methodology or components are known in advance to be insufficient for the intended use, longevity of occupancy will not be sustained, nor will it encourage the greatest efforts from occupant-employee. These are usually rationalizations that can be easily overcome with a little creative planning or problem solving.

For those that really care about the design and efficient operation of their buildings, there are four areas of significant financial impacts that engineers and their clients need to consider in the design for acceptable Indoor Air Quality in any building project: the impact on productivity of the occupants, positive or negative; effects on health of the occupants, positive or negative; the risk of litigation and/or legal liability that may result from any negative impacts; and, energy usage.


Lawrence Berkley National Labs joined with the USDOE to investigate the financial impacts of poor indoor air quality in 1997. Their study estimated that the costs in lowered productivity to the U.S. economy ranged from $12 - $125 Billion per year. Recent studies have shown that improvements in productivity of 3% - 20% can be expected due to improvements in a worker's indoor environment.

Separately, a survey among interior design and facility planning decision-makers indicates that the respondents feel that overcrowding, followed by IEQ complaints have the greatest negative impact on employee productivity. Reel Grobman & Associates (San Jose, California) conducted the survey.

According to the report, 40% of the respondents said that overcrowding had the greatest negative effect, while 31% cited noise. Poor indoor air quality (19%) and poor lighting (10%) were among other factors cited by those surveyed. However, nearly three quarters of the respondents (74%) said they felt that workplace environmental conditions were critical to employee productivity, while the rest said those conditions had some impact.

While few people doubt a connection between productivity and IEQ, there have been few studies showing a definite effect, although several such studies are currently under way. Still, some analysts have shown that ignoring the IEQ impact of building management policies can have a negative financial effect that far outweighs minor savings from those policies.

Very often, building managers propose cost cutting moves without considering the added expense from lowered productivity if those changes have a negative effect on the indoor environment. An example of this came to light recently with the Building Owners and Managers Association (BOMA) boasting to members about its success in beating back two provisions in ASHRAE Standard 62.

Titled "ASHRAE 62: The Check's in the Mail," the article appeared in BOMA's member newsletter SkyLines. The two provisions in question would have required major construction areas to be isolated from the rest of the building by negative pressure and mandated a 48-hour period for purging contaminants from those areas following construction.

BOMA claims that these provisions were onerous and would have cost building owners about $0. 10 per square foot (ft2) for the first provision and $0.01 per ft2 for the second. According to the BOMA analysis, defeating those provisions would save a building owner about $11,096 for a 100,000 ft2 building.

However, BOMA's analysis didn't factor in a possible loss of productivity that would result if contaminants from the construction activity migrated into the occupied space of the building. This has been a factor in numerous IEQ cases and was the principal cause of the problems 10 years ago at the headquarters of the US Environmental Protection Agency (EPA). That situation resulted in numerous people being injured and multiple lawsuits.

But lawsuits aside, just a small negative effect on productivity in that same 100,000 ft2 building could more than offset the $11,096 saving. Consider the example of such a building with occupant density at that recommended by ASHRAE - 7 persons per 1,000 ft2 for a total of 700 people in the building. Then, assume an average annual salary of $25,000 for each person. This would be a total weekly salary of $336,538. If construction activities cause an IEQ degradation and merely a 1% drop in productivity, this would be a loss of $3,365 for each week that the situation existed.

It's easy to see that it wouldn't take long to eat up the alleged $11,096 in "savings" if the degraded IEQ were more severe or lasted more than a few weeks. This also doesn't take into account possible long-term health effects, such as in the EPA case, potentially disastrous lawsuits, and such intangibles as employee dissatisfaction and poor morale.

That example reflects a conclusion similar to that presented in the Whole Building Design Guide, published originally by the U.S. Naval Facilities Command (NAVFAC) and now maintained by NIBS.

Many of the factors that influence environmental comfort, such as quality lighting and adequate ventilation rates, also have a direct impact on building energy use. But the relationship between productivity and building energy use should be put in perspective. It has been widely observed that in private sector offices:

Salaries average about $200 per square foot per year; Building leases average approximately $20 per square foot per year; and, Energy costs average less than $2.00 per square foot per year.

Thus, a "productivity" increase of 1% [$200 x .01=$2] will completely offset the building's entire energy bill. This implies that it is crucial that interventions made in the name of energy efficiency do not negatively impact occupant satisfaction and productivity…… These strategies can, and should, be justified by their productivity increases alone.

The Navy went on to emphasize the following points, anticipating the responses of some readers.

  1. It is difficult to quantify the productivity benefits of improved work environments. In the real world, it is hard to structure controlled experiments that isolate the effects of issues such as the proximity of a window, the quality of indoor air, or the dynamic quality of natural light. 
  2. Just because productivity effects are difficult to quantify, does not mean that they are not real.

Health Impacts

In OSHA's effort to establish ventilation rules for non-industrial workers, they used the following justifications, in part:

"….the Agency estimates that the excess risk of developing the type of non-migraine headache which may need medical attention or restrict activity which has been associated with poor indoor air quality is 57 per 1,000 exposed employees. In addition the excess risk of developing upper respiratory symptoms which are severe enough to require medical attention or restrict activity is estimated to be 85 per 1,000 exposed employees. These numbers are extrapolated from actual field studies and therefore show the magnitude of the problem at present." OSHA 1994, Federal Register #: 59:15968-16039, Proposed Indoor Air Quality Regulations, CFR Title: 29

This amounts to an estimated average excess risk of lost work-time or diminished productivity for an additional 6% of your workforce, on any given day, in any facility that exhibits poor indoor air quality. Another 9% are estimated to be at excess risk and would probably incur lost time due to upper respiratory sickness.

In that same Lawrence Berkley/DOE study, they estimated that the direct cost to the U.S. economy due to increased allergies, asthma and SBS symptoms were between $7 - $23 Billion per year. A large portion of these costs was estimated to be in the form of Workmen's Compensation claims, Health Care insurance premiums and direct Health Care costs - mostly borne by the claimants' employers.

The healthfulness of indoor environments is of paramount importance to operators and occupants of medical facilities, for many obvious reasons. The most significant to each is the unintentional transfer of infectious diseases from one patient to another. The power of the ventilation system to aid or prevent these occurrences is not unknown to hospital facilities operations.

The most vulnerable patients to these typical airborne contamination problems include bone-marrow recipients, newborn infants, those in burn units and critical care patients. All of these areas require tight airflow controls to prevent migration to adjacent spaces in health care facilities.

The current annual Hospital-acquired Infection Death Rate is 88,000 deaths from 2,000,000 hospital-acquired infections. Health Facilities Management Magazine, in November 2000 referred to these numbers as "…a huge opportunity for performance improvement, akin to reducing the number of fire-related deaths in health care prior to the enforcement of the Life Safety Code." Nationally, about 4,400 of these deaths per year are due to airborne infectious contamination.

One of the most important design goals in hospital renovation is creating a negative pressure within the construction site to prevent dust laden with fungus spores from escaping to patient areas. In order to provide this control without extreme disruptions of ongoing operations and patient comfort, a level of flexibility is required in your HVAC system allowing work, while maintaining a high level of confidence that patients and workers will not be harmed during the process.

Reliable airflow control can provide flexibility of control for optimum environments for all your buildings' occupants' environmental case law. Renovation-related SBS damages appear as one of the largest sources of successful IAQ claims.

Litigation and Liability

Engineers carry insurance to cover Errors and Omissions and General Liability, but are most Mechanical Engineers, building owners and operators protected against the costs of defending themselves in IAQ litigation? Regardless of any potential costs for damages or remediation, which can approach the cost of the original structure, it is still very expensive, even if you WIN.

With the continuing public focus and litigation on indoor air quality issues, IAQ "business" is a growth industry. You can combine this with the growing belief by employees that they are "owed" a safe and comfortable working environment. Many of those employees feel that civil litigation involving third parties is their only recourse, when shown the limitations of claims against their employers within Workmen's Compensation laws. This makes HVAC engineers, service contractors, construction subcontractors, property management companies and building owners the biggest targets.

Most comprehensive general liability policies contain "Pollution Exclusion" clauses, which usually contain the following language:

"This insurance does not apply to:

Bodily injury or property damage arising out of the discharge, dispersal, release or escape of smoke, vapor, soot, fumes, acids, alkalis, toxic chemicals, liquids or gasses, waste material or other irritants, contaminants…..but this exclusion does not apply if such discharge, dispersal, release or escape is sudden and accidental."

Courts are somewhat split on the application of this clause to Building Related Illness / Sick Building Syndrome (BRI/SBS) claims. They are not as split on the application of the "Absolute Pollution Exclusion" clause. They are also split on the definition of "pollutant". However, you can assume that about 50% of state courts apply this boiler-plate clause to claims involving indoor pollutants, putting the entire cost for a legal defense directly on the shoulders of the building owner - regardless of any subsequent court decision.


Adequate ventilation is a critical component of design and management practices needed for good IAQ. Yet, the energy required to run the ventilation system constitutes about "half of a building's energy cost". The impact of maintaining a more accurate rate of dilution ventilation, as delivered to the occupied space, must be considered.

In April 1999, the U.S. Environmental Protection Agency (EPA) published the findings of a their study entitled Energy Cost and IAQ Performance of Ventilation Systems and Controls. The methodology used in their project has been to refine and adapt the DOE-2.1E building energy analysis computer program for the specific needs of the study, and to generate a detailed database on the: energy use, indoor climate, and outdoor air flow rates of various buildings, ventilation systems and outdoor air control strategies. Some of their most important conclusions regarding Variable Air Volume (VAV) and Constant Volume (CV) air system designs are detailed below.

VAV Systems Save Energy: Variable air volume systems provided $0.10 - $0.20 energy savings per square foot over constant volume systems.

VAV with Fixed Outdoor Air Fractions Caused Outdoor Air Flow Problems: VAV systems may require a different outdoor air control strategy at the air handler to maintain adequate outside air for indoor air quality than the constant volume predecessor. If the fixed outdoor damper strategy of the CV system, which is commonly used in the VAV systems, results in a fixed outdoor air fraction, the outdoor air delivery rate at the air handler will be cut to about one half to two thirds the design level during most of the year.

Core Zones Received Significantly Less Air than Perimeter Zones and space temperatures tended to be higher: Both CV and VAV systems provided an unequal distribution of supply air and outdoor air to zones.

Core Zones in VAV Systems with a Fixed Outdoor Air Fraction Received Very Little Outdoor Air: The VAV system with fixed outdoor air fraction diminished the outdoor air delivery to the core zone to only about one third of the design level. With a design level of 20 cfm of outdoor air per occupant, the core zone received only 6-8 cfm per occupant, and only 2-3 cfm per occupant with a design level of 5 cfm per occupant. Along with higher temperatures in the core zone, this shortfall could contribute to higher indoor air quality complaint rates in the core relative to the perimeter zones.

VAV with Constant Outdoor Air Control Displayed Improved Indoor Air Performance without any Meaningful Energy Penalty: A VAV system with an outdoor air control strategy that maintains the design outdoor air flow at the air handler all year round had slightly lower energy cost in the cold climate, and slightly more energy cost in the hot and humid climate. It is therefore comparable in energy cost, but preferred for indoor air quality.

Raising Outdoor Air to Meet ASHRAE Standard 62-1989 [or 1999] in Office Buildings Resulted in Very Modest Increases in Energy Costs: Raising outdoor airflow from 5-20 cfm per occupant in office buildings typically raised HVAC energy costs by only $0.02 - $0.08 per square foot (2% - 10%) depending type of system and climate. Considering the total energy bill, this increase amounted to approximately 1% - 4%. This is much less than is commonly perceived to be the case by practitioners. Cooling cost savings during cooler weather counterbalanced the cooling cost increases in the summer months. The most significant factor affecting this increase was occupant density.

Protecting or Improving Indoor Environmental Quality During Energy Efficiency Projects May Not Hamper Energy Reduction Goals: Many energy efficiency measures with the potential to degrade indoor environmental quality appear to require only minor adjustments to protect the indoor environment. When energy efficiency retrofit measures (including lighting upgrades), which were adjusted to either enhance or not degrade indoor environmental quality, were combined with measures to meet the outdoor air requirements of ASHRAE Standard 62-1989, total energy costs were cut by 35% - 45%. Operational measures compatible with indoor environmental quality cut total energy costs by 10%-20%. Avoiding operational measures that degrade indoor environmental quality meant that total energy reductions of only 3%-5% in the office building, and 7%-10% in the education building were foregone. There appears to be demonstrable compatibility between indoor environmental goals and energy efficiency goals, when energy saving measures and retrofits are applied wisely.

Much of the perceived conflict between IEQ and energy efficiency derives from just two elements of an energy strategy - the tendency to minimize outdoor air ventilation rates and the willingness to relax controls on temperature and relative humidity to save energy. Energy reduction activities that are generally recognized as having a significant potential for degrading the indoor environment and causing problems for the building owner (client) and the occupants have been identified below.

Energy Strategies that May Degrade IEQ

Common Strategy

EPA Comment

Reducing outdoor air ventilation

Applicable ventilation standards usually specify a minimum continuous outdoor airflow rate per occupant, and/or per square foot, during occupied hours.  They are designed to ensure that pollutants in the occupied space are sufficiently diluted with outdoor air.  

  • Reducing outdoor airflow below applicable standards can degrade IEQ and has low energy saving potential relative to other energy saving options.

Variable Air Volume (VAV) Systems with fixed percentage outdoor air

VAV systems can yield significant energy savings over Constant Volume (CV) systems in many applications.  However, many VAV systems provide a fixed percentage of outdoor air (e.g. fixed outdoor air dampers) so that during part load conditions when the supply air is reduced, the outdoor air may also be reduced to levels below applicable standards. 

  • VAV systems should employ controls, which maintain a continuous outdoor airflow consistent with applicable standards.  Hardware is now available from vendors and involves no significant energy penalty.

Reducing HVAC operating hours

Delayed start-up or premature shutdown of the HVAC can evoke IEQ problems and occupant complaints.

  • AN insufficient lead time prior to occupancy can result in thermal discomfort and pollutant-related health problems for several hours as the HVAC system must overcome the loads from both the night-time setbacks and from current occupancy.  This is a particular problem when equipment is downsized.  Shutting equipment down prior to occupants leaving may sometimes be acceptable provided that fans are kept operating to ensure adequate ventilation.  However, the energy saved may not be worth the risk.

Relaxation of thermal control

Some energy managers may be tempted to allow space temperatures or humidity to go beyond the comfort range established by applicable standards. 

  • Occupant health, comfort and productivity are compromised.  The lack of overt occupant complaints is NOT an indication of occupant satisfaction.

Impacts of Increased Outdoor Air Flow Rates on Annual HVAC Energy Costs was published in 1997 by individuals from the EPA and ICF Kaiser Consulting Group. One of their conclusions included the following:

An increase from 5 to 20 cfm per person in buildings typically results in a small increase in annual HVAC energy costs-2%-8% without economizers and 6%-10% with economizers. HVAC systems in hot and humid climates experience increases, which are higher due to the excess cooling load.

This was written to evaluate the potential impact on building operations changing their ventilation rates from ASHRAE Standard 62-1981 to the update for 1989. The greatest impact was the change from 5 cfm/person to 20 cfm/person. That was a necessary, but huge increase of 400%. If that change positively impacted energy costs 10% in the worst case, we can very conservatively conclude that more effective system designs providing only that intake rate required, under any operating or environmental condition would translate to some energy savings in most situations.

REAL Solutions

The U.S. Government has addressed the indoor environment problem with Mr. Clinton's "Green Building" initiatives. These are mostly looking to mitigate or avoid materials and products that are known to produce VOC's and other contaminants found in most commercial buildings.

Regardless of the reductions made and their impact on the total amount of dilution ventilation required (per ft2 or person), the needed replacement of oxygen used by the occupants and building pressurization requirements alone will prevent operators from shutting down outside air intakes. It should also be recognized that dilution air for "unknown" contaminants and to minimize the spread of infectious diseases within a work group is also required.

Dilution ventilation is the first thing most IAQ investigators check and the first thing that is "adjusted" to mitigate known SBS problems, with good reason. The lack of an adequate amount of dilution air has been identified as the single most common source of all IAQ complaints and the cause of many IAQ lawsuits.

Provisions for precision instrumentation and effective control designs for a building's mechanical ventilation system are the single most important necessities to insure that a building can compensate for the dynamic changes in the environment, both internal and external to the building's systems. It also provides for the optimization of the energy used, while guaranteeing compliance with code-mandated ventilation rates.

Unfortunately, most building owners and operators do not involve themselves in design details and are dependent on the design engineer to guide them. But, when budgets are stretched to the limits, something has to give and "value" is engineered out of the mechanical systems, including essential controls and instrumentation.

We hear complaints from many unable to control comfort and health conditions in newer office buildings, but no one seems to make the connection between their current dilemma and the construction or design decisions that were previously made. But, even in the newer existing buildings, most can be retrofit fairly inexpensively with the required instrumentation and the control devices needed to maintain a dynamic grip on constant intake rates. It is either that or live with the costs to condition a still undeterminable amount of outside air.

Even with "packaged" unitary air conditioning systems, many without the design capacity to condition more that "10%" outside air, effective and reasonable solutions are available. The needed instrumentation, control devices and preconditioning equipment can be retrofit to compensate for many decisions and omissions made prior to occupancy of a building. Obviously, each system needs to be evaluated for design necessities and specific capacities before hard costs can be estimated. However, if replacement of an existing control system can be avoided, many systems can be upgraded for only a few thousand dollars of hardware per intake, plus installation.

The changes needed to provide adequate indoor environments for employees could return significantly more than the direct costs to HVAC systems and any indirect costs for incremental increases in energy usage.

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