Reducing electrical system costs


Communication with the authority having jurisdiction

Know exactly which codes and regulations will be enforced; don’t assume. Meet with the local authorities, the fire department, and utility company to understand enforced codes and regulations. Each jurisdiction may have different codes and regulations that must be adhered to when submitting plans for permit review. These codes can include state-, county-, and city-specific supplements to the NEC; energy codes; lighting codes; fire and life-safety codes; and air permitting and emission regulations (for generator systems).

Verification of the currently enforced edition of the NEC is also critical because some jurisdictions may not have adopted the latest edition. Additionally, each jurisdiction will have different submittal requirements for drawings, specifications, and calculations. Know these requirements up front when starting the design so that project time is focused on researching the correct codes and regulations, and preparation of the correct documents in the proper format for review. This simple planning exercise can help keep the project on schedule and prevent rework of the design documentation or installed equipment due to misinterpretation of enforced codes. 

Taking a multiphase approach

Sometimes, even after implementing cost reducing ideas, the cost is still too high for the client’s budget. Additional options include designing an installation that assumes multiphased installation. The intent of this approach is to install just enough equipment to allow the facility to function based on a reduced load or reduced productivity and allow for future expansion at a later date. In its simplest form, multiphasing includes two phases. Typically used with new construction, this approach can still be worthwhile for a large retrofit project requiring a staged approach to accommodate usage or budget. A multiphase approach can help bring down the initial cost of the project through reduction of installed equipment and associated labor. 

It’s important to realize that the overall cost of a multiphase project will exceed the cost of a single-phase project. This is because labor and equipment costs will escalate over time, the contractor will have to mobilize multiple workforces—one for each phase, the contractor will have to apply for multiple permits for each trade—one for each phase, and design documents may need to be reengineered due to changes in codes and regulations. With a multiphase approach, the cost of the project is not equally divided between phases. Assuming a two-phase project, phase-one costs will be more than 50% of the total project costs to prepare the facility and equipment for future expansion. Examples of phase one work include installing ductbanks and all underground or in-slab conduits, building out spaces for future equipment, and installation of switchgear, switchboards, transformers, and generators, all of which are sized for the total facility load. 

There is a possibility of reducing some of the distribution gear costs by providing only the circuit breakers that are needed for the first phase and providing spaces for future circuit breakers. If this approach is used, carefully consider how the subsequent phases will be deployed and the associated disruption of electrical service when the expansion is made. Many facilities and processes cannot tolerate extended power outages. With proper planning, power outages for a phased installation can be minimized and possibly eliminated. Even though a multiphase approach may cost more in capital construction cost, it has the potential to better align with an owner’s initial project budget. 

Other considerations

Recognize that the approaches presented here only begin to highlight areas for cost savings. A few other approaches to consider include:

  • Use higher voltages for distribution and step-down to utilization voltages as close to the load as possible.
  • Select vendors based on qualifications and negotiate pricing. Engineering and constructing around known products prevents overly conservative installations that support multiple vendors.
  • Calculate withstand ratings for equipment based on actual utility values for fault current contributions rather than assuming an infinite bus.
  • Size equipment for the loads. Typical system loading for commercial facilities is 30% to 40%, and for industrial facilities is 60%. Use all the demand and diversity factors allowed by the NEC for lighting, receptacles, motors, and noncoincident loads to right-size the equipment.
  • Consider using switchboard construction instead of switchgear construction. Both types of construction can use insulated case or low-voltage power circuit breakers, but their fault withstand characteristics and ease of maintenance are very different.
  • Verify the maintenance and reliability needs of the circuit breakers specified within the switchgear or switchboard structure. There are significant cost differences among low-voltage power circuit breakers, insulated case circuit breakers, and molded case circuit breakers—don’t overspecify.
  • Design trenches below equipment to reduce labor costs for conduit routings.
  • Use standard products instead of customized pieces of equipment.
  • Limit the use of strut systems and use them only where necessary. For example, using strut supports for light fixtures is overkill.
  • Use metal-clad cable for branch circuits 


In designing to budget for a client, the electrical distribution system becomes a key target for cost reduction due to the significant expense associated with procurement and installation. Consider these options for retrofitting existing equipment and other tactics for cost savings throughout the new building engineering process. 

When developing options for your client, recognize that the initial cost of equipment is not the only important issue. Equipment and material choices, rewiring, offsite assembly, and multiphasing are approaches that focus on one part of the pie: the initial cost of a product. Client-owners must be cognizant of how these cost-saving efforts will affect their total cost of ownership, which includes costs for operations, maintenance, and eventually disposal—and how early cost-saving measures will affect operations in the future.

Debra Vieira is a senior electrical engineer at CH2M HILL with more than 20 years of experience for industrial, municipal, commercial, educational, and military clients globally.

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TOM , TX, United States, 03/06/13 09:06 AM:

Some utilities require a 4 wire incoming service even when there are only 3 wire motor loads.
PRASAD , GA, United States, 03/06/13 10:25 AM:

Interesting article !
JASON , SC, UNITED STATES, 12/10/14 03:47 PM:

In all of my design implementations, I found that the cost of going overhead is more expensive. The addition of supports do not typically outweigh the de-rating and the labor that is required to install the underground duct with the conduits and the spacers and the bare ground in a duct. The overhead cable trays also cuts down in pulling the cable from point "A" to "B". I am of course speaking from an industrial sector. In a commercial sector this comment may not be valid. Also the aluminum cables are typically bigger than their copper conterparts so the raceway sizes will have a cost impact.

The Al vs Cu is very contraversial. I have some clients that are so set on copper they would request a new lead engineer for even proposing the idea. To date I have not been associated with an Al conductor project, but I have only been in the industrial industry (18 years). Commercial my have more applicable scenarios. 250HP 460V Motor require big Cu wire and Al would need to be even bigger so labor would play a factor.
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