Reducing electrical system costs

Consider these cost-saving ideas for retrofitting existing equipment and tips for cost savings throughout the new-building engineering process.
By Debra Vieira, PE, LEED AP, ATD, CPQ, CH2M HILL, Portland, Ore. March 4, 2013

It happens too often on projects. You’re working hard on a project when the client decides to check a cost estimate. The next thing you know, the design comes to a screeching halt because the project is over budget. The client is asking for ideas to help reduce construction costs without changing the facility’s function. Simple items begin to get pulled from the project. Fancy architectural finishes, angular rooms, and curved walls are replaced with more cost-effective solutions. High-end light fixtures are replaced with more practical fixtures. As a natural extension to cost-cutting measures, focus then turns to the electrical distribution system because the components are expensive to procure and install. You’re tasked with engineering new concepts for the electrical system. This article presents cost-saving ideas for retrofitting existing equipment and tips for cost savings throughout the new-building engineering process.

Go underground

Install as many feeders and branch circuits underground or in the concrete floor slab as possible. This approach reduces costs in multiple ways. Material costs are reduced by using less expensive PVC conduit instead of higher cost electrical metallic tubing, intermediate metal conduit, or rigid conduit. Eliminating overhead support systems for the conduit runs further reduces material and labor costs. PVC conduit is easier to install than rigid conduit. While the possibly does exist that the feeders and branch circuits may need to be derated in underground or in slab installations, the increased cost of the derated conductors is typically less than the cost of installing the conductors overhead (see Figure 1). An additional benefit of installing the feeders and branch circuits underground or in slab is a potentially compressed construction schedule. While the cost savings can be substantial, this approach requires careful coordination of conduit stub-up locations. This may be difficult if equipment has not already been selected or purchased. Additionally, this approach may reduce future flexibility and impede cable inspection and repair. 

Figure 1: This screen shot shows underground conductor derating calculations performed by an electrical engineering software package. Courtesy: CH2M Hill

Three-wire system

Design a system that uses a 3-phase, 3-wire electrical distribution system (three phases plus a ground) even if there are loads that require a neutral. The neutral conductor is typically the same size as the phase conductors because it is difficult for the designer to have access to all the load information necessary to calculate a reduced neutral size. Additionally, a reduced neutral size might limit load modifications in the future. Therefore, the designer is generally conservative and provides a full-size neutral within the distribution system. This has the effect of increasing feeder conductor costs by about 25%. In reality, the actual cost increase is more because the neutral conductor is a current-carrying conductor and, according to the National Electrical Code (NEC), if there are four current carrying conductors in a conduit, all four conductors must be derated 20%. For every four-conductor feeder, the cost increase is approximately 30% to 40%, or higher.

A more cost-effective solution is to limit the quantity of four-conductor feeders. This is done by designing a 3-phase, 3-wire system. Where a neutral conductor is needed (i.e., single-phase loads), install a delta-wye transformer. This transformer does not necessarily have to change the distribution voltage. For example, rather than designing a 3-phase, 4-wire system to accommodate 277 V lighting, design a 3-phase, 3-wire system and, where required, provide a 480 V delta to 480 V/277 V wye transformer for the 277-V lighting. 

Take another look at aluminum

Be open-minded about alternate conductor types—consider using aluminum conductors. This solution can be cost effective. Aluminum conductors are UL-listed and meet NEC requirements for installation, although some municipalities or states may restrict their use. Aluminum alloys used in today’s conductors are significantly better than the alloys used in days past. The AA-8000 electrical-grade aluminum alloy conductor material does not have the same issues with expansion and contraction as the old alloy that so many people fear. Most equipment terminations are typically dual rated for either copper or aluminum conductors. Terminations can be either mechanical set screw or compression type, although consideration should be given to larger parallel feeders due to the possibility of landing more conductors than the equipment is designed to terminate. Additionally, voltage drop on aluminum conductors will be greater than that for copper conductors because the resistance per foot of aluminum is higher. Aluminum conductors can be installed in all UL-listed raceway systems, and they can be used for service entrances, feeders, and branch circuit wiring. Insulation types for aluminum conductors allow installation in both wet and dry locations and are sunlight resistant. 

Another option is to use a combination of copper and aluminum conductors within the project. Consider designing all feeders rated less than 250 A and branch circuits with copper. Specify feeders rated more than 250 A to be aluminum. Using this approach, a 400 A, 3-phase, 3-wire underground aluminum feeder is about 15% less expensive than a comparable copper feeder. Also, consider specifying aluminum windings for transformers and tinned aluminum bus bars in panelboards and switchboards instead of copper. 

Performance vs. detailed design

Specifications for circuits and conduits should be rule-based, allowing the electrical contractor to choose where to combine circuits and where to route conduits. While the engineer can prepare project documentation indicating circuiting and routing, generally it is not necessary. Allow the electrical contractor to choose the best routing options based on source/load locations, building types, construction sequencing, and sharing of conduit supports. The designer may still need to define routing zones to avoid cross-discipline routing conflicts. 

Allow the electrical contractor to combine circuits in a conduit and share neutral conductors where appropriate. Circumstances where circuits must be installed in a specific manner or conduits must be routed in a very precise location should be detailed in the design documents. Rule-based circuit and conduit routing allows the contractor to provide the best route with the least amount of labor and materials. This also has the benefit of allowing design team members to focus their time on the critical circuit and conduit coordination issues rather than noncritical issues. 

Use the load as an advantage

For derating conductors in underground installations and for voltage drop, derate based on actual load instead of circuit-breaker rating. The NEC recommends that conductors be derated for underground installations and voltage drop. However, if the required voltage is not available at the load, the load will fail to operate properly. 

The most conservative approach is to use the circuit breaker ampacity to determine the load size for derating calculations. However, this can cause the conductors to be significantly oversized, especially when the conductors are servicing a dedicated load. For dedicated loads, use the actual maximum current-based nameplate rating of the device or the manufacturer’s data sheet as the load size for derating calculations. This results in smaller, less expensive conductors to install. In no case shall derated conductor sizes be less than nonderated conductors for the same device, but in some instances the conductor size may not need to be increased. For panels, switchboards, or similar types of equipment, it is recommended to base derating calculations on the equipment’s full-load capacity because the loads may change over time due to facility retrofits or upgrades. 

When underground is not an option

Figure 2: Cable tray can be used instead of conduit in situations that prevent underground feeder installation, especially if many conductors must be routed. Courtesy: CH2M HillIn cases where feeders can’t be installed underground, consider using cable tray instead of conduit (see Figure 2). While the cost and installation of cable tray is greater than that of conduit, overall cost-savings can be achieved if there is a need to route a significant quantity of conductors. The cost break point will vary depending on the facility type, width, and material of the tray itself along with the quantity of feeders being installed. This cost break point should also incorporate the difference in labor hours to pull the conductors through the conduit versus the reduced hours for laying conductors in the tray. An added benefit is that cable tray easily allows future flexibility in adding, changing, or removing conductors if the loads change. 

Another option is to use busway for the large feeders between switchgear, switchboards, and panelboards. This can be a cost-effective solution compared to using conduit and cable for a large installation. 

Battery packs

For facilities that need emergency power for life safety only (i.e., emergency lighting and fire alarm panels), consider using battery-backed devices rather than an emergency generator. Emergency generation systems are expensive to purchase, install, operate, and maintain. Even if the design is already using a standby or backup generator for other loads, battery-backed life-safety equipment can still be a cost-effective solution. 

The NEC requires that where generators are supplying any combination of life safety (emergency), standby, and backup loads, they must have the capability of selective load pickup and load shedding to prioritize the loads and ensure adequate power for the life safety loads. Boxes, enclosures, transfer switches, and panels must be permanently marked to identify these devices as part of the emergency system. The NEC further requires that wiring from an emergency source or panel to the load be independent from all other wiring and equipment. Material costs for a generator load management system, permanent identification of all systems, and independent emergency wiring—in addition to the labor to install these systems—can exceed the costs of a life-safety system designed using battery-backed devices.

Offsite prefabrication

Specify and design equipment, components, and assemblies such that they can be prefabricated offsite. Prefabrication is a technique that divides complex electrical installations into manageable subassemblies. These subassemblies can be designed and constructed at offsite manufacturing facilities. Advantages to this approach include reduced on-site labor costs, improved quality control, and improved schedule performance. Often, prefabrication will occur concurrently with on-site preparation, thereby improving the speed of construction for the entire project and potentially reducing the impact of critical-path items. 

Prefabricated components undergo quality control procedures and functional testing, and can be partially commissioned prior to shipment to the site. Prefabrication also allows an increased level of material utilization controls, which reduces material waste, improves overall sustainability of the installation, and reduces the environmental impact of construction. Additional advantages of prefabricated assemblies include enhanced worker safety, minimized delays due to weather or labor shortages, and improved site security. 

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.