Building An HVAC Capital Plan: Step-By-Step Guide for Toronto Property Managers

Lifecycle planning, budgeting and forecasting 3–7 year CAPEX cycles

Running a commercial property in Toronto can sometimes feel like managing two opposing realities:

1. HVAC systems are mission-critical to protect tenants and operations.

2. HVAC equipment is expensive to replace.

No property manager wants to deal with an emergency rooftop unit failure in the middle of summer. Renting temporary cooling towers is stressful and expensive. Nobody wants to get blindsided by a $40,000–$100,000 replacement project that wasn’t approved, budgeted, or expected.

The solution is an organized, data-driven HVAC Capital Plan.

A well-organized CAPEX plan provides transparency into when equipment will need to be replaced, accurate cost forecasts for each project, and a ready-for-board justification for every capital dollar spent. The good news is that a repeatable process makes it possible to master HVAC capital planning.

01. Create a Full Asset Inventory (HVAC “Master List”)

Before you can start planning your capital budget, you need visibility into all the HVAC assets on the property.

The first step is to create a complete equipment inventory. The Master List should include every HVAC asset on the property, including:

• Rooftop units (RTUs)

• Boilers & hydronic systems

• Heat pumps, ERVs, VRF/VRV systems

• Exhaust fans & MAUs

• Cooling towers & pumps

• Gas unit heaters / tube heaters

• Air handlers & VAV equipment

To do this properly, you need to capture a few key data points for each asset, including:

• Model, manufacturer, serial #

• Age & installation date

• BTU or tonnage

• Condition rating

• Last major repair

• Remaining useful life (RUL)

• Technician notes

  
  

02. Identify RUL (Remaining Useful Life)

Cold Canadian winters shorten equipment lifespan.

Toronto’s harsh climate takes a toll on equipment lifespan. As a result, typical Remaining Useful Life in the GTA is significantly shorter than equipment manufacturers suggest.

Average RUL in the GTA:

• RTUs: 12–15 years

• Boilers: 20–25 years

• VRF: 12–18 years

• MUAs: 12–15 years

• ERVs/HRVs: 10–15 years

• Cooling towers: 15–20 years

• Pumps / motors: 8–12 years

Organize equipment into 3 buckets based on RUL:

• 0–2 years (urgent)

• 3–5 years (priority)

• 6–10 years (long-term)

03. Field Condition Assessment (FCA)

Age is just one factor in equipment condition.

Equipment RUL is a great starting point but going onsite to review asset condition is always more accurate. The best way to do this is a simple Field Condition Assessment (FCA).

Walk each asset and score the mechanical & electrical condition. Check for corrosion, refrigerant circuit performance, controls & energy efficiency, compliance (TSSA, OBC 2025), and any prior service history.

In most cases, it’s best to just use a simple Good, Fair, or Poor score (70–100%, 40–69%, or 0–39%).

04. 3–7 Year Replacement Forecast

Map all equipment to future years based on RUL and condition.

With each asset’s RUL and current condition in mind, create a 3–7 year replacement forecast. It’s a simple spreadsheet that lists:

• Equipment tag & location

• Age / RUL

• Priority

• Estimated year to replace

• Estimated cost

05. Replacement Cost Estimates

Replacement cost ranges in Toronto.

Once you know when each piece of equipment needs to be replaced, you need a rough estimate of the cost.

The replacement cost ranges for Toronto are pretty wide, but should look something like this:

• 5–7.5 ton RTU: $18K – $28K

• 10–20 ton RTU: $30K – $65K

• Larger RTUs: $60K – $120K

• Boilers: $30K – $90K+

• Cooling towers: $80K – $150K

• MAUs: $40K – $120K

• VRF systems: $60K – $250K

Every replacement budget needs to include:

• Equipment (25–35% of project cost)

• Labour (15–25%)

• Crane (3–5%)

• Gas piping (5–10%)

• Electrical (15–25%)

• Controls integration (10%)

• Permits (5–10%)

• Plus contingency (10–15%)

06. Add Energy & Compliance Upgrades

Capital plans today include more than just replacement.

Cost estimates today need to include more than just straight replacements. Energy upgrades and code compliance should always be part of a capital plan discussion.

Typical energy upgrades include:

• ECM motors

• VFDs

• Economizer retrofits

• Condensing boilers

• Controls modernization projects include:

• BAS integration

• Smart sensors

• Remote monitoring

Compliance / code upgrades include:

• TSSA updates

• Gas code revisions

• OBC 2025 upgrades

• Refrigerant phase-out (R410A to R454B)

07. Multi-Year CAPEX Budget

An easy-to-follow annual CAPEX budget is the ultimate goal

With the complete 3–7 year forecast in place, the next step is to organize it into an annual capital budget.

This is as simple as lining up 3–5 key projects in a column, then showing the project budget and annual board recommendation.

Sample table:

• 2026 – Replace RTU #5 – $52,000

• 2027 – Boiler replacement – $68,000

• 2028 – Cooling tower rebuild – $120,000

• 2029 – RTUs #7 & #8 – $78,000

• 2030 – BAS upgrade Phase 2 – $40,000

08. OPEX vs CAPEX Impacts

CAPEX projects also have a positive impact on the OPEX budget

All capital projects will have some impact on the future Operating budget. This can be positive (cost savings) or negative (additional requirements, warranty service costs, etc. ).

Here are some common OPEX benefits that can be included in a capital plan:

• Lower breakdown costs

• Fewer after-hours callouts

• Reduced hydro bill

• Less frequent repairs

• Improved tenant comfort

• Better equipment reliability

09. Risk Matrix

Rate every asset based on how important it is.

One thing not included in a typical lifecycle plan is risk. A more thorough assessment would also score every asset based on several important criteria:

• Tenant impact if failed

• Redundancy

• Seasonality

• Lead time to replace

• Failure consequences

A risk matrix helps organize the order of replacements based on risk and impact, not just equipment age.

10. The Final Plan

HVAC capital plans should include 10 key sections.

A full HVAC Capital Plan includes the following 10 sections, with relevant supporting documents attached for each:

• Executive summary

• Asset inventory

• Lifecycle & condition analysis

• 3–7 year forecast

• Cost estimates

• Risk matrix

• Recommendations

Final Thoughts

HVAC Capital Plans provide many benefits

In the end, a repeatable capital plan process provides a number of long-term benefits for Toronto property managers:

• Predictable budgeting – Fewer surprises and emergencies

• Lower tenant complaint volume

• Higher tenant satisfaction

• Better energy performance

• Longer equipment life

• Stronger NOI and asset value

Burban Air Systems can help with all aspects of building complete HVAC capital plans, asset inventories and lifecycle assessments.