While the majority of research and development tax credits within the Architecture, Engineering, and Construction space are directly related to engineering and design activities, construction companies can claim the credit for a wide variety of activities they are doing with regard to new building projects on a day-to-day basis. Similarly, companies within the Mechanical, Electrical, and Plumbing (MEP) engineering space also qualify even though they may only be working on specific systems within larger building projects.

In reality, there is technical uncertainty indicative of research activity in all the engineering trades, especially with regard to the design of custom systems for both new and existing structures. Activities such as design reviews for constructability, development of new construction processes, and experimentation with new raw materials, in addition to alternative assessments which are done continuously throughout the life of construction projects, may be qualified.

In addition to internal labor, qualified research expenses (QREs) often include the costs associated with hiring outside consultants to perform these activities.

This full-service construction firm serves public and private sector clients throughout the United States. Their personnel are highly skilled in the disciplines of engineering, architecture, and construction to develop innovative approaches to every project. Service sectors include Corporate, Cultural, Healthcare, Education, Life Sciences, Residential, Retail and Hospitality. Core MEP services include HVAC Engineering, Electrical Engineering, Plumbing and Sanitary Engineering, and Fire/Life Safety Engineering.

Potential clients submit requests for proposal (RFP) and during this process, the company evaluates the delivery system, be it a Design-Bid-Build (DBB), Design-Build (DB), Integrated Project Delivery (IPD), and reviews the building plans and technical specifications with a core focus on public safety, reliability, and energy-efficient designs.

During research and conceptual design, activities often included the research of energy needs and utility systems of the building. The company reviewed architectural schematics and discussed alternative types and classes of Mechanical, Electrical, and Plumbing (MEP) engineered systems.

Building renovations often displayed a vast amount of uncertainty as building records and historical data could be erroneous or lack information. With this, the company developed designs aimed at minimizing occupant disturbance by providing temporary system connections.

Specifically for electrical, engineers evaluated the electrical requirements, general-purpose repositories, electrical distribution systems, lighting systems, and any specialized electrical provisions. Load requirements of the machinery, equipment, and receptacles were defined. Equipment location and wiring routes were then developed to determine the optimal location for the building’s electrical distribution system (EDS), main switchboard, and panelboards to distribute power to the branch circuits. Before the circuits and feeders could be installed, tests were performed.

The plumbing system design required a review of the building occupancy and plumbing fixture requirements to determine the necessary flow for all water supply fixtures. Engineers performed in-depth technical calculations to derive pipe sizes based on flow rate and velocity limitations. The company analyzed static and residual pressure. Hydraulic engineering principles were also used to determine the available pressure. The anticipated high and low pressures were critical to ensure the plumbing systems were operating properly and efforts were made to determine pressure losses through the building’s interior supply systems including pipe friction, elevation loss, and equipment loss. Piping and instrumentation diagrams (P&ID) for documentation of pipe lengths, diameters, flows, and materials were assessed to ensure the load calculations were correct.

Heating, Ventilation, and Air Conditioning (HVAC) technologies, such as controls, distribution systems, installation, operation, and maintenance practices, involved extensive research. This company then reviewed the building orientation, number and type of windows, insulation levels, space and process requirements, general performance metrics, load, and climatic criteria. Engineers calculated the surface area of each building feature related to heat gains or losses, power usage, and airflow to establish new loads and equipment capacity requirements.

Across all construction and MEP activities, software tools to develop 2D, 3D, mathematical, and analytical models using software platforms such as BIM and AutoCAD were used. These tools helped determine if engineering calculations meet specification requirements related to geometry, materials, and installation. Virtual tests were used to evaluate multiple design scenarios against numerous criteria. Data was collected to evaluate failures, errors, and related performance requirements.

After all identified issues at this stage were resolved, construction documents were created. During construction, design changes are often required. As the project nears completion, teams checked off punch lists to validate that all deliverables were complete as specified. After construction, if specified, a project may require commissioning and/or special inspections and/or analysis and testing. Often, construction was especially complicated due to ongoing public access issues and corresponding safety concerns. As a result, many design and construction efforts involved developing temporary solutions that also met regulatory and safety requirements, some of these activities also qualified for the R&D tax credit.

Total combined federal and state tax credits for this $115 million MEP company average about $440,000 annually.