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ASTM E917-05

(Practice)

Standard Practice for Measuring Life-Cycle Costs of Buildings and Building Systems

Standard Practice for Measuring Life-Cycle Costs of Buildings and Building Systems

SIGNIFICANCE AND USE
LCC analysis is an economic method for evaluating a project or project alternatives over a designated study period. The method entails computing the LCC for alternative building designs or system specifications having the same purpose and then comparing them to determine which has the lowest LCC over the study period.
The LCC method is particularly suitable for determining whether the higher initial cost of a building or building system is economically justified by reductions in future costs (for example, operating, maintenance, repair, or replacement costs) when compared with an alternative that has a lower initial cost but higher future costs. If a building design or system specification has both a lower initial cost and lower future costs relative to an alternative, an LCC analysis is not needed to show that the former is the economically preferable choice.
If an investment project is not essential to the building operation (for example, replacement of existing single-pane windows with new double-pane windows), the project must be compared against the “do nothing” alternative (that is, keeping the single pane windows) in order to determine if it is cost effective. Typically the “do nothing” alternative entails no initial investment cost but has higher future costs than the proposed project.
SCOPE
1.1 This practice establishes a procedure for evaluating the life-cycle cost (LCC) of a building or building system and comparing the LCCs of alternative building designs or systems that satisfy the same functional requirements.
1.2 The LCC method measures, in present-value or annual-value terms, the sum of all relevant costs associated with owning and operating a building or building system over a specified time period.
1.3 The basic premise of the LCC method is that to an investor or decision maker all costs arising from an investment decision are potentially important to that decision, including future as well as present costs. Applied to buildings or building systems, the LCC encompasses all relevant costs over a designated study period, including the costs of designing, purchasing/leasing, constructing/installing, operating, maintaining, repairing, replacing, and disposing of a particular building design or system.

General Information

Status
Historical
Publication Date
30-Sep-2005
ICS
91.010.20 - Contractual aspects
Technical Committee
E06 - Performance of Buildings
Drafting Committee
E06.81 - Building Economics
Current Stage
Ref Project

Relations

Replaces
ASTM E917-02 - Standard Practice for Measuring Life-Cycle Costs of Buildings and Building Systems
Effective Date
01-Oct-2005
Replaced By
ASTM E917-05e1 - Standard Practice for Measuring Life-Cycle Costs of Buildings and Building Systems
Effective Date
01-Oct-2005
Referred By
ASTM E1074-15(2020)e1 - Standard Practice for Measuring Net Benefits and Net Savings for Investments in Buildings and Building Systems
Effective Date
01-Oct-2005
Referred By
ASTM E3008/E3008M-16(2023) - Standard Classification for Transportation Surface Elements—UNIFORMAT II
Effective Date
01-Oct-2005
Referred By
ASTM E964-15(2020)e1 - Standard Practice for Measuring Benefit-to-Cost and Savings-to-Investment Ratios for Buildings and Building Systems
Effective Date
01-Oct-2005
Referred By
ASTM E3130-21 - Standard Guide for Developing Cost-Effective Community Resilience Strategies
Effective Date
01-Oct-2005
Referred By
ASTM E2432-23 - Standard Guide for General Principles of Sustainability Relative to the Built Environment
Effective Date
01-Oct-2005
Referred By
ASTM E2166-16(2023) - Standard Practice for Organizing and Managing Building Data
Effective Date
01-Oct-2005
Referred By
ASTM E1121-15(2020)e1 - Standard Practice for Measuring Payback for Investments in Buildings and Building Systems
Effective Date
01-Oct-2005
Referred By
ASTM E2103/E2103M-19 - Standard Classification for Bridge Elements—UNIFORMAT II
Effective Date
01-Oct-2005
Referred By
ASTM E2506-15(2020)e1 - Standard Guide for Developing a Cost-Effective Risk Mitigation Plan for New and Existing Constructed Facilities
Effective Date
01-Oct-2005
Referred By
ASTM E2150-17 - Standard Classification for Life-Cycle Environmental Work Elements—Environmental Cost Element Structure
Effective Date
01-Oct-2005
Referred By
ASTM E3035-15(2020) - Standard Classification for Facility Asset Component Tracking System (FACTS)
Effective Date
01-Oct-2005
Referred By
ASTM E1185-15(2020)e1 - Standard Guide for Selecting Economic Methods for Evaluating Investments in Buildings and Building Systems
Effective Date
01-Oct-2005
Referred By
ASTM E1057-15(2020)e1 - Standard Practice for Measuring Internal Rate of Return and Adjusted Internal Rate of Return for Investments in Buildings and Building Systems
Effective Date
01-Oct-2005

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ASTM E917-05 - Standard Practice for Measuring Life-Cycle Costs of Buildings and Building SystemsASTM E917-05 - Standard Practice for Measuring Life-Cycle Costs of Buildings and Building Systems
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ASTM E917-05 - Standard Practice for Measuring Life-Cycle Costs of Buildings and Building Systems
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NOTICE: This standard has either been superseded and replaced by a new version or withdrawn.
Contact ASTM International (www.astm.org) for the latest information
An American National Standard
Designation: E 917 – 05
Standard Practice for
Measuring Life-Cycle Costs of Buildings and Building
1
Systems
This standard is issued under the fixed designation E 917; the number immediately following the designation indicates the year of
original adoption or, in the case of revision, the year of last revision. A number in parentheses indicates the year of last reapproval. A
superscript epsilon (e) indicates an editorial change since the last revision or reapproval.
INTRODUCTION
Several methods of economic evaluation are available to measure the economic performance of a
building or building system over a specified time period. These methods include, but are not limited
to, life-cycle cost (LCC) analysis, the benefit-to-cost ratio, internal rate of return, net benefits,
payback, multiattribute decision analysis, risk analysis, and related measures (see Practices E 964,
E 1057, E 1074, E 1121, E 1765, and E 1946). These methods differ in their measure and, to some
extent, in their applicability to particular types of problems. Guide E 1185 directs you to the
appropriate method for a particular economic problem. One of these methods, life-cycle cost (LCC)
analysis, is the subject of this practice.The LCC method sums, in either present-value or annual-value
terms, all relevant costs associated with a building or building system over a specified time period.
Alternative (mutually exclusive) designs or systems for a given functional requirement can be
compared on the basis of their LCCs to determine which is the least-cost means of satisfying that
requirement over a specified study period.
1. Scope 2. Referenced Documents
2
1.1 This practice establishes a procedure for evaluating the 2.1 ASTM Standards:
life-cycle cost (LCC) of a building or building system and E 631 Terminology in Building Constructions
comparing the LCCs of alternative building designs or systems E 833 Terminology of Building Economics
that satisfy the same functional requirements. E 964 Practice for Measuring Benefit-to-Cost and Savings-
1.2 The LCC method measures, in present-value or annual- to-Investment Ratios for Buildings and Building Systems
value terms, the sum of all relevant costs associated with E 1057 Practice for Measuring Internal Rate of Return and
owning and operating a building or building system over a Adjusted Internal Rate of Return for Investments in Build-
specified time period. ings and Building Systems
1.3 The basic premise of the LCC method is that to an E 1074 Practice for Measuring Net Benefits and Net Sav-
investor or decision maker all costs arising from an investment ings for Investments in Buildings and Building Systems
decision are potentially important to that decision, including E 1121 Practice for Measuring Payback for Investments in
future as well as present costs.Applied to buildings or building Buildings and Building Systems
systems, the LCC encompasses all relevant costs over a E 1185 Guide for Selecting Economic Methods for Evalu-
designated study period, including the costs of designing, ating Investments in Buildings and Building Systems
purchasing/leasing, constructing/installing, operating, main- E 1369 Guide for Selecting Techniques for Treating Uncer-
taining, repairing, replacing, and disposing of a particular tainty and Risk in the Economic Evaluation of Buildings
building design or system. and Building Systems
1
This practice is under the jurisdiction of ASTM Committee E06 on Perfor-
2
mance of Buildings and is the direct responsibility of Subcommittee E06.81 on For referenced ASTM standards, visit the ASTM website, www.astm.org, or
Building Economics. contact ASTM Customer Service at service@astm.org. For Annual Book of ASTM
Current edition approved Oct. 1, 2005. Published November 2005. Originally Standards volume information, refer to the standard’s Document Summary page on
approved in 1983. Last previous edition approved in 2002 as E 917 – 02. the ASTM website.
Copyright © ASTM International, 100 Barr Harbor Drive, PO Box C700, West Conshohocken, PA 19428-2959, United States.
1

---------------------- Page: 1 ----------------------
E917–05
E 1765 Practice forApplying theAnalytical Hierarchy Pro- effective. Typically the “do nothing” alternative entails no
cess (AHP) to Multiattribute Decision Analysis of Invest- initial investment cost but has higher future costs than the
ments Related to Buildings and Building Systems proposed project.
E 1946 Practice for Measuring Cost Risk of Building and
6. Procedure
Building Systems
6.1 Follow these steps in calculating the LCC for a building
E 2204 Guide for Summarizing the Economic Impacts of
Building-Related Projects or building system:
6.1.1 Identify objectives, alternatives, and constraints (see
2.2 ASTM Adjuncts:
3
Discount Factor Tables, Adjunct to Practice E 91
...

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SIGNIFICANCE AND USE
5.1 LCC analysis is an economic method for evaluating a project or project alternatives over a designated study period. The method entails computing the LCC for alternative building designs or system specifications having the same purpose and then comparing them to determine which has the lowest LCC over the study period.  
5.2 The LCC method is particularly suitable for determining whether the higher initial cost of a building or building system is economically justified by reductions in future costs (for example, operating, maintenance, repair, or replacement costs) when compared with an alternative that has a lower initial cost but higher future costs. If a building design or system specification has both a lower initial cost and lower future costs relative to an alternative, an LCC analysis is not needed to show that the former is the economically preferable choice.  
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1.3 The basic premise of the LCC method is that to an investor or decision maker all costs arising from an investment decision are potentially important to that decision, including future as well as present costs. Applied to buildings or building systems, the LCC encompasses all relevant costs over a designated study period, including the costs of designing, purchasing/leasing, constructing/installing, operating, maintaining, repairing, replacing, and disposing of a particular building design or system.  
1.4 The values stated in inch-pound units are to be regarded as standard. The values given in parentheses are mathematical conversions to SI units that are provided for information only and are not considered standard.  
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Standard Practice for Measuring Cost Risk of Buildings and Building Systems and Other Constructed Projects

SIGNIFICANCE AND USE
5.1 Measuring cost risk enables owners of buildings and other constructed projects, architects, engineers, and contractors to measure and evaluate the cost risk exposures of their construction projects.3 Specifically, cost risk analysis (CRA) helps answer the following questions:  
5.1.1 What are the probabilities for the construction contract to be bid above or below the estimated value?  
5.1.2 How low or high can the total project cost be?  
5.1.3 What is the appropriate amount of contingency to use?  
5.1.4 What cost elements have the greatest impact on the project’s cost risk exposure?  
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1.1 This practice covers a procedure for measuring cost risk for buildings and building systems and other constructed projects, using the Monte Carlo simulation technique as described in Guide E1369.  
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1.3 This standard does not purport to address all of the safety concerns, if any, associated with its use. It is the responsibility of the user of this standard to establish appropriate safety, health, and environmental practices and determine the applicability of regulatory limitations prior to use.  
1.4 This international standard was developed in accordance with internationally recognized principles on standardization established in the Decision on Principles for the Development of International Standards, Guides and Recommendations issued by the World Trade Organization Technical Barriers to Trade (TBT) Committee.

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Standard Classification for Allowance, Contingency, and Reserve Sums in Building Construction Estimating

SIGNIFICANCE AND USE
4.1 When preparing construction, project, and program cost estimates, it is often necessary to make monetary provision for change or risk, or both, or other exigencies where information is incomplete.  
4.2 Such allowance, contingency or reserve sums are employed by many persons engaged in the planning, delivery, and financing of construction work.  
4.3 These users include owners, developers, facilities programmers, cost planners, estimators, schedules, architects and engineers, specification writers, operating and maintenance staff, manufacturers, educators, financial managers, and comptrollers.  
4.4 Usage:  
4.4.1 These sums are especially appropriate when performing the following activities:    
Cost budgeting;  
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4.4.2 In any of these activities a needed requirement, or component, of the planned construction can be known while the defined solution, design or specification, for providing this may not. The usual, and appropriate, response in these situations, is the inclusion of a monetary sum, within an estimate, to provide for this (these) requirement(s).  
4.4.3 Such sums may be general or specific in scope, may be planned to be spent or may only be included as possible mitigation for unplanned events and requirements.  
4.4.4 To distinguish between these sums, and in recognition of their differing purpose, they are described, and classified here, using the terms allowance, contingency, or reserve.
Note 1: Section 5 includes a generic statement of purpose for each of the three terms and provides a sub-classification that distinguishes between sums included for specific purposes and for non-specific, that is, general purposes. In cost budgeting, conceptual and design estimating especially, an estimator may intuitively recognize...
SCOPE
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SIGNIFICANCE AND USE
5.1 Investments in long-lived projects such as buildings are characterized by uncertainties regarding project life, operation and maintenance costs, revenues, and other factors that affect project economics. Since future values of these variable factors are generally not known, it is difficult to make reliable economic evaluations.  
5.2 The traditional approach to project investment analysis has been to apply economic methods of project evaluation to best-guess estimates of project input variables as if they were certain estimates and then to present results in single-value, deterministic terms. When projects are evaluated without regard to uncertainty of inputs to the analysis, decision-makers may have insufficient information to measure and evaluate the risk of investing in a project having a different outcome from what is expected.  
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5.4.1 Risk exposure is the probability of investing in a project that will have a less favorable economic outcome than what is desired (the target) or is expected.  
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4.1 Program and project estimates are a necessary part of planning and implementing any program of work.  
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4.1 Standard practices for measuring the economic performance of investments in buildings and building systems have been published by ASTM. A computer program that produces economic measures consistent with these practices is available.4 Discount Factor Tables has been published by ASTM to facilitate computing measures of performance for most of the practices.  
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Standard Practice for Measuring Internal Rate of Return and Adjusted Internal Rate of Return for Investments in Buildings and Building Systems

SIGNIFICANCE AND USE
5.1 The IRR method has been used traditionally in finance and economics to measure the percentage yield on investment.  
5.1.1 The IRR method is appropriate in most cases for evaluating whether a given building or building system will be economically efficient, that is, whether its time-adjusted benefits will exceed its time-adjusted costs over the period of concern to the decision-maker. However, it has deficiencies that limit its usefulness in choosing among projects competing for a limited budget.  
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5.1 The BCR and SIR provide measures of economic performance in a single number that indicates whether a proposed building or building system is preferred over a mutually exclusive alternative that serves as the base for computing the ratio. It may be contrasted with the life-cycle cost (LCC) method that requires two LCC measures to evaluate the economic performance of a building or building system—one for each alternative.  
5.2 The ratio indicates discounted dollar benefits (or savings) per dollar of discounted costs.  
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5.4 The BCR or SIR computed on increments of benefits (or savings) and costs can be used to determine if one design or size of a building or system is more economic than another.  
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1.1 This practice covers a procedure for calculating and interpreting benefit-to-cost ratios (BCR) and savings-to-investment ratios (SIR) as an aid for making building-related decisions.  
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1.3 Dollar amounts used to calculate BCR and SIR are all discounted, that is, expressed in time-equivalent dollars, either in present value or uniform annual value terms.  
1.4 The values stated in inch-pound units are to be regarded as standard. The values given in parentheses are mathematical conversions to SI units that are provided for information only and are not considered standard.  
1.5 This standard does not purport to address all of the safety concerns, if any, associated with its use. It is the responsibility of the user of this standard to establish appropriate safety, health, and environmental practices and determine the applicability of regulatory limitations prior to use.  
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ASTM E1074-15(2020)e1(Practice)
Standard Practice for Measuring Net Benefits and Net Savings for Investments in Buildings and Building Systems

SIGNIFICANCE AND USE
5.1 The NB (NS) method provides a measure of the economic performance of an investment, taking into account all relevant monetary values associated with that investment over the investor’s study period. The NB (NS) measure can be expressed in either present value or equivalent annual value terms, taking into account the time value of money.  
5.2 The NB (NS) method is used to decide if a given project is cost effective and which size or design for a given purpose is most cost effective when no budget constraint exists.  
5.3 The NB (NS) method can also be used to determine the most cost effective combination of projects for a limited budget; that is, the combination of projects having the greatest aggregate NB (NS) and fitting within the budget constraint.  
5.4 Use the NB method when the focus is on the benefits rather than project costs.  
5.5 Use the NS method when the focus in on project savings (that is, reductions in project costs).
SCOPE
1.1 This practice covers a recommended procedure for calculating and interpreting the net benefits (NB) and net savings (NS) methods in the evaluation of building designs and systems.  
1.2 The values stated in inch-pound units are to be regarded as standard. The values given in parentheses are mathematical conversions to SI units that are provided for information only and are not considered standard.  
1.3 This standard does not purport to address all of the safety concerns, if any, associated with its use. It is the responsibility of the user of this standard to establish appropriate safety, health, and environmental practices and determine the applicability of regulatory limitations prior to use.  
1.4 This international standard was developed in accordance with internationally recognized principles on standardization established in the Decision on Principles for the Development of International Standards, Guides and Recommendations issued by the World Trade Organization Technical Barriers to Trade (TBT) Committee.

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SIGNIFICANCE AND USE
5.1 LCC analysis is an economic method for evaluating a project or project alternatives over a designated study period. The method entails computing the LCC for alternative building designs or system specifications having the same purpose and then comparing them to determine which has the lowest LCC over the study period.  
5.2 The LCC method is particularly suitable for determining whether the higher initial cost of a building or building system is economically justified by reductions in future costs (for example, operating, maintenance, repair, or replacement costs) when compared with an alternative that has a lower initial cost but higher future costs. If a building design or system specification has both a lower initial cost and lower future costs relative to an alternative, an LCC analysis is not needed to show that the former is the economically preferable choice.  
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1.1 This practice establishes a procedure for evaluating the life-cycle cost (LCC) of a building or building system and comparing the LCCs of alternative building designs or systems that satisfy the same functional requirements.  
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1.3 The basic premise of the LCC method is that to an investor or decision maker all costs arising from an investment decision are potentially important to that decision, including future as well as present costs. Applied to buildings or building systems, the LCC encompasses all relevant costs over a designated study period, including the costs of designing, purchasing/leasing, constructing/installing, operating, maintaining, repairing, replacing, and disposing of a particular building design or system.  
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1.5 This international standard was developed in accordance with internationally recognized principles on standardization established in the Decision on Principles for the Development of International Standards, Guides and Recommendations issued by the World Trade Organization Technical Barriers to Trade (TBT) Committee.

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