ASTM E833-02

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An American National Standard
Designation: E 833 – 02
Standard Terminology of
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Building Economics
This standard is issued under the fixed designation E 833; 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.
1. Scope of a variable which results in benefits (savings) just equal to
costs.
1.1 This terminology relates to the economic evaluation of
building decision, n—a decision regarding the design, financ-
building construction as used in other standards under the
ing, engineering, construction, management, or operation of
jurisdiction of ASTM Committee E06 on Performance of
a building.
Building Constructions, and does not necessarily correspond to
building economics, n—the application of economic analysis
the terminology used in other areas of accounting and econom-
to the design, financing, engineering, construction, manage-
ics.
ment, operation, ownership, or disposition of buildings.
DEFINITIONS building system, n—an aggregation or assemblage of items
joined in regular interaction or interdependence in buildings
adjusted internal rate-of-return (AIRR), n—the compound
or building construction.
rate of interest that, when used to discount the terminal
capital cost, n—the costs of acquiring, substantially improv-
values of costs and benefits of a project over a given study
ing, expanding, changing the functional use of, or replacing
period, will make the costs equal the benefits when cash
a building or building system.
flows are reinvested at a specified rate. (Syn. financial
cash flow, n—the stream of monetary (dollar) values—costs
management rate of return (FMRR))
and benefits—resulting from a project investment.
annual value, n—a uniform annual amount equivalent to the
certainty equivalent technique, n—a technique used to adjust
project costs or benefits taking into account the time value of
economic measures of project worth to reflect risk exposure
money throughout the study period (Syn. annual worth,
and risk attitude.
equivalent uniform annual value).
annual worth, n—See annual value. DISCUSSION—Estimated project returns are multiplied by a certainty
equivalent factor (CEF) to determine the certainty equivalent amount a
annually recurring costs, n—those costs that are incurred in
decision maker finds equally acceptable to the estimated project
a regular pattern each year throughout the study period.
returns.
base date, n—See base time.
base time, n—the date to which all future and past benefits and
code of accounts, n—a hierarchical, company-specific system
costs are converted when a present value method is used for cost accounting, control, and management.
(usually the beginning of the study period) (Syn. base date).
Comprehensive Environmental Response, Compensation,
baseline plan, n—an established scope, cost, schedule, and
and Liability Act (CERCLA), n—also known as “Super-
technical performance plan against which the status of fund,” CERCLA prescribes actions and regulatory require-
resources and the effort of the overall program or project
ments for reducing risks to human health and the environ-
activities are measured, assessed, and controlled. ment resulting from releases or threatened releases of
benefit-cost analysis, n—a method of evaluating projects or
hazardous substances into the environment.
investments by comparing the present value or annual value constant dollars, n—dollars of uniform purchasing power
of expected benefits to the present value or annual value of
exclusive of general inflation or deflation.
expected costs.
DISCUSSION—Constant dollars are tied to a reference year.
benefit-to-cost ratio (BCR), n—benefits divided by costs,
construction contingency, n—the funds added to estimated
where both are discounted to a present value or equivalent
uniform annual value (Syn. benefit-cost ratio). and known costs in case of cost overruns during construc-
tion.
breakeven analysis, n—a technique for determining that value
construction documents, n—materials that convey the physi-
cal, aesthetic, technical, performance, and administrative
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This terminology is under the jurisdiction of ASTM Committee E06 on
requirements necessary to initiate a contract for construction
Performance of Buildings and is the direct responsibility of Subcommittee E06.81
of the proposed project.
on Building Economics.
Current edition approved April 10, 2002. Published June 2002. Originally
published as E 833 – 81. Last previous edition E 833 – 01a.
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