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ASTM E1369-07e2

(Guide)

Standard Guide for Selecting Techniques for Treating Uncertainty and Risk in the Economic Evaluation of Buildings and Building Systems

Standard Guide for Selecting Techniques for Treating Uncertainty and Risk in the Economic Evaluation of Buildings and Building Systems

SIGNIFICANCE AND USE
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.
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.
Risk analysis is the body of theory and practice that has evolved to help decision makers assess their risk exposures and risk attitudes so that the investment that is the best bet for them can be selected.
Note 1—The decision maker is the individual or group of individuals responsible for the investment decision. For example, the decision maker may be the chief executive officer or the board of directors.
Uncertainty and risk are defined as follows. Uncertainty (or certainty) refers to a state of knowledge about the variable inputs to an economic analysis. If the decision maker is unsure of input values, there is uncertainty. If the decision maker is sure, there is certainty. Risk refers either to risk exposure or risk attitude.
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.
Risk attitude, also called risk preference, is the willingness of a decision maker to take a chance or gamble on an investment of uncertain outcome. The implications of decision makers having different risk attitudes is that a given investment of know...
SCOPE
1.1 This guide covers techniques for treating uncertainty in input values to an economic analysis of a building investment project. It also recommends techniques for evaluating the risk that a project will have a less favorable economic outcome than what is desired or expected.  
1.2 The techniques include breakeven analysis, sensitivity analysis, risk-adjusted discounting, the mean-variance criterion and coefficient of variation, decision analysis, and simulation.
1.3 The techniques can be used with economic methods that measure economic performance, such as life-cycle cost analysis, net benefits, the benefit-to-cost ratio, internal rate of return, and payback.

General Information

Status
Historical
Publication Date
31-Mar-2007
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 E1369-07e1 - Standard Guide for Selecting Techniques for Treating Uncertainty and Risk in the Economic Evaluation of Buildings and Building Systems
Effective Date
01-Apr-2007
Replaced By
ASTM E1369-11 - Standard Guide for Selecting Techniques for Treating Uncertainty and Risk in the Economic Evaluation of Buildings and Building Systems
Effective Date
01-Nov-2011
Referred By
ASTM E1557-09(2020)e1 - Standard Classification for Building Elements and Related Sitework—UNIFORMAT II
Effective Date
01-Apr-2007
Referred By
ASTM E2204-15(2020)e1 - Standard Guide for Summarizing the Economic Impacts of Building-Related Projects
Effective Date
01-Apr-2007
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-Apr-2007
Referred By
ASTM E2103/E2103M-19 - Standard Classification for Bridge Elements—UNIFORMAT II
Effective Date
01-Apr-2007
Referred By
ASTM E1804-16(2023) - Standard Practice for Performing and Reporting Cost Analysis During the Design Phase of a Project
Effective Date
01-Apr-2007
Referred By
ASTM E3035-15(2020) - Standard Classification for Facility Asset Component Tracking System (FACTS)
Effective Date
01-Apr-2007
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-Apr-2007
Referred By
ASTM E1185-15(2020)e1 - Standard Guide for Selecting Economic Methods for Evaluating Investments in Buildings and Building Systems
Effective Date
01-Apr-2007
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-Apr-2007
Referred By
ASTM E1699-14(2020) - Standard Practice for Performing Value Engineering (VE)/Value Analysis (VA) of Projects, Products and Processes
Effective Date
01-Apr-2007
Referred By
ASTM E3130-21 - Standard Guide for Developing Cost-Effective Community Resilience Strategies
Effective Date
01-Apr-2007
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-Apr-2007
Referred By
ASTM E3008/E3008M-16(2023) - Standard Classification for Transportation Surface Elements—UNIFORMAT II
Effective Date
01-Apr-2007

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REDLINE ASTM E1369-07e2 - Standard Guide for Selecting Techniques for Treating Uncertainty and Risk in the Economic Evaluation of Buildings and Building SystemsREDLINE ASTM E1369-07e2 - Standard Guide for Selecting Techniques for Treating Uncertainty and Risk in the Economic Evaluation of Buildings and Building Systems
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Standards Content (Sample)

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
´2
Designation: E1369 – 07
Standard Guide for
Selecting Techniques for Treating Uncertainty and Risk in
the Economic Evaluation of Buildings and Building
1
Systems
This standard is issued under the fixed designation E1369; the number immediately following the designation indicates the year of
original adoption or, in the case of revision, the year of last revision.Anumber in parentheses indicates the year of last reapproval.A
superscript epsilon (´) indicates an editorial change since the last revision or reapproval.
1
´ NOTE—Footnotes updated editorially in August 2007.
2
´ NOTE—Section 2.2 and Footnote 5 were editorially corrected and Section 12 was editorially added in January 2009.
1. Scope E1057 Practice for Measuring Internal Rate of Return and
Adjusted Internal Rate of Return for Investments in Build-
1.1 This guide covers techniques for treating uncertainty in
ings and Building Systems
input values to an economic analysis of a building investment
E1074 PracticeforMeasuringNetBenefitsandNetSavings
project. It also recommends techniques for evaluating the risk
for Investments in Buildings and Building Systems
thataprojectwillhavealessfavorableeconomicoutcomethan
2 E1121 Practice for Measuring Payback for Investments in
what is desired or expected.
Buildings and Building Systems
1.2 The techniques include breakeven analysis, sensitivity
E1185 Guide for Selecting Economic Methods for Evaluat-
analysis,risk-adjusteddiscounting,themean-variancecriterion
ing Investments in Buildings and Building Systems
and coefficient of variation, decision analysis, and simulation.
2.2 Adjuncts:
1.3 Thetechniquescanbeusedwitheconomicmethodsthat
Discount FactorTables, Adjunct to Practices E917, E964,
measure economic performance, such as life-cycle cost analy-
4
E1057, E1074, and E1121
sis,netbenefits,thebenefit-to-costratio,internalrateofreturn,
and payback.
3. Terminology
2. Referenced Documents 3.1 Definitions—For definitions of terms used in this guide,
3
refer to Terminologies E631 and E833.
2.1 ASTM Standards:
E631 Terminology of Building Constructions
4. Summary of Guide
E833 Terminology of Building Economics
4.1 This guide identifies related ASTM standards and ad-
E917 Practice for Measuring Life-Cycle Costs of Buildings
juncts. It describes circumstances when measuring uncertainty
and Building Systems
and risk may be helpful in economic evaluations of building
E964 Practice for Measuring Benefit-to-Cost and Savings-
investments.This guide defines uncertainty, risk exposure, and
to-Investment Ratios for Buildings and Building Systems
risk attitude. It presents nonprobabilistic and probabilistic
techniques for measuring uncertainty and risk exposure. This
1
This guide is under the jurisdiction ofASTM Committee E06 on Performance guide describes briefly each technique, gives the formula for
of Buildings and is the direct responsibility of Subcommittee E06.81 on Building
calculating a measure where appropriate, illustrates the tech-
Economics.
niques with a case example, and summarizes its advantages
Current edition approved April 1, 2007. Published April 2007. Originally
and disadvantages.
approved in 1990. Last previous edition approved in 2002 as E1369–02. DOI:
10.1520/E1369-07E02.
4.2 Since there is no best technique for measuring uncer-
2
For an extensive overview of techniques for treating risk and uncertainty, see
tainty and risk in every economic evaluation, this guide
Marshall, Harold E.—Techniques for Treating Uncertainty and Risk in the Eco-
concludes with a discussion of how to select the appropriate
nomic Evaluation of Building Investments, National Institute of Standards and
Technology, Special Publication 757, 1988. technique for a particular problem.
3
For referenced ASTM standards, visit the ASTM website, www.astm.org, or
contact ASTM Customer Service at service@astm.org. For Annual Book of ASTM
4
Standards volume information, refer to the standard’s Document Summary page on Available from ASTM International Headquarters. Order Adjunct No.
the ASTM website. ADJE091703.
Copyright © ASTM International, 100 Barr Harbor Drive, PO Box C700, West Conshohocken, PA 19428-2959, United States.
1

---------------------- Page: 1 ----------------------
´2
E1369 – 07
4.3 This guide describes in detail how risk exposure can be 6. Procedures
measured by probability functions and distribution functions
6.1 The recommended steps for carrying out an evaluation
(see Annex A1). It also describes how risk attitude can be
of uncertainty or risk are as follows:
incorporated using utility theory and other approaches (see
6.1.1 Determine appropriate economic measure(s) for
Annex A2).
evaluating the investment (see Guide E1185).
6.1.2 Identify objectives, alternatives, and constraints (see
5. Significance and Use
Practices E917, E964, E1057, E1074, and E1121).
5.1 Investment
...

This document is not anASTM standard and is intended only to provide the user of anASTM standard an indication of what changes have been made to the previous version. Because
it may not be technically possible to adequately depict all changes accurately, ASTM recommends that users consult prior editions as appropriate. In all cases only the current version
of the standard as published by ASTM is to be considered the official document.
´2
Designation:E1369–02 Designation: E 1369 – 07
Standard Guide for
Selecting Techniques for Treating Uncertainty and Risk in
the Economic Evaluation of Buildings and Building
1
Systems
This standard is issued under the fixed designation E1369; the number immediately following the designation indicates the year of
original adoption or, in the case of revision, the year of last revision.Anumber in parentheses indicates the year of last reapproval.A
superscript epsilon (´) indicates an editorial change since the last revision or reapproval.
1
´ NOTE—Footnotes updated editorially in August 2007.
2
´ NOTE—Section 2.2 and Footnote 5 were editorially corrected and Section 12 was editorially added in January 2009.
1. Scope
1.1 This guide recommendscovers techniques for treating uncertainty in input values to an economic analysis of a building
investment project. It also recommends techniques for evaluating the risk that a project will have a less favorable economic
2
outcome than what is desired or expected.
1.2 The techniques include breakeven analysis, sensitivity analysis, risk-adjusted discounting, the mean-variance criterion and
coefficient of variation, decision analysis, and simulation.
1.3 The techniques can be used with economic methods that measure economic performance, such as life-cycle cost analysis,
net benefits, the benefit-to-cost ratio, internal rate of return, and payback.
2. Referenced Documents
3
2.1 ASTM Standards:
E631 Terminology of Building Constructions
E833 Terminology of Building Economics
E917 Practice for Measuring Life-Cycle Costs of Buildings and Building Systems
E964 Practice for Measuring Benefit-to-Cost and Savings-to-Investment Ratios for Buildings and Building Systems
E1057 Practice for Measuring Internal Rate of Return andAdjusted Internal Rate of Return for Investments in Buildings and
Building Systems
E1074 Practice for Measuring Net Benefits and Net Savings for Investments in Buildings and Building Systems
E1121 Practice for Measuring Payback for Investments in Buildings and Building Systems
E1185 Guide for Selecting Economic Methods for Evaluating Investments in Buildings and Building Systems
2.2 ASTM Adjuncts:
Discount Factor Tables, Adjunct to Practice E917 Adjuncts:
4
Discount FactorTables, Adjunct to Practices E917, E964, E1057, E1074, and E1121
3. Terminology
3.1 Definitions—For definitions of terms used in this guide, refer to Terminology E833Terminologies E631 and E833.
4. Summary of Guide
4.1 ThisguideidentifiesrelatedASTMstandardsandadjuncts.Itdescribescircumstanceswhenmeasuringuncertaintyandrisk
may be helpful in economic evaluations of building investments. This guide defines uncertainty, risk exposure, and risk attitude.
It presents nonprobabilistic and probabilistic techniques for measuring uncertainty and risk exposure.This guide describes briefly
each technique, gives the formula for calculating a measure where appropriate, illustrates the techniques with a case example, and
1
This guide is under the jurisdiction of ASTM Committee E06 on Performance of Buildings and is the direct responsibility of Subcommittee E06.81 on Building
Economics.
Current edition approved Oct. 10, 2002. Published November 2002. Originally published as E1369–90. Last previous edition E1369–98.
Current edition approved April 1, 2007. Published April 2007. Originally approved in 1990. Last previous edition approved in 2002 as E1369–02.
2
For an extensive overview of techniques for treating risk and uncertainty, see Marshall, Harold E.—Techniques for Treating Uncertainty and Risk in the Economic
Evaluation of Building Investments, National Institute of Standards and Technology, Special Publication 757, 1988.
3
ForreferencedASTMstandards,visittheASTMwebsite,www.astm.org,orcontactASTMCustomerServiceatservice@astm.org.For Annual Book of ASTM Standards
, Vol 04.11.volume information, refer to the standard’s Document Summary page on the ASTM website.
4
Available from ASTM Headquarters. Order PCN 12-509179-10.
4
Available from ASTM International Headquarters. Order Adjunct No. ADJE091703.
Copyright © ASTM International, 100 Barr Harbor Drive, PO Box C700, West Conshohocken, PA 19428-2959, United States.
1

---------------------- Page: 1 ----------------------
´2
E1369–07
summarizes its advantages and disadvantages.
4.2 Sincethereisnobesttechniqueformeasuringuncertaintyandriskineveryeconomicevaluation,thisguideconcludeswith
a discussion of how to select the appropriate technique for a particular problem.
4.3 This guide describes in detail how risk exposure can be measur
...

This document is not anASTM standard and is intended only to provide the user of anASTM standard an indication of what changes have been made to the previous version. Because
it may not be technically possible to adequately depict all changes accurately, ASTM recommends that users consult prior editions as appropriate. In all cases only the current version
of the standard as published by ASTM is to be considered the official document.
´1 ´1
Designation: E 1369 – 07 E1369–07 ´2
Standard Guide for
Selecting Techniques for Treating Uncertainty and Risk in
the Economic Evaluation of Buildings and Building
1
Systems
This standard is issued under the fixed designation E1369; the number immediately following the designation indicates the year of
original adoption or, in the case of revision, the year of last revision.Anumber in parentheses indicates the year of last reapproval.A
superscript epsilon (´) indicates an editorial change since the last revision or reapproval.
1
´ NOTE—Footnotes updated editorially in August 2007.
—Footnotes updated editorially in August 2007.
2
´ NOTE—Section 2.2 and Footnote 5 were editorially corrected and Section 12 was editorially added in January 2009.
1. Scope
1.1 This guide covers techniques for treating uncertainty in input values to an economic analysis of a building investment
project.Italsorecommendstechniquesforevaluatingtheriskthataprojectwillhavealessfavorableeconomicoutcomethanwhat
2
is desired or expected.
1.2 The techniques include breakeven analysis, sensitivity analysis, risk-adjusted discounting, the mean-variance criterion and
coefficient of variation, decision analysis, and simulation.
1.3 The techniques can be used with economic methods that measure economic performance, such as life-cycle cost analysis,
net benefits, the benefit-to-cost ratio, internal rate of return, and payback.
2. Referenced Documents
3
2.1 ASTM Standards:
E631 Terminology of Building Constructions
E833 Terminology of Building Economics
E917 Practice for Measuring Life-Cycle Costs of Buildings and Building Systems
E964 Practice for Measuring Benefit-to-Cost and Savings-to-Investment Ratios for Buildings and Building Systems
E1057 Practice for Measuring Internal Rate of Return andAdjusted Internal Rate of Return for Investments in Buildings and
Building Systems
E1074 Practice for Measuring Net Benefits and Net Savings for Investments in Buildings and Building Systems
E1121 Practice for Measuring Payback for Investments in Buildings and Building Systems
E1185 Guide for Selecting Economic Methods for Evaluating Investments in Buildings and Building Systems
2.2 ASTM Adjuncts:
Discount Factor Tables, Adjunct to Practice E917 Adjuncts:
4
Discount FactorTables, Adjunct to Practices E917, E964, E1057, E1074, and E1121
3. Terminology
3.1 Definitions—For definitions of terms used in this guide, refer to Terminologies E631 and E833.
4. Summary of Guide
4.1 ThisguideidentifiesrelatedASTMstandardsandadjuncts.Itdescribescircumstanceswhenmeasuringuncertaintyandrisk
may be helpful in economic evaluations of building investments. This guide defines uncertainty, risk exposure, and risk attitude.
It presents nonprobabilistic and probabilistic techniques for measuring uncertainty and risk exposure.This guide describes briefly
each technique, gives the formula for calculating a measure where appropriate, illustrates the techniques with a case example, and
1
This guide is under the jurisdiction of ASTM Committee E06 on Performance of Buildings and is the direct responsibility of Subcommittee E06.81 on Building
Economics.
Current edition approved April 1, 2007. Published April 2007. Originally approved in 1990. Last previous edition approved in 2002 as E1369–02.
2
For an extensive overview of techniques for treating risk and uncertainty, see Marshall, Harold E.—Techniques for Treating Uncertainty and Risk in the Economic
Evaluation of Building Investments, National Institute of Standards and Technology, Special Publication 757, 1988.
3
ForreferencedASTMstandards,visittheASTMwebsite,www.astm.org,orcontactASTMCustomerServiceatservice@astm.org.For Annual Book of ASTM Standards
volume information, refer to the standard’s Document Summary page on the ASTM website.
4
Available from ASTM International Headquarters. Order Adjunct No. ADJE091703.
Copyright © ASTM International, 100 Barr Harbor Drive, PO Box C700, West Conshohocken, PA 19428-2959, United States.
1

---------------------- Page: 1 ----------------------
´2
summarizes its advantages and disadvantages.
4.2 Sincethereisnobesttechniqueformeasuringuncertaintyandriskineveryeconomicevaluation,thisguideconcludeswith
a discussion of how to select the appropriate technique for a particular problem.
4.3 This guide describes in detail how risk exposure can be measured by probability functions and distribution functions (see
Annex A1). It also describes how risk attitude can be incorporated using utility theory and other approaches (see Annex A2).
5. Significance and Use
5.1 Inves
...

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  • Guide
    17 pages
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ASTM
ASTM E2620-15(2020)(Classification)
Standard Classification for Program and Project Estimate Summaries

SIGNIFICANCE AND USE
4.1 Program and project estimates are a necessary part of planning and implementing any program of work.  
4.2 These estimates are used by persons involved in the planning and management of programs and projects. They are an essential part of establishing initial budgets and provide a framework for continuing updates permitting cost control through the life of a program and its various projects.  
4.3 Users include owners, developers, facilities programmers, financial managers, company controllers, executives, program managers, project managers, and specialist cost planners including life cycle cost analysts.  
4.4 They are also of use in risk management, and also provide a consistent list of major activity phases for use in program and project time schedules.
SCOPE
1.1 This classification establishes a classification of cost summaries for use when estimating program and project costs.  
1.2 This classification can be applied to construction programs and projects that include one or more construction work projects.  
1.3 This classification is not based on permanent physical elements of construction (as defined and classified in Classification E1557 for example); rather, the classification items are cost components common to most program and project estimates.  
1.4 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.  
1.5 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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ASTM
ASTM E1185-15(2020)e1(Guide)
Standard Guide for Selecting Economic Methods for Evaluating Investments in Buildings and Building Systems

SIGNIFICANCE AND USE
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.  
4.2 This guide can be used to: (1) identify types of building design and system decisions that require economic analysis; (2) match the technically appropriate economic methods with the decisions; and (3) locate the methods in the ASTM practices and adjuncts listed in Section 2.  
4.3 More than one method can be technically appropriate for many building decisions. Therefore the choice in practice of which technically appropriate economic method to use for evaluating a particular building decision will often depend on the perspective of the user. Some examples of factors that influence the user are: (1) ease of applying the methods, (2) level of familiarity of the user with the methods, (3) preference of the user for different methods, and (4) presence of budget limitations for the projects.  
4.4 This guide identifies some features and limitations of the methods that might influence users' choices under varying conditions.
SCOPE
1.1 This guide identifies types of building design and building system decisions that require economic analysis and recommends ASTM practices, adjuncts, and computer programs that may be used to implement the appropriate economic methods for each decision type.  
1.2 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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    5 pages
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ASTM
ASTM E1057-15(2020)e1(Practice)
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.  
5.2 The AIRR method is a measure of the overall rate of return that an investor can expect from an investment over a designated study period. It is appropriate both for evaluating whether a given building or building system will be economically efficient and for choosing among alternatives competing for a limited budget.  
5.2.1 The AIRR method overcomes some, but not all, of the deficiencies of the IRR. The AIRR is particularly recommended over the IRR for allocating limited funding among competing projects.
SCOPE
1.1 This practice covers a procedure for calculating and interpreting the internal rate of return (IRR) and adjusted internal rate of return (AIRR) measures in the evaluation of building designs, systems, and equipment.  
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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    12 pages
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ASTM
ASTM E964-15(2020)e1(Practice)
Standard Practice for Measuring Benefit-to-Cost and Savings-to-Investment Ratios for Buildings and Building Systems

SIGNIFICANCE AND USE
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.  
5.3 The BCR or SIR can be used to determine if a given building or building system is economic relative to the alternative of not having it.  
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.  
5.5 The BCR or SIR can be used as an aid to select the economically efficient set of projects among many competing for limited funding. The efficient set of projects will maximize aggregate net benefits or net savings obtainable for the budget.
SCOPE
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.  
1.2 A basic premise of the BCR and SIR methods is that future as well as present benefits and costs arising from a decision are important to that decision, and, if measurable in dollars, should be included in calculating the BCR and SIR.  
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.  
1.6 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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    14 pages
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ASTM
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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    14 pages
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ASTM
ASTM E917-17(2023)(Practice)
Standard Practice for Measuring Life-Cycle Costs of Buildings and Building Systems

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.  
5.3 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.  
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 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.

  • Standard
    23 pages
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