ASTM E1121-12
(Practice)Standard Practice for Measuring Payback for Investments in Buildings and Building Systems
Standard Practice for Measuring Payback for Investments in Buildings and Building Systems
SIGNIFICANCE AND USE
The payback method is part of a family of economic evaluation methods that provide measures of economic performance of an investment. Included in this family of evaluation methods are life-cycle costing, benefit-to-cost and savings-to-investment ratios, net benefits, and internal rates of return.
The payback method accounts for all monetary values associated with an investment up to the time at which cumulative net benefits, discounted to present value, just pay off initial investment costs.
Use the method to find if a project recovers its investment cost and other accrued costs within its service life or within a specified maximum acceptable payback period (MAPP) less than its service life. It is important to note that the decision to use the payback method should be made with care. (See Section 11 on Limitations.)
SCOPE
1.1 This practice provides a recommended procedure for calculating and applying the payback method in evaluating building designs and building systems.
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Designation: E1121 − 12
StandardPractice for
Measuring Payback for Investments in Buildings and
1
Building Systems
This standard is issued under the fixed designation E1121; 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. Scope 4.1.1 Section 2, Referenced Documents—Lists ASTM stan-
dards and adjuncts referenced in this practice.
1.1 This practice provides a recommended procedure for
4.1.2 Section 3, Definitions—Addresses definitions of terms
calculating and applying the payback method in evaluating
used in this practice.
building designs and building systems.
4.1.3 Section 4, Summary of Practice—Outlines the con-
2. Referenced Documents
tents of the practice.
2
2.1 ASTM Standards:
4.1.4 Section 5, Significance and Use—Explains the signifi-
E631Terminology of Building Constructions
cance and use of this practice.
E833Terminology of Building Economics
4.1.5 Section 6, Procedures—Describes step-by-step the
E917Practice for Measuring Life-Cycle Costs of Buildings
procedures for making economic evaluations of buildings.
and Building Systems
4.1.6 Section 7, Objectives, Alternatives, and Constraints—
E964Practice for Measuring Benefit-to-Cost and Savings-
Identifies and gives examples of objectives, alternatives, and
to-Investment Ratios for Buildings and Building Systems
constraints for a payback evaluation.
E1057Practice for Measuring Internal Rate of Return and
Adjusted Internal Rate of Return for Investments in
4.1.7 Section 8, Data and Assumptions—Identifies data
Buildings and Building Systems
needed and assumptions that may be required in a payback
E1074Practice for Measuring Net Benefits and Net Savings
evaluation.
for Investments in Buildings and Building Systems
4.1.8 Section 9, Compute Payback Period—Presents alter-
E1185Guide for Selecting Economic Methods for Evaluat-
native approaches for finding the payback period.
ing Investments in Buildings and Building Systems
4.1.9 Section 10, Applications—Explains the circumstances
2.2 Adjuncts:
for which the payback method is appropriate.
Discount FactorTablesAdjunct to Practices E917, E964,
3
4.1.10 Section 11, Limitations—Discusses the limitations of
E1057, E1074, and E1121
the payback method.
3. Terminology
5. Significance and Use
3.1 Definitions—For definitions of general terms related to
building construction used in this practice, refer to Terminol-
5.1 The payback method is part of a family of economic
ogyE631;andforgeneraltermsrelatedtobuildingeconomics,
evaluation methods that provide measures of economic perfor-
refer to Terminology E833.
mance of an investment. Included in this family of evaluation
methods are life-cycle costing, benefit-to-cost and savings-to-
4. Summary of Practice
investment ratios, net benefits, and internal rates of return.
4.1 This practice is organized as follows:
5.2 The payback method accounts for all monetary values
1
associated with an investment up to the time at which cumu-
This practice is under the jurisdiction of ASTM Committee E06 on Perfor-
mance of Buildings and is the direct responsibility of Subcommittee E06.81 on
lative net benefits, discounted to present value, just pay off
Building Economics.
initial investment costs.
Current edition approved April 1, 2012. Published April 2012. Originally
ε1
approved in 1986. Last previous edition approved in 2007 as E1121–07 . DOI:
5.3 Use the method to find if a project recovers its invest-
10.1520/E1121-12.
2 ment cost and other accrued costs within its service life or
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
within a specified maximum acceptable payback period
Standards volume information, refer to the standard’s Document Summary page on
(MAPP)lessthanitsservicelife.Itisimportanttonotethatthe
the ASTM website.
decision to use the payback method should be made with care.
3
Available from ASTM International Headquarters. Order Adjunct No.
ADJE091703. (See Section 11 on Limitations.)
Copyright © ASTM International, 100 Barr Harbor Drive, PO Box C700, West Conshohocken, PA 19428-2959. United States
1
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E1121 − 12
6. Procedures When a zero discount rate is used, this result is referred to as
the “simple” payback (SPB). The payback period can be
6.1 Therecommendedstepsformakinganeconomicevalu-
determined mathematically, from present-value tables, or
ation of buildings or building components are summarized as
graphically.
follows:
6.1.1 Identify objectives, alternatives, and constraints,
9.2 Mathematical Solution:
6.1.2 Selec
...
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
Designation:E1121–07 Designation:E1121–12
Standard Practice for
Measuring Payback for Investments in Buildings and
1
Building Systems
This standard is issued under the fixed designation E1121; 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—Section 2.2 was editorially corrected in January 2009.
1. Scope
1.1 This practice provides a recommended procedure for calculating and applying the payback method in evaluating building
designs and building systems.
2. Referenced Documents
2
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 and Adjusted 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
E1185 Guide for Selecting Economic Methods for Evaluating Investments in Buildings and Building Systems
2.2 Adjuncts:
3
Discount FactorTables Adjunct to Practices E917, E964, E1057, E1074, and E1121
3. Terminology
3.1 Definitions—Fordefinitionsoftermsusedinthispractice,refertoTerminologies—Fordefinitionsofgeneraltermsrelated
to building construction used in this practice, refer toTerminology E631and ; and for general terms related to building economics,
refer to Terminology E833.
4. Summary of Practice
4.1 This practice is organized as follows:
4.1.1 Section 2, Referenced Documents—Lists ASTM standards and adjuncts referenced in this practice.
4.1.2 Section 3, Definitions—Addresses definitions of terms used in this practice.
4.1.3 Section 4, Summary of Practice—Outlines the contents of the practice.
4.1.4 Section 5, Significance and Use—Explains the significance and use of this practice.
4.1.5 Section 6, Procedures—Describes step-by-step the procedures for making economic evaluations of buildings.
4.1.6 Section 7, Objectives, Alternatives, and Constraints—Identifies and gives examples of objectives, alternatives, and
constraints for a payback evaluation.
4.1.7 Section 8, Data and Assumptions—Identifies data needed and assumptions that may be required in a payback evaluation.
4.1.8 Section 9, Compute Payback Period—Presents alternative approaches for finding the payback period.
4.1.9 Section 10, Applications—Explains the circumstances for which the payback method is appropriate.
4.1.10 Section 11, Limitations—Discusses the limitations of the payback method.
1
This practice is under the jurisdiction of ASTM Committee E06 on Performance of Buildings and is the direct responsibility of Subcommittee E06.81 on Building
Economics.
´1
Current edition approved April 1, 2007.2012. Published April 2007.2012. Originally approved in 1986. Last previous edition approved in 20022007 as E1121–027 .
DOI: 10.1520/E1121-07E01.10.1520/E1121-12.
2
ForreferencedASTMstandards,visittheASTMwebsite,www.astm.org,orcontactASTMCustomerServiceatservice@astm.org.For Annual Book ofASTM Standards
volume information, refer to the standard’s Document Summary page on the ASTM website.
3
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 ----------------------
E1121–12
5. Significance and Use
5.1 The payback method is part of a family of economic evaluation methods that provide measures of economic performance
of an investment. Included in this family of evaluation methods are life-cycle costing, benefit-to-cost and savings-to-investment
ratios, net benefits, and internal rates of return.
5.2 Thepaybackmethodaccountsforallmonetaryvaluesassociatedwithaninvestmentuptothetimeatwhichcumulativenet
benefits, discounted to present value, just pay off initial investment costs.
5.3 Use the method to find if a project recovers its investment cost and other accrued costs within its service life or within a
specified maximum acceptable payback period (MAPP) less than its service life. It is important to note that the decision to use the
payback method should be made with care. (See Section 11 on Limitat
...
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