ASTM_E_1121_-_15.pdf

Designation:E112115Standard Practice forMeasuring Payback for Investments in Buildings andBuilding Systems1This standard is issued under the fixed designation E1121;the number immediately following the designation indicates the year oforiginal adoption or,in the case of revision,the year of last revision.A number in parentheses indicates the year of last reapproval.Asuperscript epsilon()indicates an editorial change since the last revision or reapproval.1.Scope1.1 This practice provides a recommended procedure forcalculating and applying the payback method in evaluatingbuilding designs and building systems.2.Referenced Documents2.1 ASTM Standards:2E631 Terminology of Building ConstructionsE833 Terminology of Building EconomicsE917 Practice for Measuring Life-Cycle Costs of Buildingsand Building SystemsE964 Practice for Measuring Benefit-to-Cost and Savings-to-Investment Ratios for Buildings and Building SystemsE1057 Practice for Measuring Internal Rate of Return andAdjusted Internal Rate of Return for Investments inBuildings and Building SystemsE1074 Practice for Measuring Net Benefits and Net Savingsfor Investments in Buildings and Building SystemsE1185 Guide for Selecting Economic Methods for Evaluat-ing Investments in Buildings and Building SystemsE1369 Guide for Selecting Techniques for Treating Uncer-tainty and Risk in the Economic Evaluation of Buildingsand Building Systems2.2 Adjuncts:Discount Factor Tables Adjunct to Practices E917,E964,E1057,E1074,and E112133.Terminology3.1 DefinitionsFor definitions of general terms related tobuilding construction used in this practice,refer to Terminol-ogy E631;and for general terms related to building economics,refer to Terminology E833.4.Summary of Practice4.1 This practice is organized as follows:4.1.1 Section 2,Referenced DocumentsLists ASTM stan-dards and adjuncts referenced in this practice.4.1.2 Section 3,DefinitionsAddresses definitions of termsused in this practice.4.1.3 Section 4,Summary of PracticeOutlines the con-tents of the practice.4.1.4 Section 5,Significance and UseExplains the signifi-cance and use of this practice.4.1.5 Section 6,ProceduresDescribes step-by-step theprocedures for making economic evaluations of buildings.4.1.6 Section 7,Objectives,Alternatives,and ConstraintsIdentifies and gives examples of objectives,alternatives,andconstraints for a payback evaluation.4.1.7 Section 8,Data and AssumptionsIdentifies dataneeded and assumptions that may be required in a paybackevaluation.4.1.8 Section 9,Compute Payback PeriodPresents alter-native approaches for finding the payback period.4.1.9 Section 10,ApplicationsExplains the circumstancesfor which the payback method is appropriate.4.1.10 Section 11,LimitationsDiscusses the limitations ofthe payback method.5.Significance and Use5.1 The payback method is part of a family of economicevaluation methods that provide measures of economic perfor-mance of an investment.Included in this family of evaluationmethods are life-cycle costing,benefit-to-cost and savings-to-investment ratios,net benefits,and internal rates of return.5.2 The payback method accounts for all monetary valuesassociated with an investment up to the time at which cumu-lative net benefits,discounted to present value,just pay offinitial investment costs.5.3 Use the method to find if a project recovers its invest-ment cost and other accrued costs within its service life orwithin a specified maximum acceptable payback period(MAPP)less than its service life.It is important to note that the1This practice is under the jurisdiction of ASTM Committee E06 on Perfor-mance of Buildings and is the direct responsibility of Subcommittee E06.81 onBuilding Economics.Current edition approved Oct.1,2015.Published October 2015.Originallyapproved in 1986.Last previous edition approved in 2012 as E1121 12.DOI:10.1520/E1121-15.2For referenced ASTM standards,visit the ASTM website,www.astm.org,orcontact ASTM Customer Service at serviceastm.org.For Annual Book of ASTMStandards volume information,refer to the standards Document Summary page onthe ASTM website.3Available from ASTM International Headquarters.Order Adjunct No.ADJE091703.Copyright ASTM International,100 Barr Harbor Drive,PO Box C700,West Conshohocken,PA 19428-2959.United States1 decision to use the payback method should be made with care.(See Section 11 on Limitations.)6.Procedures6.1 The recommended steps for making an economic evalu-ation of buildings or building components are summarized asfollows:6.1.1 Identify objectives,alternatives,and constraints,6.1.2 Select an economic evaluation method,6.1.3 Compile data and establish assumptions,6.1.4 Convert cash flows to a common time basis,and6.1.5 Compute the economic measure and compare alterna-tives.6.2 Only the step in 6.1.5,as applied to measuring payback,is examined in detail in this practice.For elaboration on thesteps in 6.1.1 6.1.4,consult Practices E964 and E917,andGuide E1185.7.Objectives,Alternatives,and Constraints7.1 Specify the kind