ASTM_E_1074_-_15.pdf

Designation:E107415Standard Practice forMeasuring Net Benefits and Net Savings for Investments inBuildings and Building Systems1This standard is issued under the fixed designation E1074;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.INTRODUCTIONThe net benefits(NB)and net savings(NS)methods are part of a family of economic evaluationmethods that provide measures of economic performance of an investment over some period of time.Included in this family of evaluation methods are life-cycle cost analysis,benefit-to-cost andsavings-to-investment ratios,internal rates of return,and payback analysis.The NB method calculates the difference between discounted benefits and discounted costs as ameasure of the cost effectiveness of a project.The NS method calculates the difference betweenlife-cycle costs as a measure of the cost-effectiveness of a project.The NB and NS methods aresometimes called the net present value method.The NB and NS methods are used to decide if a projectis cost effective(net benefits greater than zero,or net savings greater than zero),or which size,ordesign,competing for a given purpose is most cost effective(the one with the greatest net benefits,orthe one with the greatest net savings).1.Scope1.1 This practice covers a recommended procedure forcalculating and interpreting the net benefits(NB)and netsavings(NS)methods in the evaluation of building designs andsystems.1.2 The values stated in inch-pound units are to be regardedas standard.The values given in parentheses are mathematicalconversions to SI units that are provided for information onlyand are not considered standard.1.3 This standard does not purport to address all of thesafety concerns,if any,associated with its use.It is theresponsibility of the user of this standard to establish appro-priate safety and health practices and determine the applica-bility of regulatory limitations prior to use.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 SystemsE1121 Practice for Measuring Payback for Investments inBuildings 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 SystemsE1765 Practice for Applying Analytical Hierarchy Process(AHP)to Multiattribute Decision Analysis of InvestmentsRelated to Buildings and Building SystemsE1946 Practice for Measuring Cost Risk of Buildings andBuilding Systems and Other Constructed ProjectsE2204 Guide for Summarizing the Economic Impacts ofBuilding-Related Projects2.2 Adjuncts:3Discount Factor Tables Adjunct to Practices E917,E964,E1057,E1074,and E11211This 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 May 1,2015.Published June 2015.Originallyapproved in 1985.Last previous edition approved in 2009 as E1074 09.DOI:10.1520/E1074-15.2For 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 3.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 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 appli-cation of the practice and how and when it should be used.4.1.5 Section 6,ProceduresSummarizes the steps in mak-ing NB(NS)analysis.4.1.6 Section 7,Compute NB(NS)Describes calculationprocedures for NB(NS).4.1.7 Section 8,Anaylsis of NB(NS)Results and theDecisionDiscusses the decision criterion and the treatment ofuncertainty,risk,and unqualified ef