iTeh StandardsiTeh Standards
EURUSD
Your shopping cart is empty.
ASTM

ASTM E2168-01

(Classification)

Standard Classification for Allowance, Contingency and Reserve Sums in Building Construction Estimating

Standard Classification for Allowance, Contingency and Reserve Sums in Building Construction Estimating

SCOPE
1.1 This standard establishes a classification for allowance, contingency, and reserve sums used in construction, project, and program estimating.
1.2 This classification applies to all construction work.
1.3 This classification is not based on permanent physical elements of construction (as defined and classified in Classification E 1557. Rather, the classification items are cost components common to construction, project, and program estimates.

General Information

Status
Historical
Publication Date
09-Oct-2001
ICS
91.010.20 - Contractual aspects
Technical Committee
E06 - Performance of Buildings
Drafting Committee
E06.81 - Building Economics
Current Stage
Ref Project

Relations

Replaced By
ASTM E2168-06 - Standard Classification for Allowance, Contingency and Reserve Sums in Building Construction Estimating
Effective Date
01-Sep-2006
Referred By
ASTM E2083-05(2016) - Standard Classification for Building Construction Field Requirements, and Office Overhead & Profit
Effective Date
10-Oct-2001
Referred By
ASTM E2514-15(2020) - Standard Practice for Presentation Format of Elemental Cost Estimates, Summaries, and Analyses
Effective Date
10-Oct-2001
Referred By
ASTM E1946-18(2023) - Standard Practice for Measuring Cost Risk of Buildings and Building Systems and Other Constructed Projects
Effective Date
10-Oct-2001
Referred By
ASTM E2620-15(2020) - Standard Classification for Program and Project Estimate Summaries
Effective Date
10-Oct-2001
Referred By
ASTM E1557-09(2020)e1 - Standard Classification for Building Elements and Related Sitework—UNIFORMAT II
Effective Date
10-Oct-2001
Referred By
ASTM E3008/E3008M-16(2023) - Standard Classification for Transportation Surface Elements—UNIFORMAT II
Effective Date
10-Oct-2001
Referred By
ASTM E2103/E2103M-19 - Standard Classification for Bridge Elements—UNIFORMAT II
Effective Date
10-Oct-2001

Buy Standard

ASTM E2168-01 - Standard Classification for Allowance, Contingency and Reserve Sums in Building Construction EstimatingASTM E2168-01 - Standard Classification for Allowance, Contingency and Reserve Sums in Building Construction Estimating
PreviousNext
Standard
ASTM E2168-01 - Standard Classification for Allowance, Contingency and Reserve Sums in Building Construction Estimating
English language
3 pages
sale 15% off
Preview
sale 15% off
Preview

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.
Designation: E 2168 – 01
Standard Classification for
Allowance, Contingency and Reserve Sums in Building
Construction Estimating
This standard is issued under the fixed designation E 2168; 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.
INTRODUCTION
In building construction estimating the terms allowance, contingency and reserve are often used
almost interchangeably and are assumed to be universally understood, yet they often mean different
things to different people. Consequently they can be ambiguous in meaning and intent.
Applying these terms, as classified herein, adds a needed precision and rigour in their use as each
term is held to be specific in its meaning, intent, and use.
1. Scope 4.2 Such allowance, contingency or reserve sums are em-
ployed by many persons engaged in the planning, delivery, and
1.1 This standard establishes a classification for allowance,
financing of construction work.
contingency, and reserve sums used in construction, project,
4.3 These users include owners, developers, facilities pro-
and program estimating.
grammers, cost planners, estimators, schedulers, architects and
1.2 This classification applies to all construction work.
engineers, specification writers, operating and maintenance
1.3 This classification is not based on permanent physical
staff, manufacturers, educators, financial managers, and comp-
elements of construction (as defined and classified in Classifi-
trollers.
cation E 1557. Rather, the classification items are cost compo-
4.4 Usage:
nents common to construction, project, and program estimates.
4.4.1 These sums are especially appropriate when perform-
2. Referenced Documents
ing the following activities:
Cost budgeting,
2.1 ASTM Standards:
Conceptual, design and construction cost estimating,
E 833 Terminology of Building Economics
Preparing complete forecast cost for economic evaluation, invest-
E 1557 Classification for Building Elements and Related
ment analysis and approval,
Controlling cost during planning, design and construction.
Sitework UNIFORMAT II
E 1804 Practice for Performing and Reporting Cost Analy-
4.4.2 In any of these activities a needed requirement, or
sis During the Design Phase of a Project
component, of the planned construction can be known while
E 1946 Practice for Measuring Cost Risk of Buildings and
the defined solution, design or specification, for providing this
Building Systems
may not. The usual, and appropriate, response in these situa-
tions, is the inclusion of a monetary sum, within an estimate, to
3. Terminology
provide for this (these) requirement(s).
3.1 Definitions—For definitions of terms used in this clas-
4.4.3 Suchsumsmaybegeneralorspecificinscope,maybe
sification, refer to Terminology E 833.
planned to be spent or may only be included as possible
mitigation for unplanned events and requirements.
4. Significance and Use
4.4.4 To distinguish between these sums, and in recognition
4.1 When preparing construction, project, and program cost
of their differing purpose, they are described, and classified
estimates, it is often necessary to make monetary provision for
here, using the terms allowance, contingency or reserve.
change and/or risk or other exigencies where information is
NOTE 1—Section 5 includes a generic statement of purpose for each of
incomplete.
the three terms and provides a sub-classification that distinguishes
between sums included for specific purposes and for non-specific i.e.
general purposes. In cost budgeting, conceptual and design estimating
This classification is under the jurisdiction of ASTM Committee E06 on
especially, an estimator may intuitively recognize the need for a general
Performance of Buildings and is the direct responsibility of Subcommittee E06.81
purposesum.Thisrecognitioncomesintheabsenceofanyknownspecific
on Building Economics.
requirement other than the need to ensure the estimate total is a reasoned
Current edition approved Oct. 10, 2001. Published January 2002.
Annual ASTM Book of Standards,Vol forecast of a reasonable bid result.
Copyright © ASTM International, 100 Barr Harbor Drive, PO Box C700, West Conshohocken, PA 19428-2959, United States.
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.
E2168–01
4.5 This classification defines allowance, contingency and 5.4.2 Table 1 is a tabulation of the basic properties, events
reserve sums as items common to construction, project, and and methods defined for allowances, contingencies and re-
program estimates through planning, design, construction, and serves as typically applied in the building construction indus-
completion. The terms are sufficiently generic to be applied in try. This table identifies the key differences, and some simi-
all forms of construction work. larities, makes for easy identification of the generic principles
drivingtheclassifications,andsoallowsconsistentapplication.
It also draws attention to the need for a subsidiary cost
5. Basis of Classification
classification that is typically part of a generic Work Break-
5.1 Classification Criteria:
down Structure.
5.1.1 The selected classification of terms is based on the
5.5 Subsidiary Classification:
following criteria. The terms shall:
5.5.1 Construction Estimate—An estimated cost for the
be readily distinguishable one from the other;
construction work including all trade costs and the prime
be simple and must identify their properties and usage directly;
be appropriate in all forms of construction financial activities, and;
contractors’ Field Requirements and Office Overhead & Profit:
allow a distinction between the environments (internal or external
i.e. an estimate of construction work intended to forecast the
within which they are applied.
amount of a reasonable bid figure.Aconstruction estimate may
5.2 Primary Classification:
include both specific and non-specific allowance(s).
5.2.1 Allowance—A sum of money that is planned to be
5.5.2 Project Estimate—An estimated cost that includes
spent. Used in the absence of precise knowledge, and esti-
Design and Project Management Fees & Disbursements, and
mated, to the best of one’s abilities, to ensure a full and
other costs, in addition to the Construction Estimate, that are
complete estimate.Allowances cover events and activities that
discretely packaged as a total project: i.e. a total estimate
are normally internal and so are directly controllable within the
includes acquisition costs, construction work, fees (profes-
project plan.
sional and legal), expenses, and any other disbursements. A
5.2.2 Contingency—A sum of money not intended to be
project estimate may include both specific and non-specific
spent. Used in the absence of precise knowledge, and esti-
contingency(s).
mated, to the best of one’s abilities. to ensure that a financial
5.5.3 Program Estimate—An estimated cost that includes
buffer is available within a budget. This buffer is intended to
all Client Costs in addition to the Project Estimate(s) that are
assist in mitigating the effects of unplanned events and other
collectively part of the main Program of Work i.e. an overall
risks that are normally exte
...

Questions, Comments and Discussion

Ask us and Technical Secretary will try to provide an answer. You can facilitate discussion about the standard in here.

This May Also Interest You

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
    English language
    sale 15% off
ASTM
ASTM E1946-18(2023)(Practice)
Standard Practice for Measuring Cost Risk of Buildings and Building Systems and Other Constructed Projects

SIGNIFICANCE AND USE
5.1 Measuring cost risk enables owners of buildings and other constructed projects, architects, engineers, and contractors to measure and evaluate the cost risk exposures of their construction projects.3 Specifically, cost risk analysis (CRA) helps answer the following questions:  
5.1.1 What are the probabilities for the construction contract to be bid above or below the estimated value?  
5.1.2 How low or high can the total project cost be?  
5.1.3 What is the appropriate amount of contingency to use?  
5.1.4 What cost elements have the greatest impact on the project’s cost risk exposure?  
5.2 CRA can be applied to a project's contract cost, construction cost (contract cost plus construction change orders), and project cost (construction cost plus owner's cost), depending on the users’ perspectives and needs. This practice shall refer to these different terms generally as “project cost.”
SCOPE
1.1 This practice covers a procedure for measuring cost risk for buildings and building systems and other constructed projects, using the Monte Carlo simulation technique as described in Guide E1369.  
1.2 A computer program is required for the Monte Carlo simulation. This can be one of the commercially available software programs for cost risk analysis, or one constructed by the user.  
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.

  • Standard
    9 pages
    English language
    sale 15% off
ASTM
ASTM E2168-10(2023)(Classification)
Standard Classification for Allowance, Contingency, and Reserve Sums in Building Construction Estimating

SIGNIFICANCE AND USE
4.1 When preparing construction, project, and program cost estimates, it is often necessary to make monetary provision for change or risk, or both, or other exigencies where information is incomplete.  
4.2 Such allowance, contingency or reserve sums are employed by many persons engaged in the planning, delivery, and financing of construction work.  
4.3 These users include owners, developers, facilities programmers, cost planners, estimators, schedules, architects and engineers, specification writers, operating and maintenance staff, manufacturers, educators, financial managers, and comptrollers.  
4.4 Usage:  
4.4.1 These sums are especially appropriate when performing the following activities:    
Cost budgeting;  
Conceptual, design, and construction cost estimating;  
Preparing complete forecast cost for economic evaluation,
investment analysis, and approval; and    
Controlling cost during planning, design, and construction.  
4.4.2 In any of these activities a needed requirement, or component, of the planned construction can be known while the defined solution, design or specification, for providing this may not. The usual, and appropriate, response in these situations, is the inclusion of a monetary sum, within an estimate, to provide for this (these) requirement(s).  
4.4.3 Such sums may be general or specific in scope, may be planned to be spent or may only be included as possible mitigation for unplanned events and requirements.  
4.4.4 To distinguish between these sums, and in recognition of their differing purpose, they are described, and classified here, using the terms allowance, contingency, or reserve.
Note 1: Section 5 includes a generic statement of purpose for each of the three terms and provides a sub-classification that distinguishes between sums included for specific purposes and for non-specific, that is, general purposes. In cost budgeting, conceptual and design estimating especially, an estimator may intuitively recognize...
SCOPE
1.1 This classification establishes a classification for allowance, contingency, and reserve sums used in construction, project, and program estimating.  
1.2 This classification applies to all construction work.  
1.3 This classification is not based on permanent physical elements of construction (as defined and classified in Classification E1557). Rather, the classification items are cost components common to construction, project, and program estimates.  
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.

  • Standard
    9 pages
    English language
    sale 15% off
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.

  • Standard
    14 pages
    English language
    sale 15% off
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.

  • Standard
    14 pages
    English language
    sale 15% off
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.

  • Standard
    19 pages
    English language
    sale 15% off
ASTM
ASTM E1369-15(2020)e1(Guide)
Standard Guide for Selecting Techniques for Treating Uncertainty and Risk in the Economic Evaluation of Buildings and Building Systems

SIGNIFICANCE AND USE
5.1 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.  
5.2 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.  
5.3 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.  
5.4 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.  
5.4.1 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.  
5.4.2 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 i...
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.2  
1.2 The techniques include breakeven analysis, sensitivity analysis, risk-adjusted discounting, the mean-variance criterion and coefficient of variation, decision analysis, simulation, and stochastic dominance.  
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.  
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.

  • Guide
    17 pages
    English language
    sale 15% off
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.

  • Guide
    5 pages
    English language
    sale 15% off
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.

  • Standard
    12 pages
    English language
    sale 15% off
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
    English language
    sale 15% off