ASTM E964-02

Standard Practice for Measuring Benefit-to-Cost and Savings-to-Investment Ratios for Buildings and Building Systems

SCOPE
1.1 This practice presents 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.

General Information

• Status: Historical
• Publication Date: 09-Oct-2002
• ICS: 91.010.20 - Contractual aspects
• Technical Committee: E06 - Performance of Buildings
• Drafting Committee: E06.81 - Building Economics

Relations

• Replaces: ASTM E964-93(1998)e1 - Standard Practice for Measuring Benefit-to-Cost and Savings-to-Investment Ratios for Buildings and Building Systems
• Effective Date: 10-Oct-2002
• Replaced By: ASTM E964-06 - Standard Practice for Measuring Benefit-to-Cost and Savings-to-Investment Ratios for Buildings and Building Systems
• Effective Date: 01-Apr-2006
• Referred By: ASTM E1185-15(2020)e1 - Standard Guide for Selecting Economic Methods for Evaluating Investments in Buildings and Building Systems
• Effective Date: 10-Oct-2002
• Referred By: ASTM E2103/E2103M-19 - Standard Classification for Bridge Elements—UNIFORMAT II
• Effective Date: 10-Oct-2002
• 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: 10-Oct-2002
• Referred By: ASTM E1121-15(2020)e1 - Standard Practice for Measuring Payback for Investments in Buildings and Building Systems
• Effective Date: 10-Oct-2002
• Referred By: ASTM E2204-15(2020)e1 - Standard Guide for Summarizing the Economic Impacts of Building-Related Projects
• Effective Date: 10-Oct-2002
• Referred By: ASTM E3130-21 - Standard Guide for Developing Cost-Effective Community Resilience Strategies
• Effective Date: 10-Oct-2002
• Referred By: ASTM E917-17(2023) - Standard Practice for Measuring Life-Cycle Costs of Buildings and Building Systems
• Effective Date: 10-Oct-2002
• Referred By: ASTM E1557-09(2020)e1 - Standard Classification for Building Elements and Related Sitework—UNIFORMAT II
• Effective Date: 10-Oct-2002
• Referred By: ASTM E3008/E3008M-16(2023) - Standard Classification for Transportation Surface Elements—UNIFORMAT II
• Effective Date: 10-Oct-2002
• Referred By: ASTM E1765-16(2023) - Standard Practice for Applying Analytical Hierarchy Process (AHP) to Multiattribute Decision Analysis of Investments Related to Projects, Products, and Processes
• Effective Date: 10-Oct-2002
• 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: 10-Oct-2002
• Referred By: ASTM E1369-15(2020)e1 - Standard Guide for Selecting Techniques for Treating Uncertainty and Risk in the Economic Evaluation of Buildings and Building Systems
• Effective Date: 10-Oct-2002
• 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: 10-Oct-2002

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
An American National Standard
Designation: E 964 – 02
Standard Practice for
Measuring Benefit-to-Cost and Savings-to-Investment Ratios
1
for Buildings and Building Systems
This standard is issued under the fixed designation E 964; 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
This is one in a series of practices for applying economic evaluation methods to building-related
decisions. Methods covered by this practice are benefit-to-cost ratio (BCR) and savings-to-investment
ratio (SIR). These are members of a family of economic evaluation methods that can be used to
measure the economic consequences of a decision over a specified period of time. The BCR is used
when the focus is on benefits (that is, advantages measured in dollars) relative to project costs. The
SIR, a variation of the BCR, is used when the focus is on project savings (that is, cost reductions)
relative to project costs. The family of methods includes, in addition to BCR and SIR, net benefits,
life-cycle cost, internal rate-of-return, adjusted internal rate-of-return, and payback (see Practices
E 917, E 1057, E 1074, and E 1121). Guide E 1185 directs you to the appropriate method for a
particular economic problem.
BCR and SIR are numerical ratios that indicate the economic performance of a project by the size
oftheratio.Aratiolessthan1.0indicatesaprojectthatisuneconomic,aratioof1.0indicatesaproject
whose benefits or savings just equal its costs, and a ratio greater than 1.0 indicates a project that is
economic. While it is straightforward to use ratios to determine whether a given project is economic
or uneconomic, care must be taken to correctly interpret ratios when using them to choose among
alternative designs and sizes of a project, or to assign priority to projects competing for limited funds.
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1. Scope and Building Systems
E 1057 Practice for Measuring Internal Rate of Return and
1.1 This practice presents a procedure for calculating and
Adjusted Internal Rate of Return for Investments in Build-
interpreting benefit-to-cost ratios (BCR) and savings-to-
2
ings and Building Systems
investment ratios (SIR) as an aid for making building-related
E 1074 Practice for Measuring Net Benefits for Investments
decisions.
2
in Buildings and Building Systems
1.2 A basic premise of the BCR and SIR methods is that
E 1121 Practice for Measuring Payback for Investments in
future as well as present benefits and costs arising from a
2
Building and Building Systems
decision are important to that decision, and, if measurable in
E 1185 Guide for Selecting Economic Methods for Evalu-
dollars, should be included in calculating the BCR and SIR.
2
ating Investments in Buildings and Building Systems
1.3 Dollar amounts used to calculate BCR and SIR are all
2.2 ASTM Adjuncts:
discounted, that is, expressed in time-equivalent dollars, either
3
Discount Factor Tables, Adjunct to Practice E 917
in present value or uniform annual value terms.
3. Terminology
2. Referenced Documents
3.1 Definitions—For definitions of terms used in this
2.1 ASTM Standards:
2
practice, refer to Terminology E 833.
E 833 Terminology of Building Economics
E 917 PracticeforMeasuringLife-CycleCostsofBuildings
4. Summary of Practice
4.1 This practice identifies related ASTM standards and
adjuncts. It outlines the recommended steps for carrying out an
1
ThispracticeisunderthejurisdictionofASTMCommitteeE-6onPerformance
analysis using the BCR or SIR method, explains each step, and
of Buildings and is the direct responsibility of Subcommittee E06.81 on Building
gives examples. This practice discusses the importance of
Economics.
CurrenteditionapprovedOct.10,2002Jan.15,1993.PublishedNovember2002.
e1
Originally published as E 964 – 83. Last previous edition E 964 – 93 (1998) .
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Annual Book of ASTM Standards, Vol 04.11. Available from ASTM Headquarters. Order ADJE091703.
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E 964–02
specifying objectives, alternatives, and constraints at the outset 7.2 The example in this section illustrates the objective,
of an evaluation. It identifies data and assumptions needed for constraints, and alternatives for a building investment that
calculating BCRs and SIRs, and shows how to calculate the could be evaluated using the BCR method. The decisionmak-
ratios. This practice emphasizes the importance of correctly er’s objective is to maximize net benefits (profits) from
interpreting the meaning of the ratios in different applicat
...