ASTM E917-05(2010)

Standard Practice for Measuring Life-Cycle Costs of Buildings and Building Systems

SIGNIFICANCE AND USE
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.
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.
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.

General Information

• Status: Historical
• Publication Date: 31-Mar-2010
• ICS: 91.010.20 - Contractual aspects
• Technical Committee: E06 - Performance of Buildings
• Drafting Committee: E06.81 - Building Economics

Relations

• Replaces: ASTM E917-05e1 - Standard Practice for Measuring Life-Cycle Costs of Buildings and Building Systems
• Effective Date: 01-Apr-2010
• Replaced By: ASTM E917-13 - Standard Practice for Measuring Life-Cycle Costs of Buildings and Building Systems
• Effective Date: 01-Sep-2013
• 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: 01-Apr-2010
• Referred By: ASTM E2204-15(2020)e1 - Standard Guide for Summarizing the Economic Impacts of Building-Related Projects
• Effective Date: 01-Apr-2010
• Referred By: ASTM E2432-23 - Standard Guide for General Principles of Sustainability Relative to the Built Environment
• Effective Date: 01-Apr-2010
• Referred By: ASTM E2103/E2103M-19 - Standard Classification for Bridge Elements—UNIFORMAT II
• Effective Date: 01-Apr-2010
• Referred By: ASTM E1699-14(2020) - Standard Practice for Performing Value Engineering (VE)/Value Analysis (VA) of Projects, Products and Processes
• Effective Date: 01-Apr-2010
• Referred By: ASTM E1185-15(2020)e1 - Standard Guide for Selecting Economic Methods for Evaluating Investments in Buildings and Building Systems
• Effective Date: 01-Apr-2010
• 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: 01-Apr-2010
• 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: 01-Apr-2010
• Referred By: ASTM E2252-22 - Standard Practice for Selection of Lead Hazard Reduction Methods for Identified Risks in Residential Housing or Child Occupied Facilities
• Effective Date: 01-Apr-2010
• Referred By: ASTM E1121-15(2020)e1 - Standard Practice for Measuring Payback for Investments in Buildings and Building Systems
• Effective Date: 01-Apr-2010
• Referred By: ASTM E2166-16(2023) - Standard Practice for Organizing and Managing Building Data
• Effective Date: 01-Apr-2010
• Referred By: ASTM E2637-17 - Standard Guide for Utilizing the Environmental Cost Element Structure Presented by Classification <astmref design="E2150"/>
• Effective Date: 01-Apr-2010
• Referred By: ASTM E3008/E3008M-16(2023) - Standard Classification for Transportation Surface Elements—UNIFORMAT II
• Effective Date: 01-Apr-2010

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: E917 − 05 (Reapproved2010)
Standard Practice for
Measuring Life-Cycle Costs of Buildings and Building
Systems
This standard is issued under the fixed designation E917; 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.
INTRODUCTION
Several methods of economic evaluation are available to measure the economic performance of a
building or building system over a specified time period. These methods include, but are not limited
to, life-cycle cost (LCC) analysis, the benefit-to-cost ratio, internal rate of return, net benefits,
payback, multiattribute decision analysis, risk analysis, and related measures (see Practices E964,
E1057,E1074,E1121,E1765,andE1946).Thesemethodsdifferintheirmeasureand,tosomeextent,
in their applicability to particular types of problems. Guide E1185 directs you to the appropriate
method for a particular economic problem. One of these methods, life-cycle cost (LCC) analysis, is
the subject of this practice. The LCC method sums, in either present-value or annual-value terms, all
relevant costs associated with a building or building system over a specified time period.Alternative
(mutually exclusive) designs or systems for a given functional requirement can be compared on the
basis of their LCCs to determine which is the least-cost means of satisfying that requirement over a
specified study period.
1. Scope 2. Referenced Documents
1.1 This practice establishes a procedure for evaluating the 2.1 ASTM Standards:
life-cycle cost (LCC) of a building or building system and E631Terminology of Building Constructions
comparingtheLCCsofalternativebuildingdesignsorsystems E833Terminology of Building Economics
that satisfy the same functional requirements. E964Practice for Measuring Benefit-to-Cost and Savings-
to-Investment Ratios for Buildings and Building Systems
1.2 The LCC method measures, in present-value or annual-
E1057Practice for Measuring Internal Rate of Return and
value terms, the sum of all relevant costs associated with
Adjusted Internal Rate of Return for Investments in
owning and operating a building or building system over a
Buildings and Building Systems
specified time period.
E1074Practice for Measuring Net Benefits and Net Savings
1.3 The basic premise of the LCC method is that to an
for Investments in Buildings and Building Systems
investorordecisionmakerallcostsarisingfromaninvestment
E1121Practice for Measuring Payback for Investments in
decision are potentially important to that decision, including
Buildings and Building Systems
futureaswellaspresentcosts.Appliedtobuildingsorbuilding
E1185Guide for Selecting Economic Methods for Evaluat-
systems, the LCC encompasses all relevant costs over a
ing Investments in Buildings and Building Systems
designated study period, including the costs of designing,
E1369Guide for Selecting Techniques for Treating Uncer-
purchasing/leasing, constructing/installing, operating,
tainty and Risk in the Economic Evaluation of Buildings
maintaining, repairing, replacing, and disposing of a particular
and Building Systems
building design or system.
E1765Practice for Applying Analytical Hierarchy Process
(AHP) to Multiattribute DecisionAnalysis of Investments
Related to Buildings and Building Systems
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
Building Economics. For referenced ASTM standards, visit the ASTM website, www.astm.org, or
Current edition approved April 1, 2010. Published July 2010. Originally contact ASTM Customer Service at [e-mail]. For Annual Book of ASTM
approved in 1983. Last previous edition approved in 2005 as E917–05. DOI:
Standards volume information, refer to the standard’s Document Summary page on
10.1520/E0917-05R10.
the ASTM website.
Copyright © ASTM International, 100 Barr Harbor Drive, PO Box C700, West Conshohocken, PA 19428-2959. United States
E917 − 05 (2010)
E1946Practice for Measuring Cost Risk of Buildings and 6. Procedure
Building Systems and Other Constructed Projects
6.1 FollowthesestepsincalculatingtheLCCforabuilding
E2204Guide for Summarizing the Economic Impacts of
or building system:
Building-Related Projects
6.1.1 Identify objectives, alternatives, and constraints (see
2.2 Adjuncts:
Section 7).
DiscountFactorTables Adjunct to Practices E917, E964,
6.1.2 Establish basic assumptions for the analysis (see 8.1).
E1057, E1074, and E1121
6.1.3 Compile cost data (see 8.2).
6.1.4 ComputetheLCCforeachalternative(seeSection9).
3. Terminology
6.1.5 Compare LCCs of each alternative to determine the
3.1 Definitions—For definitions of terms used in the
one with the minimum LCC (see 10.1).
practice, refer to Terminologies E631 and E833.
6.1.6 Make final decision, based on LCC results as well as
consideration of risk and uncertainty, unquantifiable effects,
4. Summary of Practice
andfundingconstraints(ifany)(see10.2,10.3,10.4,and10.5).
4.1 This practice outlines the recommended procedures for
computing the LCCs associated with a building or building
7. Objectives, Alternatives, and Constraints
system over a specified time period. It identifies and gives
7.1 Specify the design or system objective that is to be
examples of objectives, alternatives, and constraints for an
accomplished, identify alternative designs or systems that
LCC analysis; identifies project data and general assumptions
accomplish that objective, and identify any constraints that
neededfortheanalysis;andpresentsalternativeapproachesfor
limit the available options to be considered.
computing LCCs. This practice requires that the LCCs of
alternative building designs or systems be compared over a
7.2 An example is the selection of a space heating system
common time period to determine which design or system has
for a new house. The system must satisfy the thermal comfort
the lowest LCC. This practice also states that uncertainty,
requirements of the occupants throughout the heating season.
unquantifiable effects, and funding constraints shall be consid-
Available alternatives (for example, various gas furnaces, oil
ered in the final analysis. It identifies the recommended
furnaces,heatpumps,andelectricbaseboardheaters)mayhave
contentsofanLCCreport,describesproperapplicationsofthe
different types of fuel usage with different unit costs, different
LCC method, provides examples of its use, and identifies
fuelconversionefficiencies,differentinitialcostsandexpected
limitations of the method. A comprehensive example of the
maintenance and repair costs, and different lives. System
LCC method applied to a building economics problem is
selectionwillbeconstrainedtothosefueltypesavailableatthe
provided in Appendix X1.
building site.
5. Significance and Use
8. Data and Assumptions
5.1 LCC analysis is an economic method for evaluating a
8.1 Basic Assumptions—Establish the uniform assumptions
project or project alternatives over a designated study period.
to be made in the economic analysis of all alternatives. These
ThemethodentailscomputingtheLCCforalternativebuilding
assumptions usually include, but are not limited to, the
designs or system specifications having the same purpose and
consistent use of the present-value or annual-value calculation
then comparing them to determine which has the lowest LCC
method, the base time and study period, the general inflation
over the study period.
rate, the discount rate, the marginal income tax rate (where
5.2 TheLCCmethodisparticularlysuitablefordetermining
relevant), the comprehensiveness of the analysis, and the
whether the higher initial cost of a building or building system
operational profile of the building or system to be evaluated.
is economically justified by reductions in future costs (for
8.1.1 Present-Value Versus Annual-Value Calculations—
example, operating, maintenance, repair, or replacement costs)
The LCCs of project alternatives must be calculated uniformly
when compared with an alternative that has a lower initial cost
in present-value or annual-value terms. In the former, all costs
but higher future costs. If a building design or system specifi-
are discounted to the base time; in the latter, all costs are
cation has both a lower initial cost and lower future costs
convertedtoauniformannualamountequivalenttothepresent
relative to an alternative, an LCC analysis is not needed to
value when discounted to the base time.
show that the former is the economically preferable choice.
8.1.2 Study Period—The study period appropriate to the
5.3 If an investment project is not essential to the building LCC analysis may or may not reflect the life of the building or
operation (for example, replacement of existing single-pane systemtobeevaluated.Thesamestudyperiodmustbeusedfor
windows with new double-pane windows), the project must be
each alternative when present-value calculations are used. An
compared against the “do nothing” alternative (that is, keeping annual-value LCC may, under certain restrictive assumptions,
the single pane windows) in order to determine if it is cost
be used to compare alternatives with different study periods
effective. Typically the “do nothing” alternative entails no (see 9.2.3). The following guidelines may be useful for
initial investment cost but has higher future costs than the
selecting a study period for an LCC analysis:
proposed project.
8.1.2.1 When analyzing a project from an individual inves-
tor’s standpoint, the study period should reflect the investor’s
time horizon. For a homeowner, the study period for a
Available from ASTM International Headquarters. Order Adjunct No.
ADJE091703. Original adjunct produced in 1984. Adjunct last revised in 1984. house-related investment might be based on the length of time
E917 − 05 (2010)
the homeowner expects to reside in the house. For a commer- indifferentbetweenpayingorreceivingadollarnoworatsome
cial property owner, the study period might be based on the future point in time. The discount rate is used to convert costs
anticipated holding period of the building. For an owner/ occurring at different times to equivalent costs at a common
occupant of a commercial building, the study period might point in time.
correspond to the life of the building or building system being
8.1.4.1 Select a discount rate equal to the rate of return on
evaluated.Foraspeculativeinvestor,thestudyperiodmightbe
the next best available use of funds.Where the discount rate is
based on a relatively short holding period. For investments by
legislated or mandated for a given institution, that rate takes
government agencies and large institutions, specific internal
precedence.
policies often direct the choice of study period.
8.1.4.2 A discount rate that includes general price inflation
8.1.2.2 When LCC analyses of alternative building systems
over the study period is referred to as the “nominal” discount
or design practices are performed for general information
rate in this practice. A discount rate expressed in terms net of
rather than for a specific application (for example, government
general price inflation is referred to as the “real” discount rate.
or industry research to determine the cost effectiveness of
8.1.4.3 Anominaldiscountrate,i,anditscorrespondingreal
thermal insulation or high-efficiency heating and cooling
discount rate, r, are related as follows:
equipment in typical installations), the study period will often
11i
coincide with the service life of the material or system (but be
r 5 21or i 5 ~11r!~11I! 21 (1)
11I
limited to the typical life of the type of building where it is to
where:
be installed). When the service life is very long, a more
conservative choice for the study period might be used if the
I = the rate of general price inflation.
uncertainty associated with the long-term forecasting of costs
8.1.4.4 Use a real discount rate if estimates of future costs
substantially reduces the credibility of the results.
are expressed in constant dollars, that is, if they do not include
8.1.2.3 Regardless of the type of investor or purpose of the
general inflation.
analysis, use the same study period for all categories of costs
8.1.4.5 Use a nominal discount rate if estimates of future
when calculating the present value of any cost associated with
costs are expressed in current dollars, that is, if they include
a project. Furthermore, when comparing alternative designs or
general inflation.
systemsonthebasisoftheirpresent-valueLCCs,usethesame
8.1.4.6 When alternative building or system designs are
study period for each investment alternative.
comparedusingtheLCCmethod,usethesamediscountratein
8.1.2.4 When the study period selected is significantly
each LCC computation.
shorterthantheservicelifeofthebuildingorsystemevaluated,
8.1.5 Comprehensiveness—Different levels of effort can be
it is important that a realistic assessment of the project’s resale
applied in undertaking an LCC analysis. The appropriate level
(orresidual)valueattheendofthestudyperiodbeincludedin
of comprehensiveness depends upon the degree of complexity
the LCC analysis. Even if the building will not be sold at that
of the problem, the intended purpose of the evaluation, the
time, the resale value will likely have a significant impact on
level of monetary and nonmonetary impacts contingent upon
the LCC.
the investment decision, the cost of the different levels of
8.1.3 Inflation—General price inflation is the reduction in
comprehensiveness, and the resources available to the investor
the purchasing power of the dollar from year to year, as
or decision maker.
measured, for example, by the percent increase in the gross
8.1.5.1 Some anticipated effects are more difficult to quan-
national product (GNP) deflator over a given year. LCC
tify in monetary terms than others. Include effects that are
analyses can be calculated in constant-dollar terms (net of
difficult to quantify through the use of multiattribute decision
general inflation) or in current-dollar terms (including general
analysis (see Practice E1765). (See 10.4 for more information
inflation).Ifthelatterisused,aconsistentprojectionofgeneral
on unquantifiable effects.) Overlooking or omitting significant
price inflation must be used throughout the LCC analysis,
factorsfromanLCCevaluationdiminishesthecomprehensive-
including adjustment of the discount rate to incorporate the
ness and usefulness of the evaluation.
general inflation rate.
8.1.5.2 Comprehensiveness requires that all suitable alter-
8.1.3.1 When income tax effects a
...