ASTM E964-06

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

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.

General Information

• Status: Historical
• Publication Date: 31-Mar-2006
• ICS: 91.010.20 - Contractual aspects
• Technical Committee: E06 - Performance of Buildings
• Drafting Committee: E06.81 - Building Economics

Relations

• Replaces: ASTM E964-02 - Standard Practice for Measuring Benefit-to-Cost and Savings-to-Investment Ratios for Buildings and Building Systems
• Effective Date: 01-Apr-2006
• Replaced By: ASTM E964-06e1 - 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 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: 01-Apr-2006
• Referred By: ASTM E1121-15(2020)e1 - Standard Practice for Measuring Payback for Investments in Buildings and Building Systems
• Effective Date: 01-Apr-2006
• 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-2006
• 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-2006
• Referred By: ASTM E3008/E3008M-16(2023) - Standard Classification for Transportation Surface Elements—UNIFORMAT II
• Effective Date: 01-Apr-2006
• 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-2006
• 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: 01-Apr-2006
• Referred By: ASTM E3130-21 - Standard Guide for Developing Cost-Effective Community Resilience Strategies
• Effective Date: 01-Apr-2006
• Referred By: ASTM E917-17(2023) - Standard Practice for Measuring Life-Cycle Costs of Buildings and Building Systems
• Effective Date: 01-Apr-2006
• Referred By: ASTM E1557-09(2020)e1 - Standard Classification for Building Elements and Related Sitework—UNIFORMAT II
• Effective Date: 01-Apr-2006
• Referred By: ASTM E2204-15(2020)e1 - Standard Guide for Summarizing the Economic Impacts of Building-Related Projects
• Effective Date: 01-Apr-2006
• 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-2006
• Referred By: ASTM E2103/E2103M-19 - Standard Classification for Bridge Elements—UNIFORMAT II
• Effective Date: 01-Apr-2006

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 964 – 06
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, net
savings, life-cycle cost, internal rate-of-return, adjusted internal rate-of-return, and payback (see
PracticesE 917,E 1057,E 1074,andE 1121).GuideE 1185directsyoutotheappropriatemethodfor
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.
1. Scope 2. Referenced Documents
2
1.1 This practice covers a procedure for calculating and 2.1 ASTM Standards:
interpreting benefit-to-cost ratios (BCR) and savings-to- E 631 Terminology of Building Constructions
investment ratios (SIR) as an aid for making building-related E 833 Terminology of Building Economics
decisions. E 917 PracticeforMeasuringLife-CycleCostsofBuildings
1.2 A basic premise of the BCR and SIR methods is that and Building Systems
future as well as present benefits and costs arising from a E 1057 Practice for Measuring Internal Rate of Return and
decision are important to that decision, and, if measurable in Adjusted Internal Rate of Return for Investments in Build-
dollars, should be included in calculating the BCR and SIR. ings and Building Systems
1.3 Dollar amounts used to calculate BCR and SIR are all E 1074 Practice for Measuring Net Benefits and Net Sav-
discounted, that is, expressed in time-equivalent dollars, either ings for Investments in Buildings and Building Systems
in present value or uniform annual value terms. E 1121 Practice for Measuring Payback for Investments in
Buildings and Building Systems
1
This practice is under the jurisdiction of ASTM Committee E06 on Perfor-
2
mance of Buildings and is the direct responsibility of Subcommittee E06.81 on For referenced ASTM standards, visit the ASTM website, www.astm.org, or
Building Economics. contact ASTM Customer Service at [e-mail]. For Annual Book of ASTM
Current edition approved April 1, 2006. Published April 2006. Originally Standards volume information, refer to the standard’s Document Summary page on
approved in 1983. Last previous edition approved in 2002 as E 964 – 02. the ASTM website.
Copyright © ASTM International, 100 Barr Harbor Drive, PO Box C700, West Conshohocken, PA 19428-2959, United States.
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E 964–06
E 1185 Guide for Selecting Economic Methods for Evalu- 5.5 The BCR or SIR can be used as an aid to select the
ating Investments in Buildings and Building Systems economically efficient set of projects among many competing
E 1369 Guide for Selecting Techniques for Treating Uncer- for limited funding. The efficient set of projects will maximize
tainty and Risk in the Economic Evaluation of Buildings aggregate net benefits or net savings obtainable for the budget.
and Building Systems
6. Procedure
E 1765 Practice for Applying Analytical Hierarchy Process
6.1 The recommended steps for carrying out an economic
(AHP) to Multiattribute Decision Analysis of Investments
evaluation using the BCR or SIR method are summarized as
Related to Buildings and Building Systems
follows:
E 1946 Practice for Measuring Cost Risk of Buildings and
6.1.1 Identify objectives, constraints, and alternatives (see
Building Systems
...