ASTM E917-17(2023)
(Practice)Standard Practice for Measuring Life-Cycle Costs of Buildings and Building Systems
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.
General Information
Relations
Standards Content (Sample)
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.
Designation: E917 − 17 (Reapproved 2023)
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. A number 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, multi-attribute decision analysis, risk analysis, and related measures (see Practices E964,
E1057, E1074, E1121, E1765, and E1946). These methods differ in their measure and, to some extent,
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 conversions to SI units that are provided for information only
and are not considered standard.
1.1 This practice establishes a procedure for evaluating the
1.5 This international standard was developed in accor-
life-cycle cost (LCC) of a building or building system and
dance with internationally recognized principles on standard-
comparing the LCCs of alternative building designs or systems
ization established in the Decision on Principles for the
that satisfy the same functional requirements.
Development of International Standards, Guides and Recom-
1.2 The LCC method measures, in present-value or annual-
mendations issued by the World Trade Organization Technical
value terms, the sum of all relevant costs associated with
Barriers to Trade (TBT) Committee.
owning and operating a building or building system over a
specified time period.
2. Referenced Documents
1.3 The basic premise of the LCC method is that to an
2.1 ASTM Standards:
investor or decision maker all costs arising from an investment
E631 Terminology of Building Constructions
decision are potentially important to that decision, including
E833 Terminology of Building Economics
future as well as present costs. Applied to buildings or building
E964 Practice for Measuring Benefit-to-Cost and Savings-
systems, the LCC encompasses all relevant costs over a
to-Investment Ratios for Buildings and Building Systems
designated study period, including the costs of designing,
E1057 Practice for Measuring Internal Rate of Return and
purchasing/leasing, constructing/installing, operating,
Adjusted Internal Rate of Return for Investments in
maintaining, repairing, replacing, and disposing of a particular
Buildings and Building Systems
building design or system.
E1074 Practice for Measuring Net Benefits and Net Savings
1.4 The values stated in inch-pound units are to be regarded
for Investments in Buildings and Building Systems
as standard. The values given in parentheses are mathematical
E1121 Practice for Measuring Payback for Investments in
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 July 1, 2023. Published August 2023. Originally contact ASTM Customer Service at service@astm.org. For Annual Book of ASTM
ε1
approved in 1983. Last previous edition approved in 2017 as E917 – 17 . DOI: Standards volume information, refer to the standard’s Document Summary page on
10.1520/E0917-17R23. the ASTM website.
Copyright © ASTM International, 100 Barr Harbor Drive, PO Box C700, West Conshohocken, PA 19428-2959. United States
E917 − 17 (2023)
E1185 Guide for Selecting Economic Methods for Evaluat- 5.2 The LCC method is particularly suitable for determining
ing Investments in Buildings and Building Systems whether the higher initial cost of a building or building system
E1369 Guide for Selecting Techniques for Treating Uncer- is economically justified by reductions in future costs (for
tainty and Risk in the Economic Evaluation of Buildings example, operating, maintenance, repair, or replacement costs)
and Building Systems when compared with an alternative that has a lower initial cost
E1765 Practice for Applying Analytical Hierarchy Process but higher future costs. If a building design or system specifi-
(AHP) to Multiattribute Decision Analysis of Investments cation has both a lower initial cost and lower future costs
Related to Projects, Products, and Processes relative to an alternative, an LCC analysis is not needed to
E1946 Practice for Measuring Cost Risk of Buildings and show that the former is the economically preferable choice.
Building Systems and Other Constructed Projects
5.3 If an investment project is not essential to the building
E2204 Guide for Summarizing the Economic Impacts of
operation (for example, replacement of existing single-pane
Building-Related Projects
windows with new double-pane windows), the project must be
2.2 ASTM Adjunct:
compared against the “do nothing” alternative (that is, keeping
Discount Factor Tables - Adjunct to E917 Standard Practice
the single pane windows) in order to determine if it is cost
for Measuring Life-Cycle Costs of Buildings and Building
effective. Typically the “do nothing” alternative entails no
Systems—Includes Excel and PDF Files
initial investment cost but has higher future costs than the
proposed project.
3. Terminology
6. Procedure
3.1 Definitions—For definitions of general terms related to
building construction used in the practice, refer to Terminology
6.1 Follow these steps in calculating the LCC for a building
E631; and for general terms related to building economics,
or building system:
refer to Terminology E833.
6.1.1 Identify objectives, alternatives, and constraints (see
Section 7).
4. Summary of Practice
6.1.2 Establish basic assumptions for the analysis (see 8.1).
4.1 This practice outlines the recommended procedures for 6.1.3 Compile cost data (see 8.2).
computing the LCCs associated with a building or building 6.1.4 Compute the LCC for each alternative (see Section 9).
system over a specified time period. It identifies and gives 6.1.5 Compare LCCs of each alternative to determine the
examples of objectives, alternatives, and constraints for an one with the minimum LCC (see 10.1).
LCC analysis; identifies project data and general assumptions 6.1.6 Make final decision, based on LCC results as well as
consideration of risk and uncertainty, unquantifiable effects,
needed for the analysis; and presents alternative approaches for
computing LCCs. This practice requires that the LCCs of and funding constraints (if any) (see 10.2, 10.3, 10.4, and 10.5).
alternative building designs or systems be compared over a
common time period to determine which design or system has 7. Objectives, Alternatives, and Constraints
the lowest LCC. This practice also states that uncertainty,
7.1 Specify the design or system objective that is to be
unquantifiable effects, and funding constraints shall be consid-
accomplished, identify alternative designs or systems that
ered in the final analysis. It identifies the recommended
accomplish that objective, and identify any constraints that
contents of an LCC report, describes proper applications of the
limit the available options to be considered.
LCC method, provides examples of its use, and identifies
7.2 An example is the selection of a space heating system
limitations of the method. A comprehensive example of the
for a new house. The system must satisfy the thermal comfort
LCC method applied to a building economics problem is
requirements of the occupants throughout the heating season.
provided in Appendix X1. A comprehensive example illustrat-
Available alternatives (for example, various gas furnaces, oil
ing the treatment of uncertainty within the LCC method is
furnaces, heat pumps, and electric baseboard heaters) may have
provided in Appendix X2. Appendix X3 provides a detailed
different types of fuel usage with different unit costs, different
example analyzing the life-cycle cost implications resulting
fuel conversion efficiencies, different initial costs and expected
from energy efficiency improvements in a high school building.
maintenance and repair costs, and different lives. System
Appendix X4 provides a description of the Adjunct.
selection will be constrained to those fuel types available at the
building site.
5. Significance and Use
5.1 LCC analysis is an economic method for evaluating a
8. Data and Assumptions
project or project alternatives over a designated study period.
8.1 Basic Assumptions—Establish the uniform assumptions
The method entails computing the LCC for alternative building
to be made in the economic analysis of all alternatives. These
designs or system specifications having the same purpose and
assumptions usually include, but are not limited to, the
then comparing them to determine which has the lowest LCC
consistent use of the present-value or annual-value calculation
over the study period.
method, the base time and study period, the general inflation
rate, the discount rate, the marginal income tax rate (where
relevant), the comprehensiveness of the analysis, and the
Available from ASTM International Headquarters. Order Adjunct No.
ADJE091717-EA. Original adjunct produced in 1984. Adjunct last revised in 2003. operational profile of the building or system to be evaluated.
E917 − 17 (2023)
8.1.1 Present-Value Versus Annual-Value Calculations— inflation). If the latter is used, a consistent projection of general
The LCCs of project alternatives must be calculated uniformly price inflation must be used throughout the LCC analysis,
in present-value or annual-value terms. In the former, all costs including adjustment of the discount rate to incorporate the
are discounted to the base time; in the latter, all costs are general inflation rate.
converted to a uniform annual amount equivalent to the present
8.1.3.1 When income tax effects are not included in the
value when discounted to the base time. LCC analysis, as in the case of LCC evaluations of nonprofit
buildings and owner-occupied houses (without financing), it is
8.1.2 Study Period—The study period appropriate to the
usually easier to express all costs in constant dollars. Price
LCC analysis may or may not reflect the life of the building or
changes for individual cost categories that are higher or lower
system to be evaluated. The same study period must be used for
than the rate of general inflation can be included by using
each alternative when present-value calculations are used. An
differential rates of price change for those categories.
annual-value LCC may, under certain restrictive assumptions,
be used to compare alternatives with different study periods 8.1.3.2 When income tax effects are included in the LCC
analysis, it is usually easier to express all costs in current
(see 9.2.3). The following guidelines may be useful for
dollars because income taxes are tied to current-dollar cash
selecting a study period for an LCC analysis:
flows rather than constant-dollar cash flows.
8.1.2.1 When analyzing a project from an individual inves-
8.1.4 Discount Rate—The discount rate selected should
tor’s standpoint, the study period should reflect the investor’s
reflect the investor’s time value of money. That is, the discount
time horizon. For a homeowner, the study period for a
rate should reflect the rate of interest that makes the investor
house-related investment might be based on the length of time
indifferent between paying or receiving a dollar now or at some
the homeowner expects to reside in the house. For a commer-
future point in time. The discount rate is used to convert costs
cial property owner, the study period might be based on the
occurring at different times to equivalent costs at a common
anticipated holding period of the building. For an owner/
point in time.
occupant of a commercial building, the study period might
8.1.4.1 Select a discount rate equal to the rate of return on
correspond to the life of the building or building system being
the next best available use of funds. Where the discount rate is
evaluated. For a speculative investor, the study period might be
legislated or mandated for a given institution, that rate takes
based on a relatively short holding period. For investments by
precedence.
government agencies and large institutions, specific internal
8.1.4.2 A discount rate that includes general price inflation
policies often direct the choice of study period.
over the study period is referred to as the “nominal” discount
8.1.2.2 When LCC analyses of alternative building systems
rate in this practice. A discount rate expressed in terms net of
or design practices are performed for general information
general price inflation is referred to as the “real” discount rate.
rather than for a specific application (for example, government
8.1.4.3 A nominal discount rate, i, and its corresponding real
or industry research to determine the cost effectiveness of
discount rate, r, are related as follows:
thermal insulation or high-efficiency heating and cooling
equipment in typical installations), the study period will often
11i
r 5 2 1 or i 5 ~11r!~11I! 2 1 (1)
coincide with the service life of the material or system (but be
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
I = the rate of general price inflation.
conservative choice for the study period might be used if the
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
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