ASTM E1074-06

Standard Practice for Measuring Net Benefits and Net Savings for Investments in Buildings and Building Systems

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.

General Information

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

Relations

• Replaces: ASTM E1074-04 - Standard Practice for Measuring Net Benefits and Net Savings for Investments in Buildings and Building Systems
• Effective Date: 01-Apr-2006
• Replaced By: ASTM E1074-06e1 - Standard Practice for Measuring Net Benefits and Net Savings for Investments in 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
• 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 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 E964-15(2020)e1 - Standard Practice for Measuring Benefit-to-Cost and Savings-to-Investment Ratios for Buildings and Building Systems
• 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 1074 – 06
Standard Practice for
Measuring Net Benefits and Net Savings for Investments in
1
Buildings and Building Systems
This standard is issued under the fixed designation E 1074; 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
The net benefits (NB) and net savings (NS) methods are part of a family of economic evaluation
methods that provide measures of economic performance of an investment over some period of time.
Included in this family of evaluation methods are life-cycle cost analysis, benefit-to-cost and
savings-to-investment ratios, internal rates of return, and payback analysis.
The NB method calculates the difference between discounted benefits and discounted costs as a
measure of the cost effectiveness of a project. The NS method calculates the difference between
life-cycle costs as a measure of the cost-effectiveness of a project. The NB and NS methods are
sometimescalledthenetpresentvaluemethod.TheNBandNSmethodsareusedtodecideifaproject
is cost effective (net benefits greater than zero, or net savings greater than zero), or which size, or
design, competing for a given purpose is most cost effective (the one with the greatest net benefits, or
the one with the greatest net savings).
1. Scope ating Investments in Buildings and Building Systems
E 1369 Guide for Selecting Techniques for Treating Uncer-
1.1 This practice covers a recommended procedure for
tainty and Risk in the Economic Evaluation of Buildings
calculating and interpreting the net benefits (NB) and net
and Building Systems
savings(NS)methodsintheevaluationofbuildingdesignsand
E 1765 Practice for Applying Analytical Hierarchy Process
systems.
(AHP) to Multiattribute Decision Analysis of Investments
2. Referenced Documents
Related to Buildings and Building Systems
2
E 1946 Practice for Measuring Cost Risk of Buildings and
2.1 ASTM Standards:
Building Systems
E 631 Terminology of Building Constructions
E 2204 Guide for Summarizing the Economic Impacts of
E 833 Terminology of Building Economics
Building-Related Projects
E 917 PracticeforMeasuringLife-CycleCostsofBuildings
2.2 ASTM Adjuncts:
and Building Systems
3
Discount Factor Tables
E 964 Practice for Measuring Benefit-to-Cost and Savings-
to-Investment Ratios for Buildings and Building Systems
3. Terminology
E 1057 Practice for Measuring Internal Rate of Return and
3.1 Definitions—For definitions of terms used in this
Adjusted Internal Rate of Return for Investments in Build-
practice, refer to Terminologies E 631 and E 833.
ings and Building Systems
E 1121 Practice for Measuring Payback for Investments in
4. Summary of Practice
Buildings and Building Systems
4.1 This practice is organized as follows:
E 1185 Guide for Selecting Economic Methods for Evalu-
4.1.1 Section 2, Referenced Documents—Lists ASTM stan-
dards referenced in this practice.
4.1.2 Section 3, Definitions—Addresses definitions of terms
1
This practice is under the jurisdiction of ASTM Committee E06 on Perfor-
used in this practice.
mance of Buildings and is the direct responsibility of Subcommittee E06.81 on
4.1.3 Section 4, Summary of Practice—Outlines the con-
Building Economics.
Current edition approved April 1, 2006. Published April 2006. Originally
tents of the practice.
approved in 1985. Last previous edition approved in 2004 as E 1074 – 04.
2
For referenced ASTM standards, visit the ASTM website, www.astm.org, or
contact ASTM Customer Service at [e-mail]. For Annual Book of ASTM
3
Standards volume information, refer to the standard’s Document Summary page on Available from ASTM International Headquarters. Order Adjunct No.
the ASTM website. ADJE091703. Original adjunct produced in 1984.
Copyright © ASTM International, 100 Barr Harbor Drive, PO Box C700, West Conshohocken, PA 19428-2959, United States.
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E 1074 – 06
TABLE 1 Calculation of Net Benefits
A
Net Cash Flow SPV Factor
Year, t Benefits, B, dollars Costs, C , dollars PVNB, dollars
t t
B − C , dollars fori=15 %
t t
0 0 10 000 −10 000 1.000 −10 000
1 4 000 3 000 +1 000 0.8696 +870
2 11 500 4 500 +7 000 0.7561 +5 293
3 10 000 4 000 +6 000 0.6575 +3 945
4 8 000 5 000 +3 000 0.5718 +1 715
Total 33 500 26 500 +7 000 +1 823
A
TofindthePVNBofthenetcashflowforeachdiscountingperiod,thesinglepresentvalue(SPV)discountfactorismultipliedtimesthenetcashflow.Foranexplanation
3
of discounting factors and how to use them, see Discount Factor Tables, adjunct to Practice E 917 .
4
4.1.4 Section 5, Significance and Use—Explains the appli- 6.1.6 Compute NB (NS) and compare alternatives, and
...