ASTM E2506-15(2020)e1
(Guide)Standard Guide for Developing a Cost-Effective Risk Mitigation Plan for New and Existing Constructed Facilities
Standard Guide for Developing a Cost-Effective Risk Mitigation Plan for New and Existing Constructed Facilities
SIGNIFICANCE AND USE
5.1 Standard practices for measuring the economic performance of investments in buildings and building systems have been published by ASTM. A computer program that produces economic measures consistent with these practices is available.5 The computer program is described in Appendix X3. Discount Factor Tables has been published by ASTM to facilitate computing measures of economic performance for most of the practices.
5.2 Investments in long-lived projects, such as the erection of new constructed facilities or additions and alterations to existing constructed facilities, are characterized by uncertainties regarding project life, operation and maintenance costs, revenues, and other factors that affect project economics. Since future values of these variable factors are generally unknown, it is difficult to make reliable economic evaluations.
5.3 The traditional approach to uncertainty in project investment analysis is to apply economic methods of project evaluation to best-guess estimates of project input variables, as if they were certain estimates, and then to present results in a single-value, deterministic fashion. When projects are evaluated without regard to uncertainty of inputs to the analysis, decision-makers may have insufficient information to measure and evaluate the financial risk of investing in a project having a different outcome from what is expected.
5.4 To make reliable economic evaluations, treatment of uncertainty and risk is particularly important for projects affected by natural and man-made hazards that occur infrequently, but have significant consequences.
5.5 Following this guide when performing an economic evaluation assures the user that relevant economic information, including information regarding uncertain input variables, is considered for projects affected by natural and man-made hazards.
5.6 Use this guide in the project initiation and planning phases of the project delivery process. Consideration of alternative combin...
SCOPE
1.1 This guide describes a generic framework for developing a cost-effective risk mitigation plan for new and existing constructed facilities—buildings, industrial facilities, and other critical infrastructure. This guide provides owners and managers of constructed facilities, architects, engineers, constructors, other providers of professional services for constructed facilities, and researchers an approach for formulating and evaluating combinations of risk mitigation strategies.
1.2 This guide insures that the combinations of mitigation strategies are formulated so that they can be rigorously analyzed with economic tools. Economic tools include evaluation methods, standards that support and guide the application of those methods, and software for implementing the evaluation methods.
1.3 The generic framework described in this guide helps decision-makers assess the likelihood that their facility and its contents will be damaged from natural and man-made hazards; identify engineering, management, and financial strategies for abating the risk of damages; and use standardized economic evaluation methods to select the most cost-effective combination of risk mitigation strategies to protect their facility.
1.4 The purpose of the risk mitigation plan is to provide the most cost-effective reduction in personal injuries, financial losses, and damages to new and existing constructed facilities. Thus, the risk mitigation plan incorporates perspectives from multiple stakeholders—owners and managers, occupants and users, and other affected parties—in addressing natural and man-made hazards.
1.5 This standard does not purport to address all of the safety concerns, if any, associated with its use. It is the responsibility of the user of this standard to establish appropriate safety, health, and environmental practices and determine the applicability of regulatory limitations prior to use.
1.6 This international standa...
General Information
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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.
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Designation: E2506 − 15 (Reapproved 2020)
Standard Guide for
Developing a Cost-Effective Risk Mitigation Plan for New
and Existing Constructed Facilities
This standard is issued under the fixed designation E2506; 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.
ε NOTE—Adjunct title and stock number in 2.2 were updated editorially in April 2020.
INTRODUCTION
Protecting constructed facilities from damages from natural and man-made hazards in a cost-
effective manner is a challenging task. Several measures of economic performance are available for
evaluating building-related investments. These measures include, but are not limited to, life-cycle cost,
present value net savings, savings-to-investment ratio, and adjusted internal rate of return. This guide
provides a generic framework for assessing the risks associated with natural and man-made hazards,
formulating combinations of risk mitigation strategies for constructed facilities exposed to those
hazards, and using measures of economic performance to identify the most cost-effective combination
of strategies.
1. Scope 1.4 The purpose of the risk mitigation plan is to provide the
most cost-effective reduction in personal injuries, financial
1.1 This guide describes a generic framework for develop-
losses, and damages to new and existing constructed facilities.
ing a cost-effective risk mitigation plan for new and existing
Thus, the risk mitigation plan incorporates perspectives from
constructed facilities—buildings, industrial facilities, and other
multiple stakeholders—owners and managers, occupants and
critical infrastructure. This guide provides owners and manag-
users, and other affected parties—in addressing natural and
ers of constructed facilities, architects, engineers, constructors,
man-made hazards.
other providers of professional services for constructed
1.5 This standard does not purport to address all of the
facilities, and researchers an approach for formulating and
safety concerns, if any, associated with its use. It is the
evaluating combinations of risk mitigation strategies.
responsibility of the user of this standard to establish appro-
1.2 This guide insures that the combinations of mitigation
priate safety, health, and environmental practices and deter-
strategies are formulated so that they can be rigorously
mine the applicability of regulatory limitations prior to use.
analyzed with economic tools. Economic tools include evalu-
1.6 This international standard was developed in accor-
ation methods, standards that support and guide the application
dance with internationally recognized principles on standard-
of those methods, and software for implementing the evalua-
ization established in the Decision on Principles for the
tion methods.
Development of International Standards, Guides and Recom-
1.3 The generic framework described in this guide helps mendations issued by the World Trade Organization Technical
decision-makers assess the likelihood that their facility and its
Barriers to Trade (TBT) Committee.
contents will be damaged from natural and man-made hazards;
2. Referenced Documents
identify engineering, management, and financial strategies for
abating the risk of damages; and use standardized economic
2.1 ASTM Standards:
evaluation methods to select the most cost-effective combina-
E631 Terminology of Building Constructions
tion of risk mitigation strategies to protect their facility.
E833 Terminology of Building Economics
E917 Practice for Measuring Life-Cycle Costs of Buildings
and Building Systems
This guide is under the jurisdiction of ASTM Committee E06 on Performance
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, 2020. Published May 2020. Originally contact ASTM Customer Service at service@astm.org. For Annual Book of ASTM
approved in 2006. Last previous edition approved in 2015 as E2506-15. DOI: Standards volume information, refer to the standard’s Document Summary page on
10.1520/E2506-15R20E01. the ASTM website.
Copyright © ASTM International, 100 Barr Harbor Drive, PO Box C700, West Conshohocken, PA 19428-2959. United States
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E2506 − 15 (2020)
E964 Practice for Measuring Benefit-to-Cost and Savings- software that support the generic framework. These documents
to-Investment Ratios for Buildings and Building Systems and software are summarized in Appendix X1.
E1057 Practice for Measuring Internal Rate of Return and
4.3 Data about the frequency and consequences of natural
Adjusted Internal Rate of Return for Investments in
and man-made hazards are helpful when assessing the risks
Buildings and Building Systems
that a particular facility faces from these hazards. Historical
E1074 Practice for Measuring Net Benefits and Net Savings
patterns of natural disasters, in particular, indicate which areas
for Investments in Buildings and Building Systems
are more prone to these specific hazards in the future. Many
E1121 Practice for Measuring Payback for Investments in
analysts refer to past incidences of man-made hazards, such as
Buildings and Building Systems
crime, as predictors of future occurrences. Sources of hazards
E1185 Guide for Selecting Economic Methods for Evaluat-
data are presented in Appendix X2.
ing Investments in Buildings and Building Systems
E1369 Guide for Selecting Techniques for Treating Uncer-
5. Significance and Use
tainty and Risk in the Economic Evaluation of Buildings
5.1 Standard practices for measuring the economic perfor-
and Building Systems
mance of investments in buildings and building systems have
E1557 Classification for Building Elements and Related
been published by ASTM. A computer program that produces
Sitework—UNIFORMAT II
economic measures consistent with these practices is avail-
E1699 Practice for Performing Value Engineering (VE)/
able. The computer program is described in Appendix X3.
Value Analysis (VA) of Projects, Products and Processes
Discount Factor Tables has been published by ASTM to facili-
E1765 Practice for Applying Analytical Hierarchy Process
tate computing measures of economic performance for most of
(AHP) to Multiattribute Decision Analysis of Investments
the practices.
Related to Projects, Products, and Processes
E1946 Practice for Measuring Cost Risk of Buildings and 5.2 Investments in long-lived projects, such as the erection
Building Systems and Other Constructed Projects of new constructed facilities or additions and alterations to
E2103/E2103M Classification for Bridge Elements— existing constructed facilities, are characterized by uncertain-
UNIFORMAT II ties regarding project life, operation and maintenance costs,
E2166 Practice for Organizing and Managing Building Data revenues, and other factors that affect project economics. Since
E2204 Guide for Summarizing the Economic Impacts of future values of these variable factors are generally unknown,
Building-Related Projects it is difficult to make reliable economic evaluations.
2.2 ASTM Adjunct:
5.3 The traditional approach to uncertainty in project invest-
Discount Factor Tables - Adjunct to E917 Practice for
ment analysis is to apply economic methods of project evalu-
Measuring Life-Cycle Costs of Buildings and Building
ation to best-guess estimates of project input variables, as if
Systems - Includes Excel and PDF Files
they were certain estimates, and then to present results in a
single-value, deterministic fashion. When projects are evalu-
3. Terminology
ated without regard to uncertainty of inputs to the analysis,
3.1 Definitions—For definitions of general terms related to decision-makers may have insufficient information to measure
building construction used in this guide, refer to Terminology
and evaluate the financial risk of investing in a project having
E631; and for general terms related to building economics, a different outcome from what is expected.
refer to Terminology E833.
5.4 To make reliable economic evaluations, treatment of
uncertainty and risk is particularly important for projects
4. Summary of Guide
affected by natural and man-made hazards that occur
4.1 This guide presents a generic framework for developing
infrequently, but have significant consequences.
a cost-effective risk mitigation plan for constructed facilities
5.5 Following this guide when performing an economic
exposed to natural and man-made hazards. The generic frame-
evaluation assures the user that relevant economic information,
work consists of three interrelated components. The three
including information regarding uncertain input variables, is
components are: (1) perform risk assessment; (2) specify
considered for projects affected by natural and man-made
combinations of risk mitigation strategies; and (3) perform
hazards.
economic evaluation. The generic framework builds on an
5.6 Use this guide in the project initiation and planning
approach presented in Chapman and Leng (1).
phases of the project delivery process. Consideration of alter-
4.2 This guide identifies related ASTM standards and ad-
native combinations of risk mitigation strategies early in the
juncts and describes why measuring uncertainty and risk is
project delivery process allows both greater flexibility in
critical in the development of cost-effective protective strate-
addressing specific hazards and lower costs associated with
gies for constructed facilities. In addition to ASTM standards
their implementation.
and adjuncts, this guide identifies technical documents and
3 5
Available from ASTM International Headquarters. Order Adjunct No. The NIST Cost-Effectiveness Tool for Capital Asset Protection helps users
ADJE091717-EA. Original adjunct produced in 1984. Adjunct last revised in 2003. calculate measures of economic performance for buildings and building systems that
The boldface numbers in parentheses refer to a list of references at the end of are consistent with ASTM standards. The program is downloadable from http://
this standard. www.nist.gov/el/economics/CETSoftware.cfm.
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E2506 − 15 (2020)
5.7 Use this guide for economic evaluations based on Provide the assessment team with the tools, such as laptop
Practices E917 (life-cycle costs), E964 (benefit-to-cost and computers and electronic forms/data collection sheets, needed
savings-to-investment ratios), E1057 (internal rate of return to implement the assessment plan.
and adjusted internal rate of return), E1074 (net benefits and 7.2.3 Make assignments and deploy the assessment team.
net savings), E1121 (payback), E1699 (value engineering), and
Collect and compile information on specific hazard types, their
E1765 (analytical hierarchy process for multi-attribute decision likelihood, and consequences.
analysis).
7.2.4 Use an agreed upon format, such as Classifications
E1557 or E2103/E2103M or Practice E2166, to create a
5.8 Use this guide in conjunction with Guide E2204 to
compiled set of information collected from the assessment
summarize the results of economic evaluations involving
team that documents the findings of the risk assessment.
natural and man-made hazards.
Transmit the compiled set of information to a central repository
6. Procedures
to insure that access to sensitive information can be limited to
those with a legitimate need to know.
6.1 The recommended steps in developing a cost-effective
risk mitigation plan are as follows:
8. Specify Combinations of Risk Mitigation Strategies for
6.1.1 Establish risk mitigation objectives and constraints.
Evaluation
6.1.2 Conduct assessment and document findings.
6.1.3 Review alternative risk mitigation strategies.
8.1 Review Alternative Risk Mitigation Strategies—This
6.1.4 Select candidate combinations of risk mitigation strat-
section describes three risk mitigation strategies—engineering,
egies.
management, and financial. Each strategy is composed of
6.1.5 Develop cost estimates and sequence of cash flows for
multiple approaches for addressing hazards identified in the
each candidate combination.
risk assessment. These approaches focus on hazard mitigation
6.1.6 Select appropriate economic method(s) for evaluating
for a specific system or collection of systems and components,
the candidate combinations of risk mitigation strategies (see
as well as facility and site-related elements. Strategies may be
Guide E1185).
used either singly or in combination. Past research indicates
6.1.7 Compute measures of economic performance for each
that combinations of risk mitigation strategies offer flexibility
candidate combination.
in dealing with both a single hazard and multiple hazards.
6.1.8 Recompute measures of economic performance taking
8.1.1 Engineering:
into consideration uncertainty and risk (see Guide E1369 and
8.1.1.1 Engineering strategies are technical options in the
Practice E1946).
construction or renovation of constructed facilities, their
6.1.9 Analyze results and recommend the most cost-
systems, or their subsystems designed to reduce the likelihood
effective combination of risk mitigation strategies.
or consequences of disasters. Engineering strategies provide
6.1.10 Prepare report with documentation supporting rec-
protection against both natural and man-made hazards. Engi-
ommended risk mitigation plan.
neering strategies also help defend against man-made hazards,
where their ability to detect or deter may reduce the likelihood
7. Perform Risk Assessment
or consequences of such hazards.
7.1 Establish Risk Mitigation Objectives and Constraints:
8.1.1.2 Protective engineering strategies are intended to
7.1.1 Specify the decision-maker’s objectives. This is cru-
reduce harm to occupants, damage to the structure, and
cial in defining the problem and determining the suitability of
disruption of business if a disaster occurs. Protective engineer-
the economic evaluation method(s).
ing strategies may improve the structural integrity of a
7.1.2 Identify the constructed facility or set of facilities to be
building, facilitate evacuation of occupants, or circumvent
evaluated. Identify the types of hazards to be evaluated.
compromised systems.
7.1.3 Specify the design or system objective that is to be
8.1.1.3 There is some overlap among engineering strategies
accomplished. Identify any constraints that limit the available
that
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