ASTM E1074-15

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

SIGNIFICANCE AND USE
5.1 The NB (NS) method provides a measure of the economic performance of an investment, taking into account all relevant monetary values associated with that investment over the investor's study period. The NB (NS) measure can be expressed in either present value or equivalent annual value terms, taking into account the time value of money.  
5.2 The NB (NS) method is used to decide if a given project is cost effective and which size or design for a given purpose is most cost effective when no budget constraint exists.  
5.3 The NB (NS) method can also be used to determine the most cost effective combination of projects for a limited budget; that is, the combination of projects having the greatest aggregate NB (NS) and fitting within the budget constraint.  
5.4 Use the NB method when the focus is on the benefits rather than project costs.  
5.5 Use the NS method when the focus in on project savings (that is, reductions in project costs).
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.  
1.2 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.  
1.3 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 and health practices and determine the applicability of regulatory limitations prior to use.

General Information

• Status: Historical
• Publication Date: 30-Apr-2015
• ICS: 91.010.20 - Contractual aspects
• Technical Committee: E06 - Performance of Buildings
• Drafting Committee: E06.81 - Building Economics

Relations

• Replaces: ASTM E1074-09 - Standard Practice for Measuring Net Benefits and Net Savings for Investments in Buildings and Building Systems
• Effective Date: 01-May-2015
• Replaced 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-2020
• Referred By: ASTM E1121-15(2020)e1 - Standard Practice for Measuring Payback for Investments in Buildings and Building Systems
• Effective Date: 01-May-2015
• Referred By: ASTM E1557-09(2020)e1 - Standard Classification for Building Elements and Related Sitework—UNIFORMAT II
• Effective Date: 01-May-2015
• Referred By: ASTM E1185-15(2020)e1 - Standard Guide for Selecting Economic Methods for Evaluating Investments in Buildings and Building Systems
• Effective Date: 01-May-2015
• Referred By: ASTM E3008/E3008M-16(2023) - Standard Classification for Transportation Surface Elements—UNIFORMAT II
• Effective Date: 01-May-2015
• 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-May-2015
• 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-May-2015
• 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-May-2015
• 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-May-2015
• Referred By: ASTM E2204-15(2020)e1 - Standard Guide for Summarizing the Economic Impacts of Building-Related Projects
• Effective Date: 01-May-2015
• Referred By: ASTM E2103/E2103M-19 - Standard Classification for Bridge Elements—UNIFORMAT II
• Effective Date: 01-May-2015
• Referred By: ASTM E3130-21 - Standard Guide for Developing Cost-Effective Community Resilience Strategies
• Effective Date: 01-May-2015
• 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-May-2015
• Referred By: ASTM E917-17(2023) - Standard Practice for Measuring Life-Cycle Costs of Buildings and Building Systems
• Effective Date: 01-May-2015

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:E1074 −15
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 E1074; 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
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 E833 Terminology of Building Economics
E917 Practice for Measuring Life-Cycle Costs of Buildings
1.1 This practice covers a recommended procedure for
and Building Systems
calculating and interpreting the net benefits (NB) and net
E964 Practice for Measuring Benefit-to-Cost and Savings-
savings(NS)methodsintheevaluationofbuildingdesignsand
to-Investment Ratios for Buildings and Building Systems
systems.
E1057 Practice for Measuring Internal Rate of Return and
1.2 The values stated in inch-pound units are to be regarded
Adjusted Internal Rate of Return for Investments in
as standard. The values given in parentheses are mathematical
Buildings and Building Systems
conversions to SI units that are provided for information only
E1121 Practice for Measuring Payback for Investments in
and are not considered standard.
Buildings and Building Systems
1.3 This standard does not purport to address all of the
E1185 Guide for Selecting Economic Methods for Evaluat-
safety concerns, if any, associated with its use. It is the ing Investments in Buildings and Building Systems
responsibility of the user of this standard to establish appro-
E1369 Guide for Selecting Techniques for Treating Uncer-
priate safety and health practices and determine the applica- tainty and Risk in the Economic Evaluation of Buildings
bility of regulatory limitations prior to use.
and Building Systems
E1765 Practice for Applying Analytical Hierarchy Process
2. Referenced Documents
(AHP) to Multiattribute DecisionAnalysis of Investments
2
Related to Buildings and Building Systems
2.1 ASTM Standards:
E1946 Practice for Measuring Cost Risk of Buildings and
E631 Terminology of Building Constructions
Building Systems and Other Constructed Projects
E2204 Guide for Summarizing the Economic Impacts of
1
This practice is under the jurisdiction of ASTM Committee E06 on Perfor-
Building-Related Projects
mance of Buildings and is the direct responsibility of Subcommittee E06.81 on
3
2.2 Adjuncts:
Building Economics.
Discount Factor Tables Adjunct to Practices E917, E964,
Current edition approved May 1, 2015. Published June 2015. Originally
approved in 1985. Last previous edition approved in 2009 as E1074 – 09. DOI:
E1057, E1074, and E1121
10.1520/E1074-15.
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.
Copyright © ASTM International, 100 Barr Harbor Drive, PO Box C700, West Conshohocken, PA 19428-2959. United States
1

---------------------- Page: 1 ----------------------
E1074−15
4
3. Terminology 6.1.6 Compute NB (NS) and compare alternatives, and
6.1.7 Make final decision, based on NB (NS) results as well
3.1 Definitions—For definitions of general terms related to
as consideration of risk and uncertainty, unquantifiable effects,
building construction used in this practice, refer to Terminol-
and funding constraints (if any).
ogy E631; and for general terms related to building economics,
refer to Terminology E833. 6.2 Since the steps mentioned in 6.1.2 – 6.1.5 are treated in
detail in Practice E917 and briefly in Practices E964 and
4. Summary of Practice
E1121, th
...

This document is not an ASTM standard and is intended only to provide the user of an ASTM standard an indication of what changes have been made to the previous version. Because
it may not be technically possible to adequately depict all changes accurately, ASTM recommends that users consult prior editions as appropriate. In all cases only the current version
of the standard as published by ASTM is to be considered the official document.
Designation: E1074 − 09 E1074 − 15
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 E1074; 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
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
sometimes called the net present value method. The NB and NS methods are used to decide if a project
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
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.
1.2 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.
1.3 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 and health practices and determine the applicability of regulatory
limitations prior to use.
2. Referenced Documents
2
2.1 ASTM Standards:
E631 Terminology of Building Constructions
E833 Terminology of Building Economics
E917 Practice for Measuring Life-Cycle Costs of Buildings and Building Systems
E964 Practice for Measuring Benefit-to-Cost and Savings-to-Investment Ratios for Buildings and Building Systems
E1057 Practice for Measuring Internal Rate of Return and Adjusted Internal Rate of Return for Investments in Buildings and
Building Systems
E1121 Practice for Measuring Payback for Investments in Buildings and Building Systems
E1185 Guide for Selecting Economic Methods for Evaluating Investments in Buildings and Building Systems
E1369 Guide for Selecting Techniques for Treating Uncertainty and Risk in the Economic Evaluation of Buildings and Building
Systems
1
This practice is under the jurisdiction of ASTM Committee E06 on Performance of Buildings and is the direct responsibility of Subcommittee E06.81 on Building
Economics.
Current edition approved April 1, 2009May 1, 2015. Published May 2009June 2015. Originally approved in 1985. Last previous edition approved in 20062009 as
ε2
E1074 – 06E1074 – 09. . DOI: 10.1520/E1074-09.10.1520/E1074-15.
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 Standards
volume information, refer to the standard’s Document Summary page on the ASTM website.
Copyright © ASTM International, 100 Barr Harbor Drive, PO Box C700, West Conshohocken, PA 19428-2959. United States
1

---------------------- Page: 1 ----------------------
E1074 − 15
E1765 Practice for Applying Analytical Hierarchy Process (AHP) to Multiattribute Decision Analysis of Investments Related to
Buildings and Building Systems
E1946 Practice for Measuring Cost Risk of Buildings and Building Systems and Other Constructed Projects
E2204 Guide for Summarizing the Economic Impacts of Building-Related Projects
3
2.2 Adjuncts:
Discount Factor Tables Adjunct to Practices E917, E964, E1057, E1074, and E1121
3. Terminology
3.1 Definitions—For definitions of terms general terms related to building construction used in this practice, refer to
TerminologiesTerminology E631 and ; and for general terms related to building economics, refer to Terminology E833.
4. Summary of Practice
4.1 This practice is organized
...