ASTM E1121-07

Standard Practice for Measuring Payback for Investments in Buildings and Building Systems

SIGNIFICANCE AND USE
The payback method is part of a family of economic evaluation methods that provide measures of economic performance of an investment. Included in this family of evaluation methods are life-cycle costing, benefit-to-cost and savings-to-investment ratios, net benefits, and internal rates of return.  
The payback method accounts for all monetary values associated with an investment up to the time at which cumulative net benefits, discounted to present value, just pay off initial investment costs.  
Use the method to find if a project recovers its investment cost and other accrued costs within its service life or within a specified maximum acceptable payback period (MAPP) less than its service life. It is important to note that the decision to use the payback method should be made with care. (See Section 11 on Limitations.)
SCOPE
1.1 This practice provides a recommended procedure for calculating and applying the payback method in evaluating building designs and building systems.

General Information

• Status: Historical
• Publication Date: 31-Mar-2007
• ICS: 03.060 - Finances. Banking. Monetary systems. Insurance
• ICS: 91.010.99 - Other aspects
• Technical Committee: E06 - Performance of Buildings
• Drafting Committee: E06.81 - Building Economics

Relations

• Replaces: ASTM E1121-02 - Standard Practice for Measuring Payback for Investments in Buildings and Building Systems
• Effective Date: 01-Apr-2007
• Replaced By: ASTM E1121-07e1 - Standard Practice for Measuring Payback for Investments in Buildings and Building Systems
• Effective Date: 01-Apr-2007
• Referred By: ASTM E2204-15(2020)e1 - Standard Guide for Summarizing the Economic Impacts of Building-Related Projects
• Effective Date: 01-Apr-2007
• 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-2007
• Referred By: ASTM E2103/E2103M-19 - Standard Classification for Bridge Elements—UNIFORMAT II
• Effective Date: 01-Apr-2007
• 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-2007
• 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-2007
• 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-2007
• Referred By: ASTM E3130-21 - Standard Guide for Developing Cost-Effective Community Resilience Strategies
• Effective Date: 01-Apr-2007
• 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-2007
• 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-2007
• Referred By: ASTM E3008/E3008M-16(2023) - Standard Classification for Transportation Surface Elements—UNIFORMAT II
• Effective Date: 01-Apr-2007
• Referred By: ASTM E917-17(2023) - Standard Practice for Measuring Life-Cycle Costs of Buildings and Building Systems
• Effective Date: 01-Apr-2007
• 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-2007
• Referred By: ASTM E1557-09(2020)e1 - Standard Classification for Building Elements and Related Sitework—UNIFORMAT II
• Effective Date: 01-Apr-2007

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 1121–07
Standard Practice for
Measuring Payback for Investments in Buildings and
1
Building Systems
This standard is issued under the fixed designation E 1121; the number immediately following the designation indicates the year of
original adoption or, in the case of revision, the year of last revision.Anumber in parentheses indicates the year of last reapproval.A
superscript epsilon (e) indicates an editorial change since the last revision or reapproval.
1. Scope 4.1.3 Section 4, Summary of Practice—Outlines the con-
tents of the practice.
1.1 This practice provides a recommended procedure for
4.1.4 Section 5, Significance and Use—Explains the signifi-
calculating and applying the payback method in evaluating
cance and use of this practice.
building designs and building systems.
4.1.5 Section 6, Procedures—Describes step-by-step the
2. Referenced Documents procedures for making economic evaluations of buildings.
2
4.1.6 Section 7, Objectives, Alternatives, and Constraints—
2.1 ASTM Standards:
Identifies and gives examples of objectives, alternatives, and
E631 Terminology of Building Constructions
constraints for a payback evaluation.
E833 Terminology of Building Economics
4.1.7 Section 8, Data and Assumptions—Identifies data
E917 PracticeforMeasuringLife-CycleCostsofBuildings
needed and assumptions that may be required in a payback
and Building Systems
evaluation.
E964 Practice for Measuring Benefit-to-Cost and Savings-
4.1.8 Section 9, Compute Payback Period—Presents alter-
to-Investment Ratios for Buildings and Building Systems
native approaches for finding the payback period.
E1057 Practice for Measuring Internal Rate of Return and
4.1.9 Section 10, Applications—Explains the circumstances
Adjusted Internal Rate of Return for Investments in Build-
for which the payback method is appropriate.
ings and Building Systems
4.1.10 Section 11, Limitations—Discussesthelimitationsof
E1074 Practice for Measuring Net Benefits and Net Sav-
the payback method.
ings for Investments in Buildings and Building Systems
E1185 Guide for Selecting Economic Methods for Evalu-
5. Significance and Use
ating Investments in Buildings and Building Systems
5.1 The payback method is part of a family of economic
2.2 ASTM Adjuncts:
3 evaluation methods that provide measures of economic perfor-
Discount Factor Tables, Adjunct to Practice E917
mance of an investment. Included in this family of evaluation
3. Terminology methods are life-cycle costing, benefit-to-cost and savings-to-
investment ratios, net benefits, and internal rates of return.
3.1 Definitions—For definitions of terms used in this
5.2 The payback method accounts for all monetary values
practice, refer to Terminologies E631 and E833.
associated with an investment up to the time at which cumu-
4. Summary of Practice
lative net benefits, discounted to present value, just pay off
initial investment costs.
4.1 This practice is organized as follows:
5.3 Use the method to find if a project recovers its invest-
4.1.1 Section 2, Referenced Documents—ListsASTM stan-
ment cost and other accrued costs within its service life or
dards and adjuncts referenced in this practice.
within a specified maximum acceptable payback period
4.1.2 Section3, Definitions—Addressesdefinitionsofterms
(MAPP)lessthanitsservicelife.Itisimportanttonotethatthe
used in this practice.
decision to use the payback method should be made with care.
(See Section 11 on Limitations.)
1
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
6. Procedures
Building Economics.
Current edition approved April 1, 2007. Published April 2007. Originally
6.1 Therecommendedstepsformakinganeconomicevalu-
approved in 1986. Last previous edition approved in 2002 as E1121–02.
ation of buildings or building components are summarized as
2
For referenced ASTM standards, visit the ASTM website, www.astm.org, or
follows:
contact ASTM Customer Service at [e-mail]. For Annual Book of ASTM
Standards volume information, refer to the standard’s Document Summary page on
6.1.1 Identify objectives, alternatives, and constraints,
the ASTM website.
6.1.2 Select an economic evaluation method,
3
Available from ASTM International Headquarters. Order Adjunct No.
6.1.3 Compile data and establish assumptions,
ADJE091703.
Copyright © ASTM International, 100 Barr Harbor Drive, PO Box C700, West Conshohocken, PA 19428-2959, United States.
1

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E1121–07
6.1.4 Convert cash flows to a common time basis, and
where:
6.1.5 Compute the economic measure and compare alterna-
B = dollar value of benefits (including earnings,
t
tives.
cost reductions or savings, and resale values,
6.2 Only the step in 6.1.5, as applied to measuring payback,
if any, and ad
...