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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.

Significance and Use

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.

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.

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.

Use the NB method when the focus is on the benefits rather than project costs.

Use the NS method when the focus in on project savings (that is, reductions in project costs).

Keywords

benefit-cost analysis; building economics; economic evaluation methods; engineering economics; life-cycle cost analysis; net benefits; net savings; Benefit-cost ratio/analysis; Building economics; Cost analysis (of building constructions); NB (net benefits)

To find similar documents by ASTM Volume:

04.11 (Building Constructions (I): E72 - E2110)

To find similar documents by classification:

91.010.20 (Contractual aspects)

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