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).

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 (purchase separately) The documents listed below are referenced within the subject standard but are not provided as part of the standard.

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

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

Adjuncts

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);

ICS Code

ICS Number Code 91.010.20 (Contractual aspects)

DOI: 10.1520/E1074-09

ASTM International is a member of CrossRef.

ASTM E1074