To obtain a copy of a specific publication, users should contact the publication's publisher directly.
Abstract
Describes how to calculate net benefits (savings) and internal rates of return and how to use them in selecting building designs and building systems that will be cost effective over time. Net benefits are the difference between positive benefits or cost reductions (savings) and project costs, measured in present value or annual value dollars. The net benefits 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 internal rate of return on an investment is the compound rate of interest that, when used to discount the streams of dollar benefits (savings) and dollar costs over a defined study period, will make the two equal. The internal rate of return is used to determine if a given project is cost effective; to compare the relative cost effectiveness of different purpose projects competing for a limited budted; and, when calculated on incremental changes in benefits and costs, to evaluate which size or design for a given purpose is most cost effective. The report describes formulas for calculating net benefits and the internal rate of return, their applications in selecting cost effective projects, and limitations of their use. This recommended practice for measuring net benefits and internal rates of return will assist the private and public building communities in making cost effective decisions in the design, operation, maintenance and retrofit of buildings.
Describes how to calculate net benefits (savings) and internal rates of return and how to use them in selecting building designs and building systems that will be cost effective over time. Net benefits are the difference between positive benefits or cost reductions (savings) and project costs, measured in present value or annual value dollars. The net benefits 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 internal rate of return on an investment is the compound rate of interest that, when used to discount the streams of dollar benefits (savings) and dollar costs over a defined study period, will make the two equal. The internal rate of return is used to determine if a given project is cost effective; to compare the relative cost effectiveness of different purpose projects competing for a limited budted; and, when calculated on incremental changes in benefits and costs, to evaluate which size or design for a given purpose is most cost effective. The report describes formulas for calculating net benefits and the internal rate of return, their applications in selecting cost effective projects, and limitations of their use. This recommended practice for measuring net benefits and internal rates of return will assist the private and public building communities in making cost effective decisions in the design, operation, maintenance and retrofit of buildings.
Date
10/1983
10/1983
Author(s)
Harold Marshall
Harold Marshall
Page(s)
52
52
Keyword(s)
cost reduction; net benefit; investment buildings; cost effective rate of return
cost reduction; net benefit; investment buildings; cost effective rate of return