Form , which is used to initiate the authorization process for military construction projects, requires a life cycle cost analysis. In cases where the Net Savings is negative, it is not possible to compute return on investment, and the payback period is always beyond the designated study period. In particular, they could be used throughout bid review and project management to enable decision-making on the selection of building systems, components, equipment and materials through the explicit identification of expected benefits and costs and resultant relative economic efficiency, and the opportunity to mitigate risks e. In several instances, the professional staff and professionals associated with those organizations offered suggestions for improvement and refinement such as recent empirical studies and data sources. The summation of those annual savings over the year Study Period discounted to present value leads to higher Net Savings.
Savings were based on the difference between the amounts of water given in the data templates and the water use based on good practice for all of the eight principles outlined above. This study follows standard economic analysis methodologies and data collection approaches to calculate long-term cost-benefits Present Value Net Savings , return on investment, and payback, as required in the NDAA Section Therefore, investments in these buildings would be better than most investments currently available to the US federal government on the market. Among the five locations in this study, the unit costs for water differed by a factor of 2, and the wastewater disposal costs differed by a factor of almost 3. Municipal Nonhazardous Waste—solid waste haul and tip costs.
The LEED Volume Certification program could further increase cost-effectiveness through pre-approval of standardized designs and management procedures, and coordinated procurement programs. The time-adjusted costs are subtracted from the time-adjusted savings, where the discount rate d represents foregone opportunities in the market for investment If the Net Savings are fase than zero, the investment is economically efficient and higher Net Savings indicates better economic efficiency.
It also required the DOD to provide a policy prescribing a comprehensive strategy for the cost-effective pursuit of design and building standards that include specific energy-efficient standards and sustainable design attributes based tsudy those findings.
Page 91 Share Cite. Additional monitoring of reductions in solid waste would provide a means to incorporate these savings into the economic evaluations, and could have a significant impact on the relative economic efficiency of different facility alternatives and operations programs.
The Office of Management and Budget OMB annually updates the real and nominal discount rates to be used for cost-effectiveness studies of federal capital investments, which are based on the interest rates for Treasury Notes of different maturity dates.
Table 2 Sources of Information Report Subject The first costs and final energy savings will be formally documented but the analysis and results are not currently available for use in this project. It ggbi be noted that the wm of the savings accumulate after the payback period, and the building with the shortest payback does not have the highest Net Savings.
The Federal Energy Management Program FEMP is applicable to renewable energy, wm conservation, and water conservation projects in all federal buildings.
For example, this study did not consider the economic implications of improvements in occupant health, safety, and well-being, casee the empirical basis for those financial impacts have not been established. In addition, the second portion of this study tested the applicability of the analytical approach, process and tools developed for this research to military construction and renovation projects going forward, as further input for the DOD comprehensive strategy.
The Results section of this report ggi the Net Savings for the Long-Term Cost-Benefit with the sensitivity analysis, as well as the Rate of Return on Investment and Payback, for each specified standard and rating systems using the two building types i. Since the costs of these energy sources differ significantly by location—and fluctuate on a monthly basis—the economic impact of specific strategies to reduce these energy usage categories should be calculated with respect to the specific location to assess opportunities for net savings.
For the economic efficiency analysis to be used effectively in decision-making, the early project planning and scope development through detailed design development and implementation would include:.
Initial Investment Cost—total srudy cost for completed facility approved for occupancy excludes land acquisition ; cost per square foot. The higher discount rate, which represents more opportunity in the market for higher returns, means that an alternative has to perform better to be economically efficient.
Cleaning and landscaping costs were also estimated based on cost per building area i. Energy Use Comparison between The primary objective of this stuvy is to ensure the usefulness of the analytical approach and results to aid decision-making for strategic investments in DOD capital facility assets.
Only those costs that are relevant to the decision [for the alternatives] and significant in amount are needed to make a valid investment decision.
Page 92 Share Cite. These stdy costs are understood to be approximate. Green Globes, as a voluntary building rating systems, offers the opportunity to improve overall building performance, including attributes that were not assessed for financial implications in this study.
The second part of the study tested the applicability of the analytical tools to DOD facilities going forward, as input to the DOD comprehensive strategy.
In addition, the sensitivity analysis indicates that an additional building that was not economically efficient with moderate energy and water price escalation at 0.
These costs could be expected to decrease with improvements in sustainable building stuyd and materials, and savings in these wm categories could have major cost implications, since these cost expenditures are often several times higher than expenditures for energy and water.
This approach provides critical information related to uncertainty in future conditions relevant for strategic decision making and risk mitigation at the installation level as well as for specific military facilities. The data provided by USGBC did not include building construction cost, but subsequent communications with the staff at USGBC provided construction cost data on 20 projects; public data sources including press releases, articles, and other public data sources provided construction cost data for the other five projects in this sample.
DOD’s report to the congressional defense committees must also include a copy of DOD policy prescribing a comprehensive strategy for the pursuit of design and building standards across the department that include specific energy-efficiency standards and sustainable design attributes for military construction based on the cost-benefit analysis, return on investment, and demonstrated payback required for the aforementioned building standards and green building certification systems.
Solid waste municipal and hazardous ; and iv. Page 98 Share Cite. The National Academies Press.
These incremental costs do not account for any of the first costs for the PV systems so they need fbi be calculated separately. This linear relationship was derived for each. The results of the economic evaluation of the building standards and rating systems presented in this report have direct applicability to the development of the DOD comprehensive strategy for cost-effective military construction and renovation.