Life-Cycle Costing Manual for the Federal Energy Management Program

By Fuller, Sieglinde K.

Book Id: WPLBN0000148517
Format Type: PDF eBook
File Size: 9.3 MB
Reproduction Date: 2008

Title:	Life-Cycle Costing Manual for the Federal Energy Management Program
Author:	Fuller, Sieglinde K.
Volume:
Language:	English
Subject:	Government publications, Legislation., Government Printing Office (U.S.)
Collections:	Government Library Collection
Historic Publication Date:
Publisher:	Government Printing Office


Citation APA MLA Chicago Fuller, S. K. (n.d.). Life-Cycle Costing Manual for the Federal Energy Management Program. Retrieved from http://gutenberg.cc/

Excerpt
Excerpt: Handbook 135 is a guide to understanding the life-cycle cost (LCC) methodology and criteria established by the Federal Energy Management Program (FEMP) for the economic evaluation of energy and water conservation projects and renewable energy projects in all federal buildings. It expands on the life-cycle cost methods and criteria contained in the FEMP rules published in 10 CFR 436, Subpart A, which applies to all federal agencies. The purpose of this handbook is to facilitate the implementation of the FEMP rules by explaining the LCC method, defining the measures of economic performance used, describing the assumptions and procedures to follow in performing evaluations, giving examples, and noting NIST computer software available for computation and reporting purposes. An annual supplement to Handbook 135, Energy Price Indices and Discount Factors for LCC Analysis, NISTIR 85-3273-X is also published by NIST to provide the current discount rate and discount factors needed for conducting an LCC analysis in accordance with the FEMP rules. This annual supplement is required when using Handbook 135.

Table of Contents
TABLE OF CONTENTS Bibliographic Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i.ii Abstract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .iii Keywords . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i.ii Ordering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .i.ii Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .i.v Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .vi ii Chapter 1 Introduction to Life-Cycle Cost Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 -1 1.1 Why Use Life-Cycle Cost Analysis? . . . . . . . . . . . . . . . . . . . . . . . . . 1-1 1.2 The LCC Method and Supplementary Measures of Economic Analysis . . . 1-2 1.3 LCCA for Federal Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 -3 1.4 Organization of Handbook 135 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-3 Chapter 2 Getting Started . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2- 1 2.1 Preliminary Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 -1 2.2 Define the Project and State the Objective . . . . . . . . . . . . . . . . . . . . . .2 -2 2.3 Identify Feasible Alternatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 -5 2.4 Set the Study Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 -6 Chapter 3 Discounting and Inflation in LCC Analysis . . . . . . . . . . . . . . . . . . . . . . . . . .3 -1 3.1 Discounting Future Amounts to Present Value . . . . . . . . . . . . . . . . . . . 3 -1 3.2 Discount Formulas and Discount Factors . . . . . . . . . . . . . . . . . . . . . . 3 -3 3.3 Adjusting for Inflation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-11 Chapter 4 Estimating Costs for LCC Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4 -1 4.1 Relevant Effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4 -1 4.2 Cost Categories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4 -1 4.3 Timing of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4 -2 4.4 Using Base-Date Prices to Estimate Future Costs . . . . . . . . . . . . . . . . . 4 -4 4.5 Estimating Investment-Related Costs . . . . . . . . . . . . . . . . . . . . . . . . .4 -4 4.6 Estimating Operational Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-7 Chapter 5 Calculating Life-Cycle Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 -1 5.1 The Life-Cycle Cost (LCC) Method . . . . . . . . . . . . . . . . . . . . . . . . . . 5-1 5.2 Selection of HVAC System for Office Building: Simple Example . . . . . . . 5-4 5.3 Selection of HVAC System for Office Building: Complex Example . . . . . 5-7 5.4 Summary of the LCC Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 -9 Chapter 6 Calculating Supplementary Measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6 -1 6.1 Net Savings (NS) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-2 6.2 Savings-to-Investment Ratio (SIR) . . . . . . . . . . . . . . . . . . . . . . . . . . .6 -4 6.3 Adjusted Internal Rate of Return (AIRR) . . . . . . . . . . . . . . . . . . . . . .6 -6 6.4 Simple Payback (SPB) and Discounted Payback (DPB) . . . . . . . . . . . . . 6-9 Chapter 7 Applying LCC Measures to Project Investments . . . . . . . . . . . . . . . . . . . . . . . 7 -1 7.1 Accept