- Author
-
Marshall, H. E.
|
Ruegg, R. T.
- Title
- Recommended Practice for Measuring Benefit/Cost and Savings-to-Investment Ratios for Buildings and Building Systems. Final Report.
- Coporate
- National Bureau of Standards, Washington, DC
- Report
-
NBSIR 81-2397
November 1981
- Distribution
- Available from National Technical Information Service
- Keywords
-
buildings; cost analysis; benefit cost analysis; cost effectiveness; investments; decision making; guidelines
- Identifiers
- savings to investment ratio; benefit cost ratio
- Abstract
- This report describes how to calculate a benefit-cost ratio (B/C) and a savings-to-investment ratio (SIR) and how to use them in selecting building designs and building systems that will be cost effective in the long run. The B/C relates positive benefits, such as revenues, to project costs in the form of a ratio. The SIR, a variation of the B/C, relates project savings (i.e., cost reductions) to project costs in a ratio. It is used when there are few if any positive cash flows from a project. The B/C and SIR can be used to help answer such questions as: 'Is a project cost effective.' 'Which size and/or design of a project is most cost effective.' 'What priorities should be given individual projects competing for a limited budget.' The report addresses different formulations of the ratios and their implications for selecting cost-effective projects.