NISTIR 6806

Project-Oriented Life-Cycle Costing

Workshop for Energy Conservation

in Buildings

Sieglinde K. Fuller

Amy S. Rushing

Gene M. Meyer

U.S. DEPARTMENT OF COMMERCE

Technology Administration

National Institute of Standards and

Technology

Prepared for:

United States Department of Energy

Federal Energy Management Program

NISTIR 6806

Project-Oriented Life-Cycle Costing

Workshop For Energy Conservation

in Buildings

Sieglinde K. Fuller

Amy S. Rushing

Office of Applied Economics

Gene M. Meyer

Kansas State University

September 2001 Sponsored by:

Building and Fire Research Laboratory The Federal Energy Management Program

National Institute of Standards and Technology U.S. Department of Energy

Gaithersburg, MD 20899 Washington, DC 20585

U.S. Department of Commerce

Donald L. Evans, Secretary

National Institute of Standards and Technology

Karen H. Brown, Acting Director

Disclaimer

Use of Non-Metric Units in NIST Internal Report No. 6806

The policy of the National Institute of Standards and Technology is to use metric units of measurement in

all its publications. NISTIR 6806 is intended for a workshop audience that deals with energy projects for

buildings and building systems. In construction-related industries in North America certain non-metric

units are so widely used instead of metric units that it is more practical and less confusing to include in

this workbook only measurement values for customary units.
iii

Table of Contents

Table of Contents........................................................................................................................... iii

Preface..............................................................................................................................................v

Acknowledgements...................................................................................................................... viii

Instructor Profiles .......................................................................................................................... ix

Workshop Objectives..................................................................................................................... xi

Workshop Overview ..................................................................................................................... xii

Workshop Agenda ....................................................................................................................... xiii

Introduction......................................................................................................................................1

Module A: Review of LCC Method .......................................................................................... A-1

Class Exercise A1.................................................................................................................. A-54

Worksheet For Class ExerciseA1.......................................................................................... A-55

Class Exercise A2.................................................................................................................. A-56

Worksheet for Class Exercise A2.......................................................................................... A-57

Solution to Class Exercise A1 ............................................................................................... A-58

Solution to Class Exercise A2 ............................................................................................... A-59

Summary of the Life-Cycle Costing Method ........................................................................ A-60

Module B: NIST LCC Software: Overview and BLCC5 ..........................................................B-1

Module C: Fuel Switching and Phased-In Capital Replacements ..............................................C-1

Exercise C1 ............................................................................................................................C-13

Class Exercise C2 ...................................................................................................................C-26

Solution to Class Exercise C2 ................................................................................................C-28

Module D: Replacement of Functional Systems to Improve Energy Efficiency....................... D-1

Exercise D1 ............................................................................................................................. D-3

Class Exercise D2.................................................................................................................. D-37

Solution to Class Exercise D2 ............................................................................................... D-38

Module E: Replace Chiller or Purchase Chilled Water ..............................................................E-1

Exercise E1...............................................................................................................................E-4

Class Exercise E2 ...................................................................................................................E-28

Class Exercise E3 ...................................................................................................................E-29

Solution to Class Exercise E2.................................................................................................E-30

Solution to Class Exercise E3.................................................................................................E-36
iv

Module F: Evaluation of Alternative Financing Contracts.........................................................F-1

Exercise F1 ...............................................................................................................................F-5

Class Exercise F2 ...................................................................................................................F-24

Solution to Class Exercise F2.................................................................................................F-27

Module G: Class Examples........................................................................................................ G-1

Class Exercise G1.................................................................................................................... G-2

Class Exercise G2.................................................................................................................... G-3

Class Exercise G3.................................................................................................................... G-5

Class Exercise G4.................................................................................................................... G-7

Solution to Class Exercise G1 ................................................................................................. G-8

Solution to Class Exercise G2 ............................................................................................... G-13

Solution to Class Exercise G3 ............................................................................................... G-23

Solution to Class Exercise G4 ............................................................................................... G-30

Economic Measures of Evaluation and Their Uses ................................................................. EM-1

Acronyms..................................................................................................................................AC-1

Glossary ....................................................................................................................................GL-1

Course Evaluation..................................................................................................................... CE-1
v

Preface

This student manual for the Project-Oriented Life-Cycle Costing Workshop for Energy Conservation

in Buildings is a workbook for a two-day course on life-cycle costing developed by the National

Institute of Standards and Technology (NIST) for the U.S. Department of Energy (DOE), Federal

Energy Management Program (FEMP). The methodology and procedures in this manual are

consistent with 10 CFR Part 436A and its amendments, which provide guidelines for the economic

analysis of investments in energy and water conservation and renewable energy projects for federal

buildings. These guidelines are explained in detail in Life-Cycle Costing Manual for the Federal

Energy Management Program, Handbook 135, 1995 edition. The methodology is also consistent

with American Society for Testing and Materials (ASTM) Standards on Building Economics, in

particular ASTM Standard Practices E917, E964, E1057, E1074, E1121, and E1185.

The Project-Oriented LCC Workshop is one of three workshops conducted by NIST to provide

energy managers with the knowledge and skills needed to perform quickly and correctly economic

analyses required for building-related capital investments. The analytical methodology presented is

equally useful for government and private-sector investment decisions. The Basic Life-Cycle Costing

Workshop takes the participant through the steps of an LCC analysis, explains in detail the

underlying theory of present-value analysis, and integrates it with the FEMP criteria. The ProjectOriented LCC Workshop builds on the basic workshop, focuses on the use of BLCC computer

programs, and applies the LCC methodology to more complex issues. The third workshop is a twohour, interactive distance teaching workshop that introduces the elements of LCC analysis to

participants at downlink sites across the U.S.

This student manual is organized into seven teaching modules. The workshop begins with a thorough

review of LCC principles and 10 CFR 436 criteria. Each of the remaining modules is based on a

topic that has emerged from past life-cycle costing workshops and the consulting activities of the

Office of Applied Economics at NIST deemed of special interest to energy managers. The teaching

material is organized around a representative example of an LCC analysis. A group exercise at the

end of each module reinforces the students’ knowledge gained during the presentation.

Visual materials (slides) used in the workshop are printed in the manual in the order they are

presented to facilitate note taking. These visual materials are updated annually to reflect changes in

the federal discount rate and projected energy price escalation rates used in federal LCC analyses of

energy and water conservation projects.

Other materials used in the LCC workshop include the following:

(1) Energy Price Indices and Discount Factors for Life-Cycle Cost Analysis, Annual Supplement

to NIST Handbook 135 and NBS Special Publication 709, National Institute of Standards and

Technology, NISTIR 85-3273.

This report, which is updated annually, provides current DOE and OMB discount rates, projected

energy price indices, and corresponding discount factors needed to estimate the present value of

future energy and non-energy project-related costs. Request the latest edition when ordering.

(2) NIST "Building Life-Cycle Cost" (BLCC) Computer Programs, BLCC5 and BLCC4, National

Institute of Standards and Technology. These programs use as default values the same
vi

discount factors and energy price projections that underly the discount factor tables in the

Annual Supplement. Use the latest BLCC versions, which are available at the DOE web site

(see below).

The BLCC5 program is a windowed version of the DOS-based BLCC4. It is programmed in Java,

uses an xml file format, and is thus platform-independent. The BLCC5 User’s Guide is part of its

Help system. BLCC5 has two modules:

(1) Module for Agency-Funded Projects

for LCC analyses of projects funded from direct appropriations.

(2) Module for Financed Projects

for LCC analyses of projects financed through ESPC or Utility Contracts as authorized by 

Executive Order 13123 (6/99).

Other user-specific modules now in BLCC4 (e.g., for MILCON analyses, OMB analyses, and

private-sector analyses, including taxes) will be transferred to BLCC5 as funding becomes available.

NIST BLCC programs provide comprehensive economic analysis capabilities for the evaluation of

proposed capital investments that are expected to reduce the long-term operating costs of buildings

and building systems. They compute the LCC for project alternatives, compare project alternatives in

order to determine which has the lowest LCC, perform annual cash flow analysis, and compute net

savings (NS), savings-to-investment ratio (SIR), adjusted internal rate of return (AIRR), and Payback

Period (PB) for project alternatives over their designated study period. The BLCC programs can be

used by federal, state, and local government agencies, as well as by the private sector (BLCC4). In

their application to federal energy conservation and renewable energy projects, BLCC5 and BLCC4

are consistent with

- NIST Handbook 135, and the federal life-cycle cost methodology and procedures described in 10

CFR 436A,

- Circular A-94, and the

- Tri-Services Memorandum of Agreement on Criteria/Standards for Economic Analysis/LifeCycle Costing for MILCON Design.

In their application to private-sector and non-federal public-sector projects, they are consistent with

ASTM standards for building economics.

The Annual Supplement to Handbook 135 can be downloaded from the DOE/FEMP web site at

www.eren.doe.gov/femp (click on icon Technical Assistance and go to Analytical 

Software Tools).

Handbook 135 can be downloaded from the NIST web site at 

www.nist.bfrl.gov/oae/publications/handbooks/135.html.
vii

The latest versions of BLCC5 and BLCC4, associated programs, and user guides can be downloaded

from the DOE/FEMP web site at

www.eren.doe.gov/femp (click on icon Technical Assistance and go to Analytical Software

Tools).

To order diskettes of BLCC4 and associated programs and hard copies of the above publications, call

the FEMP Help Desk:

Energy Efficiency and Renewable Energy Clearing House

(800) DOE-EREC (800-363-3732)

or write or fax your order to

U.S. Department of Energy

Federal Energy Management Program, EE-90

1000 Independence Avenue, S.W.

Washington, DC 20585-0121

Fax: (202) 586-3000

BLCC4 may also be purchased from the following vendors:

FlowSoft

5 Oak Forest Court

Saint Charles, MO 63303-6622

(636) 922-FLOW (3569)

www.flowsoft.com

Energy Information Services

P.O. Box 381

St. Johnsbury, VT 05819-0381

(802) 748-5148
viii

Acknowledgements

The authors are grateful to Dr. Robert Chapman and to Dr. Saul Gass for their review of this manual.

Thanks are also due to the many workshop participants whose comments have been helpful in

developing the course and the manual. The authors are especially indebted to Mr. Steven Petersen,

formerly with the Office of Applied Economics, who initiated this effort and designed the first

edition of this manual. J’aime Maynard assembled the latest revisions to the manuscript and managed

its production.
ix

Instructor Profiles

Sieglinde (Linde) K. Fuller, Ph.D

Economist, Office of Applied Economics

Building and Fire Research Laboratory

National Institute of Standards and Technology

sieglinde.fuller@nist.gov

Dr. Fuller joined NIST’s Office of Applied Economics in 1979. Her areas of expertise include

benefit-cost analysis, economic impact studies, and the pricing of publicly supplied goods and

services. As project leader of the NIST/DOE collaborative effort to promote energy and water

conservation, she has been involved in developing techniques, workshops, instructional materials,

and computer software for calculating the life-cycle costs and benefits of energy and water

conservation projects in buildings, in accordance with federal legislation. She has participated in

OAE projects to estimate the economic impacts of BFRL’s research on U.S. industries and the return

on BFRL’s research investment dollars. Her doctoral studies focused on a public-sector pricing

model in the Boiteux tradition, which calculates optimal prices and production plans for goods and

services supplied by government agencies. She applied the model to NIST’s Standard Reference

Materials. Dr. Fuller has published manuals, reports, and articles related to these activities. In 1998

she was selected as a Twenty-First Century Citizenship Pioneer in DOE’s “You Have the Power”

Campaign.

Prior to her academic and professional work in economics, Dr. Fuller studied languages and

linguistics in Germany and worked as an accredited translator and interpreter for industry

representatives to the European Common Market, at trade exhibitions, and for commercial

enterprises in Germany, Canada, and France.

Amy S. Rushing

Computer Specialist, Office of Applied Economics

Building and Fire Research Laboratory

National Institute of Standards and Technology

amy.rushing@nist.gov

Ms. Rushing joined the Office of Applied Economics in May 1997. Her major interests are computer

programming and web site design. Currently she is using Java to update two DOS-based economic

decision software tools to make the software more user-friendly. The first tool provides vehicle

acquisition decision support, and the second is used for performing life-cycle costing of energy

conservation projects in federal buildings. In addition, she is providing technical support for

economic impact assessments of research related to cybernetic building systems and the computerintegrated construction environment.

Prior to joining the OAE staff, Ms. Rushing worked at Hood College utilizing her knowledge of

computers to assist faculty, staff, and students. She also served as an intern at Frederick County

Public Schools Technology Services where she initiated the design effort for the Frederick County

Public Schools web site.
x

Ms. Rushing programs in C++ and Java. She is also proficient in HTML and web site design. In

addition to her academic training, she has completed computer training courses in HTML, Java, and

the design of user-interfaces.

Gene M. Meyer, PE

Engineering Extension Program

Kansas State University

gmeyer@ksu.edu

Mr. Meyer is an instructor with Engineering Extension at Kansas State University. Mr. Meyer's

background includes seven years as a consulting engineer doing power plant design, and for the last

18 years he has assisted business and industry with energy and environmental issues. His areas of

expertise include building HVAC systems, lighting, boiler operations and maintenance, solar design,

and economic analysis. Meyer has taught building life-cycle cost analysis classes for the states of

Ohio, Montana, Iowa, and Kansas; assisted with numerous FEMP BLCC classes; and has provided

short courses on life-cycle cost analysis for the American Society of Heating, Refrigerating, and

Air-Conditioning Engineers.

Meyer has a B.S. in mechanical engineering from the University of Kansas and an M.S. in

mechanical engineering from Kansas State University. He is also a registered professional engineer

in Kansas and Missouri.
xi

 Workshop Objectives

Know how to use economic analysis to improve

 capital investment decisions related to

 energy and water conservation and renewable energy

projects in buildings

Know the common methods and assumptions required

for life-cycle cost analyses of energy- and water-related

investments in federal buildings

Know how to use the BLCC programs for

life-cycle cost analysis
xii

Workshop Overview

The workshop begins with a review of the LCC principles that are the subject of the Basic LCC

Workshop. The elements of performing a life-cycle cost evaluation are explained. Emphasis is placed

on clarifying those issues that often confuse practitioners. Issues include why it is necessary to adjust

cash flows for the time-value of money and how to do it, how to estimate costs and savings, and how

to handle inflation. Students are shown, step-by-step, how to compute Life-Cycle Costs, Net Savings,

and the Savings-to-Investment Ratio. Federal criteria for performing economic evaluations of

energy-related building projects are presented. The NIST LCC software is introduced with focus on

the windowed version BLCC5. The course uses BLCC5 examples to address specific topics of

interest to LCC practitioners, such as how to structure for LCC analysis projects that require

- fuel switching and phased-in capital replacements

- replacement of functional systems

- decisions whether to replace equipment or purchase services, and

- evaluation of an alternative financing contract.

The issue of uncertainty is discussed and guidance is given on how to deal with it in an LCC

analysis. Exercises are provided on each topic, to be solved by student teams.
xiii

Workshop Agenda

Topic

A. Review of LCC Method

B. NIST LCC Software: Overview and BLCC5

C. Fuel Switching and Phased-In Capital Replacements

D. Replacement of Functional Systems to Improve Energy Efficiency

E. Replace Chiller or Purchase Chilled Water

F. Evaluation of Alternative Financing Contracts

G. Class Examples
1

Introduction

Why this course

The energy crisis of the 1970s, higher energy prices, and environmental concerns focused our

attention on the critical need to include energy conservation as a major performance objective in the

design or rehabilitation of buildings. In the last three decades, the Federal Government, as owner and

operator of over a half-million buildings and the nation’s largest user of energy, has played a

leadership role in improving the energy efficiency of our nation’s building stock. Through energy

conservation alone, the Government has been able to save nearly a billion dollars a year between

1985 and 1994, at a savings-to-investment ratio of 5:1 and an internal rate of return of 25 %. More

recently, water conservation in buildings and the use of renewable energy and green building

materials have also been included in the Government’s goal of ensuring efficient resource allocation.

Congress and the President, through legislation and executive order, have mandated energy and

water conservation goals for federal buildings and have required that these goals be met using costeffective measures. These measures include both improved operating procedures and the

incorporation of energy and water conservation features in the design of new and existing buildings.

The primary criterion mandated by Congress and the President for assessing the cost-effectiveness of

energy and water conservation measures is minimization of life-cycle costs. They have also

instructed the Federal Government to make available to the public and private sector methods,

computational tools, and data developed in the Federal Energy Management Program.

Scope

This workshop is complementary to the Basic LCC Workshop, which is theory-oriented. This

workshop focuses more on project analysis and the use of LCC computer software. Each of the

examples discussed provides a different insight into the application of economic analysis to energy

and water conservation investments in buildings. The examples will also demonstrate how to

structure an analysis for solution using the NIST BLCC computer programs.

The principles of economic evaluation taught in the Basic LCC Workshop, and reviewed at the

beginning of this workshop, are applicable to investment decisions both in the public and private

sectors. The decisions most relevant to building-related investments are (1) Is the higher initial cost

of a project justified by the lower operating costs in later years? and (2) Of several potential

alternative investments, which is the most economical in the long run? While this course focuses on

investments in energy conservation and renewable resources in federal buildings, either agencyfunded or financed through energy services companies or utility energy services companies, the

principles are equally applicable to projects undertaken by state and local governments, non-profit

organizations, and for-profit companies and corporations.
2

About this manual

The manual is intended as both an in-class workbook and as a future source of reference and

review. It is divided into seven modules by subject matter. The subject matter is discussed by

way of sample analyses performed in BLCC5, the windowed version of the NIST LCC software.

At the end of Module A, there is a summary of the LCC principles reviewed in the first lecture.

For all other modules an exercise is provided to reinforce the material discussed in the lecture

and to give students hands-on experience with BLCC5. Students are encouraged to work in

small groups when solving these classroom exercises. The solution to each classroom exercise is

included at the end of each corresponding module in the form of BLCC5 reports.

Module A

• rationale for Life-Cycle Cost Analysis• basic LCC methodology• federal LCC rules• interpretation of analysis results

Review of LCC Metho

Objectives: Upon completion of this module, understand
Savings must be greater tha

Costs

Sa

Basic Economic Criterion fo

Investments that Reduce Futur

Costs
$

$

— — 

Alternative

A

Alternative

B

Life-Cycle Costs of 

Alternatives
Total Life-Cycle Cost is M

02468

101214161820

 Energy Efficie

Dollars

Q*
Net Savings are Maximi

02468

1012141618

Energy Effi

Dollars

Q*
Incremental Savin

gs Eq

Incremental Costs

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

Energy E

Dollars

Q*
Types of Decisions

• Accept/reject projects• Optimal energy efficiency l• Optimal system selection or • Optimal combination of 

interdependent systems

• Prioritization of independen

projects
Life-Cycle Cost Anal

• a method of economic analysis that sums 

project costs over a given study period in p

terms.

• most relevant when selecting among mutu

project alternatives that provide the same performance but have different initial cocosts, and/or expected lives.

LCCA is
Typical Project Cos

Generally, only amounts that are different considered when comparing mutually exclualternatives.

• Investment-related:

– Acquisition costs

– Replacement costs– Residual value (resale or disposal cost

• Operating-related:

– Operation, maintenance, and repair c

– Energy and water costs– Contract-related costs (for financed p
The Study Period

The study period• is the length of time over which an invest

analyzed based on 

– the expected life of the project and/or– the investor’s time horizon.

• Base Date: analysis date to which all cash 

discounted.

• Service Date: date when building or syste

or becomes operational.

• Study period must be the same for all alt
Study Period

Service Period

Study Period

Base Date

Service Date

Year 1 2 3 4 

Service Period

Study Period

Base Date

Service Date

Year 1 2 3 4 5 6 7 

Coinciding Study Period and Service Period

Phased-in Planning/Construction/Implementation 
Adjusting for Different Sys

SYSTEM II: 20 YRS

SYSTEM I: 15 YRS

1 15 20

Residual

1 15 20 

Replacement Residual

Length of study period
Present Value and Disco

• is the equivalent value to an investor, as of the ba

amount paid or received at a future date.

• is found by discounting; 

discounting adjusts for the investor’s time-value o

money.

A present value amountThe present value of a future amount

• is the interest rate that makes an investor indifferen

between cash amounts received or paid at differenpoints in time.

The discount rate
Life-Cycle Cost

Study Period

Replacement

Cost

Operating

Costs

Investment

Costs

First Cost

OM&R Costs - Contract Costs
Converting future amou

present value:

PV

=

Ct

×

1

LCC

=

Σ

n

t=0

Ct

(1+d)

t

where n = length of study perio

(1+d)

t
Useful Discount Fact

(1) Single present value (SPV) factor for one-t

or non-annually recurring amounts:

(2) Uniform present value (UPV) factor for un

amounts:

where A

0 = annual amount at base-date prices

PV = F

t x SPV(t,d)

PV = A

0 x UPV(n,d)
Useful Discount Factors 

(3) Modified uniform present value (UPV*) fa

changing annual amounts

PV = A

0 x UPV*(n,d,e)
DOE Energy Price Proj

• DOE energy price escalation rates 

– by region (census region)

– by fuel type (elec., oil, gas, LPG– by rate (residential, commercia– by year
Summary of Present Valu

PVPVPV

A

o

A

o

A1 A

2

SPV

UPV

UPV*

Single future amount (year t) PV = Ft x SP

Recurring annual amount (over n years) PV = A

o x UP

Changing annual amount (over n years) PV = A

o x U
Single Present Value F

Example: Find the present value of $1,000 receyear 10 when the discount rate is 3.3% (table ASupplement to HB135).

PV = F

t x SPV

PV = $1,000 x SPV (d=3.3%, t=10)

= $1,000 x 0.723 = $723
Uniform Present Value 

Factor

Find the present value of an annually recurrinof $1,000 each year for 10 years when the disco(table A-2, Annual Supplement to HB135).

PV = A

0 x UPV

PV = $1,000 x UPV (d=3.3, n=10)

= $1,000 x 8.40 = $8,400
Modified Uniform Presen

(UPV*) Factor

Find the present value of an annually recurrinof $1,000 over 10 years, when this cost is expe2%/yr and the discount rate is 3.3% (table A-3Supplement to HB135).

PV = A

0 x UPV*

PV = $1,000 (annual) x UPV*(d=3.3, 

= $1,000 x 9.33 = $9,330
FEMP UPV* Factor for 

Costs

Find the present value of an annually recurrinof $1,000 over 10 years, given current DOE enescalation rates (Region 4, industrial rates) and DOE discount rate of 3.3% (table Ba-4, AnnuaHB135).

PV = A

0 x UPV*

PV = $1,000 x UPV*(d=3.3, n=10, electr.

= $1,000 x 6.96 = $6,960
Sources of Discount Fa

• Discount factors can be hand-calculated, co

calculated, or looked up.

• Sources:

– Annual Supplement to Handbook 135 (fo

projects)

– NIST DISCOUNT computer program, N– Generic discount factor tables, NISTIR 8

• Available from:

– DOE HELP Desk at 1-800-DOE-EREC (– www.eren.doe.gov - Technical Assistance 

Software Tools 
Inflation Adjustment in 

Definitions

• Inflation: rate of increase of the 

level of prices.

• Escalation: rate of increase in th

a particular commodity.

• Differential escalation: rate of i

the price of a particular commorelative to the rate of increase in general level of prices.
Inflation Adjustment in 

Definitions (cont.)

• Constant dollars: dollars of uniform purc

from year to year, exclusive of general inf

• Current dollars: dollars of purchasing po

which actual prices are stated, including inflation.
Two Approaches 

for Dealing with Infla

• Exclude general price inflatio

– Specify all costs in constant dollars.– Use a real discount rate (excluding in

• Include general price inflation:

– Specify all costs in current dollars.– Use a nominal discount rate (includi

Both approaches yield the sam

values.
Comparing LCCs of Alte

Systems Requires a Com

Analytical Perspecti

• Base date• Service date• Study period• Discount rate• Inflation assumption (or constant 

analysis)

• Cost estimating method(s)• Operational schedule• Energy analysis method
Federal Criteria for LCC 

• Energy and Water Conservation Projects—10 CFR 4

– DOE discount rate (updated annually), published 

Supplement to Handbook 135

– Maximum 25-year service period– Local energy prices, metered energy quantities– DOE energy price escalation rates– Analysis usually in constant base-year dollars (i.e.

except for financed projects

• Other federal projects—OMB Circular A-94

– OMB discount rates, varying with length of study 

project

– No limit on study period
Example I: Central AC 

Selection for Office Bu

Location: Federal building, W

DOE Region 3

Discount rate: 2001 FEMP discou

(constant-dollar an

Fuel type: ElectricityPrice: $0.08/kWh, local raRate type: Commercial

 Useful life: 20 years

Study period: 20 yearsBase date: June 2001
Base Case:

Conventional System w/o C

Controls and Econom

• $103,000 Initial investment costs• $ 12,000 Replacement cost for fan at the e• $ 3,500 Residual value at the end of the 2

study period

• $ 20,000 Annual electricity costs (250,000 

$0.08/kWh)

• $ 7,000 Annual OM&R costs
Cash-Flow Diagram for B

$20,000 annually 

Electricity

$103,000 

Initial 

investment 

cost

$7,000 annually 

OM&R

Base Date 

$1

Fan r

Year 01 02 03 04 05 06 07 08 09 10 11 
LCC for Base Cas

(Conventional Syste

Cost Items

(1)

Base Date

Cost

(2)

Year of

Occurrence

(3)

DiscounFactor

(4)

Initial investment $103,000 Base date already i

present v

Capital replacement

(fan)

$12,000 12 SPV12

0.677

Residual value ($3,500)) 20 SPV20

0.522

Electricity:250,000 kWh at$0.08/kWh

$20,000 annual UPV*20

12.99

OM&R $7,000 annual UPV20

14.47

Total LCC 
Alternative Case:

Energy-Saving System with 

Controls and Econom

• $110,000 Initial investment costs• $ 12,500 Replacement cost for fan at th• $ 3,700 Residual value at the end of th

 period

• $ 13,000 Annual electricity costs (162,50

 $0.08/kWh)

• $ 8,000 Annual OM&R costs
LCC for Alternative (Ener

system)

Cost Items

(1)

Base Date

Cost

(2)

Year of

Occurrence

(3)

DiscouFactor

(4)

Initial investment cost $110,000 Base date already i

present v

Capital replacement

(fan)

$12,500 12 SPV12 0

Residual value ($3,700) 20 SPV20 0

Electricity:162,000 kWh at$0.08/kWh

$13,000 annual UPV20 * 1

OM&R $8,000 annual UPV20 1

Total LCC 
Lowest LCC

LCC of Base Case : $4LCC of Alternative: $4

Alternative with the lowest 

is the economic choice
Uses of Life-Cycle C

Types of Decisions LCC CAccept /Reject yes lOptimal Performance yes lOptimal System/Design yes lProject Priority no 
Supplementary Econo

Measures

• Net Savings (NS)• Savings-to-Investment Ratio (S• Adjusted Internal Rate of Retu• Discounted Payback (DPB)
Net Savings (NS)

NS = PV of operational sav

minus PV of addition

investment

NSAlt = LCCBC - LCCNSALT = $470,387 - $40

NSALT = $ 69,226

Alternative with the highe

is the economic choice
Uses of Net Saving

Types of Decisions LCC Accept /Reject yes Optimal Performance yes Optimal System/Design yes Project Priority no 
Savings-to-Investment Ra

SIR = Ratio of PV of operational 

to PV of additional investm
Savings-to-Investment 

SIR =

PV operational savings

PV Operational savings = PV O&M costsBC - 

PV

∆ Investment costs = PV investmentALT - 

SIR = (110,000 + 8,462 - 1,931) - (103

(259,800 + 101,290) - (168,870 

7,234

SIR = 76,460 = 10.6

PV of additional investment co
Uses of Savings-to-Inves

Ratio

Types of Decisions LCC CAccept /Reject yes > Optimal Performance no -Optimal System/Design no -Project Priority yes d

o

Meaningful SIR cannot be computed 

projects.
Adjusted Internal Rate of 

(AIRR)

AIRR = Measure of performan

investment as a percenassuming reinvestmenflows at a given rate (r

AIRR = (1+r)SIR1/N-1

= (1+0.033) 10.6 1/20 - 1

= 16.2%
Uses of Adjusted Internal 

Return

Types of Decisions LCC Accept /Reject yes Optimal Performance no Optimal System/Design no Project Priority yes 

Meaningful AIRR cannot be com

financed projects.
Discounted Payback (

DPB = Minimum value of n, yea

which discounted savings are at least equal to addiinvestment costs 

(

)

( )

S I

d

I t t

t

t

n

−

+

≥

∑

=

∆

∆

1

1
Discounted Payback for A

Base-year electricity savings: $7,000Base-year OM&R savings: - $1000Additional Initial Investment: $7,000

Cumulative

∆Initial 

Year PV Savings Cost 

1 $ 5,610 $7,000 2 10,970 7,000 

Discounted Payback occurs in y
Uses of Discounted Pay

Types of Decisions LCC CAccept /Reject yes

≤ 

Optimal Performance no -Optimal System/Design no -Project Priority no -

Meaningful DPB cannot be computed 

projects.
• 2-year planning/construction period• First half of investment cost incurred at e

second half at service date

Example II: CAC System Se

Office Building wit

Planning/Construction P
Cash Flow Diagram for B

with P/C Period

Electricity

$51,500 

$51,500 

$7,000 OM&R

Base 

Date 

Service 

Date 

$12,000 

Cap. repl. 

(fan)

Year 01 03 02 12 

Initial investment costs

$20,000

07
LCC Calculation for Bas

with P/C Period

Cost Items

(1)

Base Date

Cost

(2)

Year of

Occurrence

(3)

DiscouFactor

(4)

Initial investment cost:

$51,500 1

Capital replacement (fan) $12,000 14 SPV14 0

Residual value ($3,500) 22 SPV22 0

Electricity:250,000 kWh at$0.08/kWh

$20,000 annual

UPV*22-2

OM&R $7,000 annual UPV22-2

Total LCC 

1st Installment atmidpoint of construction

SPV1 0

2nd Installment at $51,500 2 beginning of serviceperiod

SPV

2 0

13.88-1.84 = 15.47-1.91 = 
LCC Calculation for Alte

with P/C Period

Cost Items

(1)

Base Date

Cost

(2)

Year of

Occurrence

(3)

DiscouFactor

(4)

Initial investment cost:

$55,000 1

Capital replacement (fan) $12,500 14 SPV14 0

Residual value ($3,700) 22 SPV22 0

Electricity:250,000 kWh at$0.08/kWh

$13,000 annual UPV*22-2 1

OM&R $8,000 annual UPV22-2

Total LCC 

1st Installment atmidpoint of construction

SPV1 0

2nd Installment at $55,000 2 beginning of serviceperiod

SPV

2 0

1
Net Savings for Altern

with P/C Period

NSAlt = LCCBC - LCCALTNSALT = $439,733 - 375,900NSALT = $63,833

Savings-to-Investment Ratio (with P/C peSIR = (104,775 + 7,938 - 1,813) - (98,

(240,800 + 94,920) - (156,520 + 

6,887

SIR = 70,720 = 10.3
Class Exercise A1

Attic Insulation

Materials required: Annual Supplement to Handbook 135

Four-function calculator

Note: These problems are intended for manual solution.

Use the worksheet on the next page to determine the level of insulation 

cost, which is to be installed in the attic of a house located in Northern insulation level is R-11.

Location: West (Region 4)Base date: June 2001Service date: June 2001Discount rate: 3.3%Expected life: 25 yearsReplacements: noneResidual value: noneElectricity price: 0.08/kWhRate type: Residential

Insulation Annual energy consumption Installed

Level Cost ($)R-11R-19R-30R-38

kWh

9602705568046703

0

450650800
Worksheet for Class Exe

(1) (2) (3) (4)= (5) (6)= 

(3)X$.08/kWh (4)x(5) 

Energy Cost

Rvalue

Initial

Cost

($)

Annual

kWh

Annual

($) UPV*

Life

($)

R-11R-19R-30R-38

0

450650800

9602705568046703
Class Exercise A2

Selection of Heating System

Select the residential heating system with the lower life-cycle cost and 

and Savings-to-Investment Ratio. Use the worksheet on the next page.

Annual space heating load: 50 MBtuFuel oil price: $1.12/gallon ($8.00/MNatural gas price: $0.80/therm ($8.00/MRate type: ResidentialLocation: Midwest (Region 2)Discount rate: 3.3%Base date/service date: June 2001Study Period: 15 years

Oil Furnace 

Initial cost: $4,500 Annual maintenance cost $100 Annual efficiency (average) 82% Expected life (years) 15 Residual value $500 
Worksheet for Class Exercis

LCC = Initial Cost + PV energy + PV maintenance - PV resOil Furnace:LCC =

+

+

LCC =Gas Furnace:LCC =

+

+

LCC =SIR = Net reduction in operating-related costs

Increase in investment-related costs

SIR =SIR =NS = -NS =
Solution to Class Exerci

UPV* = 15.82*R-30 has the lowest Life-Cycle Cost and the highest N

Annual

($)

Life

($)

Initial Cost

($)

Annual

kWh

Rvalue

Energy Cost

12,150

8,9228,6068,480

0

450650800

9602705568046703

To

768564544536

R-0R-19R-30*R-38
Solution to Class Exercise A

Lowest Life-Cycle Cost:LCC = Initial Cost + PV energy + PV maintenance - Oil Furnace:LCC = $4,500 + (50/0.82 x $8.00 x 10.66) + ($100 x 

LCC = $4,500 + $5,200 + $1,168 - $307LCC = $10,561Gas Furnace:LCC = $5,000 + (50/0.83 x $8.00 x 10.16) + ($75 x 1

LCC = $5,000 + $4,896 + $876 - $614LCC = $10,158Net Savings for Gas Furnace:NS = $10,561 - $10,158NS = $ 403SIR for Gas Furnace:SIR = ($5,200 + $1,168) - ($4,896 + $876)

($5,000 - $614) - ($4,500 -$307) SIR = $ 596 

$ 193

SIR = 3.09
A-60

Summary of the Life-Cycle Costing Method

Savings and investment costs

The basic criterion for determining whether a design alternative that increases capital investment and

lowers future operating costs is cost-effective is that the savings generated by the investment must

be greater than the additional investment cost. The number of years over which the savings are

accumulated and the weighting of future costs (or cost savings) relative to present costs are major

considerations in life-cycle cost (LCC) analysis.

Life-cycle cost

The LCC concept requires that all costs and savings related to a design decision be evaluated

over a common study period and be adjusted for the time value of money before they can be

meaningfully compared. Choosing building systems on the basis of first cost alone can increase the

long-run owning and operating costs of a building. For example, the purchase of a low-efficiency

heating system, while initially less expensive than a more efficient system, will incur higher energy

costs when in use. The difference may be significant since for many building systems only a small

part of the life-cycle cost is attributable to the initial purchase price. The greater part is usually

attributable to ongoing operating, maintenance, repair, and energy costs.

The principles of present-value analysis, which are the basis for the life-cycle cost method, apply to

investments in federal, state, and local governments whether they are funded by the government

agency from tax appropriations or financed through private-sector energy or utility services

companies.

To supplement LCC analysis, there are additional measures of economic effectiveness, such as

Net Savings (NS), Savings-to-Investment Ratio (SIR), Adjusted Internal Rate of Return (AIRR)

and Discounted Payback Period (DPB) period. If computed correctly, all of these measures are

consistent with the LCC method.

Particular care must be given to the use of the DPB as a criterion for accepting or rejecting

projects. The DPB is consistent with the LCC method only when nothing more is required than that

payback occur before the end of the study period and if cumulative net savings after payback is

achieved are positive. DPB is not consistent with the LCC method when an arbitrary payback period

is specified as a cut-off point for project acceptance.

Comparing alternatives

From a decision standpoint, the LCC of a design alternative only has meaning when it is

compared against the LCC of a base case. For example, Alternative B has a higher investment cost

but lower operating-related costs than Base Case A, although both are expected to perform equally

well with regard to their basic purpose. Since the sum of investment cost plus operating cost

(including energy costs) for alternative B is less than that for A, alternative B is the more costeffective choice. Note that in an existing building, the base case alternative (i.e., the existing design)

may not require any investment; it may be the "do nothing" alternative. In that case, the life-cycle

cost of the base case is made up entirely of operating-related costs, which must be compared against

the combined investment and operating costs of the alternatives considered. In other cases (e.g., a
A-61

new building design) the base case may be the design with the lowest first cost or the minimum level

of performance that satisfies building code requirements.

Minimizing total owning and operating costs

The graph in slide A-5 is typical of energy conservation investments. It compares the owning

and operating costs associated with a wide range of energy efficiency levels for a building

system (e.g., exterior wall insulation or air conditioner efficiency). Generally, as the level of

energy efficiency increases, the initial cost increases at an increasing rate. Lower levels of

efficiency can generally be achieved at low cost, but as the efficiency level is increased,

structural, mechanical, or design modifications must be made to accommodate the added

components. This quickly adds to the initial cost. For example, to increase the effective thermal

resistance value of a wall, the wall thickness must be increased or a more costly type of

insulation must be used; or, in the case of air conditioners, significantly larger heat exchangers or

more costly compressors are necessary to increase energy efficiency. For some systems, such as

fossil-fired furnaces, there are practical limits to the extent to which efficiency can be increased,

causing the investment cost curve to bend sharply upwards.

The operating cost curve in the graph shows that as the energy efficiency of the system is increased,

energy consumption is decreased, but at a decreasing rate. In fact, energy consumption is generally

inversely proportional to energy efficiency so that additional units of improvement generate less

savings than the ones before. For example, increasing the thermal resistance value of attic insulation

from R-30 to R-40 only saves about 18 % as much energy as increasing the level from R-10 to R-20.

The total cost curve is the vertical summation of the investment cost and operating cost associated

with any level of energy efficiency. The lowest point on the total cost curve, Q*

, determines the

level of energy efficiency that minimizes life-cycle costs. It is important to recognize that there are

a number of factors that contribute to this result. For example, longer study periods, more severe

climates, lower conservation costs (say through technology improvements), and higher energy prices

all tend to result in a higher level of energy efficiency becoming cost-effective.

Maximizing net savings

The graph in slide A-6 shows that the most cost-effective level of energy conservation can also be

determined by finding the level that maximizes net savings, the difference between total costs and

total savings. The slide shows two curves, the investment cost curve, which is identical to that shown

in the previous slide, and a savings curve. The savings curve is determined by taking the difference

between the operating cost at the zero level of investment and the operating cost at any other level of

investment on the graph.

Note that total savings are greater than total costs anywhere between the origin and the point where

the two curves cross. Thus we might conclude that any level of investment between these two points

is justified. But in fact the economically optimal level of energy efficiency is that level for which

net savings is greatest, again Q*

. This is the same point that was determined by finding the level

with the lowest LCC. This is not surprising if you recognize that net savings at any point along the

horizontal axis of the graph in slide A-5 is the difference between the LCC of the base case

(measured at the zero investment level) and the LCC of the alternative at that point. Thus the energy

efficiency level with the lowest LCC must have the highest net savings. By contrast, at the point
A-62

where investment cost just equals savings (slide A-6), you are no better off than you were at the

origin, since in both cases net savings is zero.

Incremental savings versus incremental costs

Graph A-7 provides an additional look at the relationship between the investment cost curve and the

operating cost curve. Here incremental costs and incremental savings are plotted. Each additional

unit of energy efficiency results in smaller and smaller increments in savings and greater and greater

additions to cost. The shape of these curves is quite typical: conservation investment costs are

increasing at an increasing rate and energy savings are decreasing at a decreasing rate. The point

where these two curves cross determines the economically optimal level of energy efficiency,

again Q*

, the point at which the last increment in cost increases savings by the same amount.

This is the same point, Q*

, found by minimizing LCC or maximizing net savings. At any point to the

left of Q*

, incremental savings are higher than incremental costs, so that increasing the energy

efficiency level will reduce life-cycle costs and increase net savings. At any point to the right of Q*

,

the intersection, incremental savings are less than incremental costs, so that reducing the energy

efficiency level will reduce life-cycle costs and increase net savings.

Economic efficiency

It is essential to recognize that all three of these methods arrive at the same optimal level of energy

efficiency. In general, if the LCC methodology is applied correctly, all three of these methods

arrive at the same optimal level of energy efficiency. Economists refer to the level of investment

where life-cycle cost is minimized, net savings is maximized, and incremental investment is equal to

incremental savings as the "economically efficient" level of investment for a given project.

The above treatment of costs and savings assumes that the energy efficiency of building systems can

be improved in a continuous fashion. In fact, commercially available systems are rarely available in a

continuous range of efficiency ratings. However, the underlying concepts shown here are valid even

when efficiency improvements come in "step" form. That is, the alternative with the lowest LCC

will be the most cost-effective choice, given that it satisfies the other performance objectives of the

system. In every case, finding the alternative with the lowest LCC will provide sufficient

information to choose the economically efficient level of investment.

Types of decisions

There are five types of investment decisions related to energy conservation to which economic

analysis can be usefully applied:

(1) An accept/reject project is a project that is optional from a building design standpoint and can

be either implemented or not, depending on whether or not it is a good investment. A good

example is the installation of standard storm windows over existing single-pane windows in a

house. The comfort level of a house can be maintained at an acceptable level with or without

storm windows, but with storm windows installed much less energy will be used. (If several

options are available with different levels of energy performance, then this becomes a decision

about the optimal efficiency level.) Optimal efficiency level refers to the problem of selecting

the most cost-effective level of energy performance for a building system. For example, attic

insulation can be installed over a wide range of thermal resistance levels, an air conditioner can

have a wide range of seasonal efficiency ratings, and a solar heating system can have a wide

range of collector areas.
A-63

(2) Optimal system selection refers to the problem of selecting the most cost-effective system type

for a particular application. System selection can directly impact the energy performance of a

building. Examples include the choice of the heating and cooling system types for a building

(e.g., electric heat pump or gas furnace with electric air conditioning), wall design (e.g., masonry

or wood frame), or even insulation type (e.g., rigid foam or mineral wool).

(3) Optimal combination of interdependent projects refers to the problem of selecting two or

more building systems at the same time, recognizing that the implementation of one system will

have significant effects on the energy savings potential of the other, and vice-versa. For

example, installing a high-efficiency furnace will reduce the energy savings potential of storm

windows, while installing storm windows will reduce the energy savings potential of installing a

high-efficiency furnace.

(4) Prioritization of independent projects is required when a number of cost-effective energy

conservation investments have been identified but not enough funding is available to implement

all of these projects. Economic analysis allows the ranking of these projects in decreasing order

of cost-effectiveness as a guideline to allocating available funding.

Basic steps in LCC analysis

The basic steps in an LCC analysis are to

- identify the alternatives under consideration,

- specify the data requirements and establish assumptions,

- estimate the costs in dollars,

- adjust costs for time value of money,

- compute total LCC for each alternative, and

- choose the alternative with the lowest total life-cycle cost.

Depending on the circumstances, you may also want to calculate supplementary measures of

economic performance, perform an uncertainty assessment, and add a narrative describing noneconomic issues. All of these steps will be covered during the workshop.

Typical project costs

Relevant effects

To make a decision about economic efficiency, it is important to measure the economic

consequences of alternatives. Data requirements for making an economic decision are not the same

as those for keeping an accounting system. For an LCC analysis, you need, in general, evaluate only

costs that change from one alternative to another. Costs that remain the same do not decrease or

increase the life-cycle costs of an alternative relative to the base case and thus need not be included.

Because collecting cost data can be expensive, you want to focus on collecting those data which are

likely to have a significant effect on the life-cycle costs of an alternative. You do not want to spend

your limited resources on collecting data that have little impact.
A-64

Do not include "sunk" costs in your analysis. Sunk costs are those costs that have already been

incurred and cannot be avoided by future decisions. Only amounts that can be changed by the

decision need to be included in the analysis.

Non-tangible costs are costs or benefits that cannot easily be expressed in dollar amounts. Even

though they cannot be explicitly included in an LCC analysis, their effects should be described in a

narrative so that they will not be overlooked when making a decision.

Types of costs

Life-cycle costs typically include investment-related costs and operational costs. Acquisition

costs, including costs for planning, design, and construction, are investment-related, as are residual

values such as resale value, salvage value, or disposal costs. Under the FEMP rule, capital

replacement costs are also defined as investment-related. Energy costs, maintenance costs, and

repair costs are considered operational costs, that is, non-investment-related costs. This definition is

useful when computing economic measures that evaluate long-run savings in operational costs in

relation to total capital investment costs.

Some of the costs included in an LCC analysis are annually recurring, such as energy, and routine

maintenance and repair costs. Non-annually recurring costs are those that may occur only one time

during the life-cycle, such as acquisition costs and residual values, or several times, such as

replacement costs. This definition is needed for choosing the appropriate discount factors used to

convert future costs to present values.

In a third classification, acquisition costs are designated as initial costs and all other costs as future

costs, a useful classification both for selecting discount factors and for relating initial investment

costs to the operating costs of a project.

All costs included in the analysis are expressed in base-year dollars. These base-year amounts will

be multiplied by discount factors that incorporate the discount rate and any applicable escalation

rate.

Energy and water costs

Special criteria apply to energy costs in analyses of conservation measures considered for federal

buildings:

Current prices: It is essential to get current energy prices from local suppliers. It is better not to use

regional or national average energy or water cost data, since they do not reflect local supply and

demand conditions. Prices should take into account, where applicable, rate type, rate structure,

summer and winter differentials, block rates, and demand charges to reflect an estimate as close as

possible to today's actual price.

Energy price projections: Energy prices are assumed to increase or decrease at a rate different from

general price inflation. To avoid inconsistencies in LCC analyses throughout the government, it is

required under the FEMP rule (10 CFR 436A) to adjust today's energy price estimates by the energy

price projections published annually by DOE. These energy price projections are embedded in the

discount factors updated annually and published on April 1 of each year in Energy Prices and

Discount Factors for Life-Cycle Cost Analysis 20xx, Annual Supplement to NBS Handbook 135 and
A-65

NBS Special Publication 709. These projections are also included in the NIST BLCC computer

programs.

Water costs: In 1995 water conservation was added to energy conservation as a designated goal for

the Federal Energy Management Program. No special water usage/disposal escalation rates are

projected by DOE.

Setting the study period

The study period is the time over which the effects of a decision are of interest to the decision-maker.

There is no one correct study period, but it must be sufficiently long to enable a correct assessment of

long-run economic performance. Often the life of the system under analysis is used as the study

period. However, the Federal Government limits the study period for energy and water conservation

projects to a maximum of 25 years from the service date. Apart from the 25-year maximum limit,

there are other factors that determine the length of the study period:

(1) Compare all alternatives over the same study period. Present-value cash flows calculated

for one time period would not be comparable with those calculated for a longer or shorter

period.

(2) Calculate all measures of economic evaluation (LCC, NS, SIR, AIRR) using the same

study period, otherwise they would not be consistent with each other.

(3) Consider the time horizon of the investor. The study period may be shorter or longer

depending on whether the investor is, for example, the builder or the occupant of a building.

(4) Adjust for different expected lives of buildings or systems. In order to fit different

expected lives into the same study period, equalize the differing time periods by using

replacement values and residual values, such as a resale value, salvage value, or disposal

costs.

Discounting future costs to present value

Before we can compare or sum costs occurring at different points over the study period, they must be

converted to a common point in time to reflect the time value of money. This means that future costs

(or savings) have to be discounted to present value so that they can be directly compared with

initial investment costs.

Cash-flow conventions

There are several cash-flow conventions that may be used when discounting costs occurring over the

study period to present value. One-time costs are usually discounted from the actual time of

occurrence. Annually recurring costs are discounted from the end of the year (FEMP) or the middle

of the year (DoD). Costs occurring at the beginning of the study period do not need to be discounted

since they are already in present value.

Discount rate

The discount rate used to adjust future costs to present value is the rate of interest that makes the

investor indifferent between cash amounts received at different points in time. The discount rate

adjusts for inflation and the real earning power of money. This rate is often referred to as the
A-66

minimum acceptable rate of return (MARR). It is important to recognize that every investor has

his or her own time preference for money, and thus his or her own discount rate.

Discount factors

Pre-calculated discount factors can be used to calculate present values by multiplying the base-year

dollar amounts by the appropriate discount factor. NIST publication Discount Factor Tables for LifeCycle Cost Analyses (NISTIR 89-4203) contains pre-calculated discount factors that incorporate

FEMP and OMB discount rates and DOE energy price escalation rates. These discount factors are

also embedded in the NIST BLCC programs.

Common discount factor applications

When performing an LCC analysis, three types of future cash flows are most commonly encountered,

each requiring a different type of present-value factor:

(1) The one-time cash flow is multiplied by the Single Present Value (SPV) factor to find its

present value. An example of a one-time cash flow is a replacement cost or a residual value at

the end of the study period.

(2) The uniform annual amount is multiplied by the Uniform Present Value (UPV) factor to find

the present value. An example of a uniform annual amount is an annual operating and

maintenance cost that remains the same from year to year.

(3) The changing annual amount varies from year to year at some known rate, which can be either

constant or variable from year to year. The base-year amount (A0) is multiplied by the Modified

Uniform Present Value (UPV*) factor to find the present value. An example of an amount that

changes at a variable rate each year is the annual energy cost of a building when the physical

amount of energy consumed is expected to be reasonably constant but energy prices are expected

to change from year to year. An amount changing at a constant rate may be an operating cost that

increases annually due to expected higher maintenance costs.

UPV* factors for energy costs

For LCC analyses related to energy conservation in federal facilities, NIST publishes UPV* factors

specifically for use with future energy costs. The NIST UPV* factors explicitly incorporate the

FEMP discount rate and DOE projections of energy price increases over the next 30 years. They are

published in NISTIR 85-3273, Energy Price Indices and Discount Factors for Life-Cycle Cost

Analysis 20xx, tables B-1a through B-5a. Because the FEMP discount rate and the DOE projections

of energy price escalation rates change from year to year, this publication is updated by NIST each

year on April 1. The UPV* factors in this publication are differentiated by fuel type, rate type

(residential, commercial, industrial), and by region (Northeast, Midwest, South, and West). The

UPV* factor for energy costs is used with the annual energy cost computed in base-year dollars

How to handle inflation in LCC analysis

Definitions

An economic evaluation of capital investments over time needs to consider both the earning

power of money, as reflected by the discount rate, and the changing purchasing power of the
 A-67

dollar. The following five terms will be used in the discussion of how to handle inflation in lifecycle cost analysis: 

- Price inflation: A rise in the general price level, tantamount to a decline in the general 

purchasing power of the dollar. 

- Price escalation: Increase in the price of a particular commodity, such as energy. 

- Differential price escalation: The difference between the rate of general inflation and 

the rate of escalation in the price of a particular commodity. For example, if the price of a 

particular commodity increases at exactly the same rate as general inflation, the differential 

price escalation rate is 0 percent. Energy prices are a type of cost that has deviated 

significantly from general inflation since the early 1970s. For this reason, the FEMP LCC 

methodology for evaluating energy conservation investments requires that projected 

increases in energy prices be explicitly included in the economic analysis, while other 

categories of costs are generally assumed to increase at the rate of general inflation. 

- Current dollars and constant dollars: Current dollars include the rate of general 

price inflation, constant dollars exclude the rate of general price inflation. 

- Nominal discount rates and real discount rates: Nominal discount rates include 

the rate of general price inflation, real discount rates exclude the rate of general price 

inflation.

Treatment of inflation 

There are two basic approaches for dealing with inflation in an economic analysis. 

(1) Use current dollars and a nominal discount rate and price escalation rates. The rate of 

inflation is included in the future dollar amounts, and in the discount and price escalation rates. 

This is the approach that is generally used when tax considerations are included in the economic 

analysis, or when current-dollar cash flows need to be compared with current-dollar savings, as is 

the case for ESPC projects. 

(2) Use constant dollars and a real discount rate and price escalation rates. Future dollar 

amounts exclude, and the discount and escalation rates exclude inflation. In this case only 

differential price escalation rates are included in the analysis, exclusive of general inflation. 

Constant-dollar analyses are generally used in agency-funded government studies. 

 

Both constant- and current-dollar analyses, if conducted properly, will yield exactly the same 

present-value result, and thus support the same conclusion. However, it is generally easier to 

conduct an economic analysis in constant dollars because the underlying rate of inflation from year 

to year over the study period does not need to be estimated. 

It is important to differentiate between a present-value analysis of a capital investment and a 

budget analysis, where funds must be appropriated for year-to-year disbursement. The purpose of a 

present-value analysis is to determine whether the overall savings appear to justify the required 

investment at the time that the investment decision is being made. A budget analysis must include 
 A-68

general inflation to assure that sufficient funding will be appropriated in future years to cover actual 

expenses. 

Relationship between real and nominal rates: 

d = (1 + D)/(1 + I) - 1 

D = (1 + d) (1 + I) - 1 

e = (1 + E)/(1 + I) - 1 

E = (1 + e) (1 + I) - 1 

where d = real discount rate, excluding inflation 

D = nominal discount rate, including inflation 

e = real rate of escalation, excluding inflation 

E = nominal rate of escalation, including inflation 

I = rate of inflation 

Supplementary measures of economic performance

Supplementary measures of economic performance can be used to determine the comparative costeffectiveness of capital investment. Several widely used measures are presented in this workshop. 

These are Net Savings, Savings-to-Investment Ratio, Adjusted Internal Rate of Return, and 

Payback Period. Except for the Payback Period, these measures are consistent with and build upon 

the Life-Cycle Cost methodology. All of these supplementary measures are comparative rather than 

absolute measures of performance because they are only meaningful in relation to an alternative 

course of action, i.e., the base case. 

Net Savings (NS)

NS is a measure of long-run profitability of an alternative relative to a base case. The NS can be 

calculated as an extension of the LCC method to show the difference between the LCC of a base case 

and the LCC of an alternative. It can also be calculated directly from differences in the individual 

cash flows between a base case and an alternative. 

The NS can be used like the LCC measure to determine a project’s cost-effectiveness. For a project 

alternative to be cost-effective with respect to the base case, it must have an NS of greater than 

zero. Even with a zero Net Savings, the minimum required rate of return (MARR) has been achieved 

because the required rate of return is built into the net savings computation through the discount rate. 

NS is not useful for ranking projects. 

Savings-to-Investment Ratio (SIR)

The SIR is a dimensionless measure of performance that expresses the ratio of savings to costs. The 

numerator of the ratio contains the operation-related savings; the denominator contains the increase 

in investment-related costs. An SIR > 1.0 means that an alternative is cost-effective relative to a 

base case. For selecting the optimal energy efficiency level or the optimal system or design, the SIR 

method is reliable only if based on incremental SIRs. 

The SIR is recommended for setting priority among projects when the budget is insufficient to fund 

all cost-effective projects. The projects are ranked in descending order of their SIRs. 
 A-69

Adjusted Internal Rate of Return (AIRR) 

The AIRR is calculated as a percentage yield. The yield rate is compared with the investor’s MARR. 

The AIRR has to be higher than the MARR for an investment to be considered cost effective.

(The AIRR is a modified version of the Internal Rate of Return (IRR); it uses the discount rate rather 

than the calculated rate of return as the reinvestment rate for saved cash flows.) The AIRR is used in 

the same way as the SIR. 

Discounted Payback (DPB)

The DPB measures how long it takes to recover initial investment costs. It is calculated as the 

number of years elapsed between the initial investment and the time at which cumulative 

savings, net of accrued costs, are just sufficient to offset investment costs. The DPB takes the 

time value of money into account by using discounted cash flows. If the discount rate is assumed 

to be zero, the method is called Simple Payback (SPB), a measure of evaluation less accurate 

than the DPB. 

 

Both the DPB and the SPB ignore all costs and savings that occur after payback has been 

reached. They should be used only as a rough screening measure for accept/reject decisions. 

Uncertainty assessment in LCC analysis

Decisions about energy conservation investments in buildings typically involve a great deal of 

uncertainty about their costs and potential savings. Performing an LCC analysis greatly increases 

the likelihood of choosing an alternative that saves money in the long run. Yet, there may still be 

some uncertainty associated with the LCC results; LCC analyses are usually performed early in the 

design process when only estimates of costs and savings are available rather than certain dollar 

amounts. Uncertainty in input values creates risk that a decision will have a less favorable outcome 

than what is expected. 

Even though you may be uncertain about some of the input values, especially those occurring in the 

future, it is still better to include them in an economic evaluation than to base your evaluation on first 

costs only. Ignoring uncertain long-run costs implies the assumption that they are zero, a poor 

assumption to make. 

There are techniques that allow you to estimate the cost of choosing the “wrong” alternative. 

Sensitivity analysis and breakeven analysis are two approaches that are so simple to perform

that they should be part of every LCC analysis. These and a number of other approaches to risk and 

uncertainty assessment are described in detail in Techniques for Treating Uncertainty and Risk in the 

Economic Evaluation of Building Investments by Harold E. Marshall, NIST Special Publication 757, 

September 1988. 

Sensitivity analysis 

Sensitivity Analysis measures the impact on the analysis results of changing one or more key input 

values about which there is uncertainty. Sensitivity analysis can be performed with respect to any 

measure of worth (LCC, NS, SIR, AIRR, PB). The sensitivity of these measures can be compared 

among alternatives. 
 A-70

Identifying critical inputs: It is important to know which of the uncertain input parameters have the 

greatest effect on LCC results. To identify the critical inputs, simply increase the value of each of 

them in turn by a certain percentage and, holding all others constant, recalculate the economic 

measure to be tested. The higher the percentage change in outcome for a given change in input value, 

the greater the effect. 

Estimating the range of results: To arrive at an estimate of the upper and lower bounds of an 

economic measure, it can be recalculated using the lowest and highest likely estimates of its input 

variables, corresponding to the most optimistic or pessimistic scenarios. 

“What if” scenarios: Identifying critical input values and determining the range of economic 

measures answers a number of “what if” questions. Sensitivity analysis is a good technique for 

taking a closer look at the most plausible “what if” scenarios, in order to be prepared to answer these 

types of questions when they arise during the decision-making process. 

Breakeven analysis 

Decision makers sometimes want to know the maximum cost of an input that will allow the 

project to still break even, or, conversely, what minimum benefit a project can produce and still 

cover the cost of the investment. 

To perform breakeven analysis, benefits and costs are set equal; all variables are specified, 

except the breakeven variable; and the breakeven variable is solved for algebraically. 

Advantages and disadvantages of sensitivity and breakeven analyses

Results of sensitivity analysis and breakeven analysis can be presented in text, tables, or graphs. 

They are easy to perform and easy to understand and require no additional methods of 

computation beyond those needed for LCC analysis. The breakeven value can serve as a 

benchmark value to be compared against its predicted performance. The disadvantages of sensitivity 

analysis and breakeven analysis are that they do not give a probabilistic measure of the risk of 

choosing an uneconomic project and do not include an explicit measure of risk attitude. 

Summary of FEMP LCC criteria 

The following criteria, consistent with the FEMP rules outlined in 10 CFR 436A, specifically 

apply to the economic evaluation of energy and water conservation and renewable energy 

projects in federal buildings: 

Constant-dollar analysis 

In general, use constant dollar analysis and real discount and escalation rates. The 

DOE/FEMP discount rate and energy price escalation rates are real rates, that is, they exclude 

the rate of general price inflation. If, as for example, in the case of alternative financing projects, 

the analysis is performed in current dollars, the inflation rate has to be added to the discount rate 

and price escalation rates. 

The DOE discount rate and corresponding discount factors are updated annually on April 1 and 

published in NISTIR 85-3273, Energy Price Indices and Discount Factors for Life-Cycle Cost 

Analysis, the Annual Supplement to NIST Handbook 135, and in the NIST LCC computer programs, 

BLCC4 and BLCC5. 
 A-71

Discounting convention 

Cash flows are discounted from the end of the year. (In analyses of military construction 

projects, cash flows are discounted from the middle of the year.) 

Present values

For reasons of consistency, the FEMP rule prescribes the use of present-value analysis for evaluating 

energy- and water-related projects. All future dollar amounts should be discounted to the base date

of the project. Note that “present-value” amounts are not the same as constant dollar amounts as of 

the base date, since the latter do not reflect the time value of money. 

Energy prices

The FEMP LCC method uses local energy and water prices at the building site in calculating the 

annual dollar value of the energy or water consumed by a building or building system. Local energy 

and water prices should reflect the type of rate charged (residential, commercial, or industrial), 

differences between summer and winter rates, the impact of block rates on marginal energy and 

water costs, and demand charges. The analyst should not artificially adjust energy or water prices to 

reflect environmental externalities. 

If fuel is purchased for on-site electricity generation, the costs of the fuel at the point of generation, 

plus the costs incurred in generating and distributing the electricity, should be used in the analysis. 

Quantity of energy and water usage 

Since the FEMP LCC method uses local energy and water prices at the building site, energy and 

water quantities should be stated in units consistent with unit prices at the point of metering. 

Equivalent quantities of energy or water at some earlier point in the supply chain (e.g., oil or coal 

prices before conversion to electricity) should not be used. 

DOE energy price escalation rates 

Energy prices are assumed to change at rates different from the rate of general price inflation. DOE 

annually projects real (differential) energy price escalation rates for the next three years, by Census 

region, rate type, and fuel type. These real energy price escalation rates and the real DOE discount 

rate are used to calculate the modified present value factors (UPV* factors) for use in FEMP LCC 

analyses. The UPV* factors are updated and published annually as a set of tables in NISTIR 85-

3273, the Annual Supplement to Handbook 135. At present there are no equivalent DOE projections 

of escalation rates for water costs. 

The real price escalation rates for energy costs are incorporated into LCC evaluations in the 

following ways: 

(1) by multiplying the appropriate UPV* factor by the base-year annual energy cost (or savings) 

to calculate a present value; or 

(2) by using the most recent version of the NIST BLCC computer programs, which read the 

DOE-projected differential escalation rates from a file on the diskette and automatically 

compute the present value of energy costs 
 A-72

Items other than energy and water costs in FEMP studies are generally assumed to have a zero 

real escalation rate unless there is documentable evidence to the contrary. This is equivalent to 

saying that the prices of non-energy items are assumed to change at the same rate as general price 

inflation. 

Study period 

The maximum study period for federal energy conservation projects is 25 years from the date of 

occupancy of a building or the date of operation of a system. Any lead time for planning, design, or 

construction may be added to the 25-year maximum study period. 

The study period should be the same for all alternatives under consideration and the lesser of 25 

years, or the estimated use of the building or life of the system. Replacement costs and residual 

values, such as a salvage value, a disposal cost, or a resale value, are used to equalize the study 

period for the various alternatives. 

 

For evaluating energy use and related investments in a leased federal building, the study period 

is the lesser of 25 years or the effective remaining term of the lease, including renewal options 

likely to be exercised. 

Uncertainty assessment 

If uncertainty analysis casts substantial doubt on the results of LCC analysis, federal agencies are 

advised to obtain more reliable input data or eliminate the project. Federal agencies are directed to 

use the DOE discount rate as published, without testing for sensitivity. 

No evaluation required 

The FEMP rule states that 

(1) A project is presumed cost-effective if it saves energy and if the costs of implementing the 

energy conservation measure are insignificant, and 

(2) a project is presumed not cost-effective if the building is 

(a) occupied under a one-year lease without renewal option or with a renewal option that is 

not likely to be exercised; 

(b) occupied under a lease that includes the cost of utilities in the rent, with no pass-through to 

the government of energy savings; or 

(c) scheduled for demolition or retirement within one year. 
Module B

NIST LCC Software: Overview a

• use BLCC5 to evaluate energy and w

conservation projects.

• describe the features of other NIST L

computer programs.

Objectives: Upon completion of this module, y
BLCC 5.0-01

Building Life-Cycle Cost Prog

(windowed version of BLCC

for Energy and Water Conserv

and Renewable Energy Proj
Overview - BLCC

• Economic analysis of capital investments 

future costs

• Focus on energy and water conservation • Current modules 

– agency-funded projects (direct approp– financed projects (ESPC/UC)

• Future modules

– MILCON– private sector

• Downloadable from DOE web site
Data Requirement

• Project Information

– name, location, analyst, comment, disc

convention, constant or current dollarrate, base date, service date, and lengtperiod

• Capital Investment Costs

– investment costs– cost-phasing– escalation rates– replacement costs and timing– residual values
Data Requirements (c

• Operating-Related Costs

– annually recurring OM&R– non-annually recurring OM&R– energy consumption and cost data– water consumption and cost data– escalation rates

• Contract Costs

– annually recurring (annual contract p

service, performance period expense)

– non-annually recurring (implementat

financing procurement cost)
Creating a BLCC5 Inpu

• Input general information for the project• Input data for each alternative.• Use tree as a guideline and checklist.• Go to Help - Creating and Editing Data F

definitions of all input variables .

• Print reports

– LCC computations are made each tim

opened.

• Save project file using user-supplied filen
BLCC5 Tree

Project 

Component
Project Data

Screenspecific help
Add/Copy Featur
Delete Feature
Energy Usage
Energy Costs
Water Costs
Contract Costs

Annually Recurring Non-Annu
Investment Costs
Capital Replacement C
Operating/Maintenance/

Costs

Annually Recurring Non-Annua
BLCC5 Reports

• For all alternatives in project

– input data listing– life-cycle cost analysis (detailed and summary)– yearly cash flow analysis 

• Comparative analysis

– listing of LCCs for all project alternatives, with low– comparative economic measures (alternative versu– side-by-side comparison of present values – net savings– savings-to-investment ratio– adjusted internal rate of return– payback– energy savings– emission reductions
Lowest LCC
NIST DOS-Based LC

Support Software

• BLCC4• ERATES: complex electricity rate schedu• EMISS: air pollution emission factors• DISCOUNT: present value factors and c
NIST LCC Program

• Programs updated every April 1 with new 

escalation and discount rates

• Downloadable from DOE/FEMP Web sit

– www.eren.doe.gov/femp -- Technical A

Analytical Software Tools

Module C

Fuel Switching and 

Phased-In Capital Replacem

Objective: Upon completion of this module, you • evaluate capital replacements affectin

types and energy usage amounts afte
Boiler Replacement Pr

Location: Office building in MarylandExisting: 3 -700 kBtu oil-fired boilers 

60% efficient, 15-year remaininoil price $1.20/gallon ($8.57 MB

Proposal: 3 -700 kBtu gas/oil-fired boilers 

$15,000 each (installed) 80/83% efficient, 30-year expectgas price $1.00/therm ($10.00 M

Maintenance similar for both systemsAnnual heat load = 2,065 MBtuStudy period = 15 yearsFEMP LCC discount rate = 3.3%
Preliminary Analy

Replace All Three Boilers I

Calculate LCC of existing system.LCCexisting = AL/Effexisting x Poil x UPV*

LCCexisting = 2,065/.60 x $8.57 x 10.43

= $307,634

Where:IC = initial costAL = annual loadEff = seasonal efficiencyP = energy price ($/MBtu)UPV* = modified uniform present value (commercial, region 3, oil or gas)FR = residual value factorSPV = single present value factorSP = study period
Preliminary Analysis (

Replace All Three Boilers Im

Calculate LCC of new boilers using both gas and oilLCCnew = IC + AL/Effnew x Pgas/oil x UPV*

- IC x RF x SPVsp

LCCnew(gas)= $45,000 + 2,065/0.80 x $10.00 x 10.49

- $45,000 x 0.5 x 0.614= $301,958

LCCnew(oil)= $45,000 + 2,065/0.83 x $8.57 x 10.43

- $45,000 x 0.5 x 0.614= $253,571
Phased-In Boiler Replac

Replace boiler #1 immediately, #2 at end of #3 at end of year 4.

LCCnew = IC

1 x SPV

0 + IC

2 x SPV

2 + IC

3 x SPV

4

+

+ AL

1/Effnew x Poil x UPV*(15,oil,S,com) 

+ AL

2/Effexisting x Poil x UPV*(2,oil,S,com) 

+ AL

2/Effnew x Poil x [UPV*(15,oil,S,com) - 

+ AL

3/Effexisting x Poil x UPV*(4,oil,S,com) 

+ AL

3/Effnew x Poil x [UPV*(15,oil,S,com) - 

- IC

1 x RF

1 x SPV15- IC

2 x RF

2 x SPV

- IC

3 x RF

3 x SPV15
Boiler Load Profil

The annual load on each boiler (AL

1, AL

2, AL

identify energy use as boilers are pha

987654321

bin

32 889 700 189

7 2000 700 700 

12 1778 700 700 17 1556 700 700 22 1333 700 63327 1111 700 41137 668 666

0

42 444 444

0

47 222 222

0

boiler 1 boiler 2 b

load 

(kBtu)

outdoor 

temp

load distribution (kB
Annual Energy Use 

Individual Boiler

9

1

2

1

Total

87654321

bin

379 102

0 

1,704 345 15 

12 12

6 

38 38

8 

97 87

0 

178 104

0 

496

0

0 

351

0

0 

152

0

0 

boiler 1 boiler 2 boiler 3

annual load (MBtu)
LCC for Existing Boi

LCC existing(i) = AL

1/Effexisting x Poil x UP

LCC existing(1) = 1,704/0.60 x $8.57 x 10.4

LCC existing(2) = 345/0.60 x $8.57 x 10.4LCC existing(3) = 15/0.60 x $8.57 x 10.4
LCC for New Boilers (ind

LCCnew(i) = ICnew x SPVy(i)

+ AL(i)/Effexisting x Poil x UPV*y(i),oil,S,com+ AL(i)/Effnew x Poil x [UPV*15,oil,S,com - UPV*y

- ICnew(i) x RFi x SPVsp

LCCnew(1) = $15,000 x 1.0

+ 1,704/0.60 x $8.57 x 0.0+ 1,704/0.83 x $8.57 x (10.43 – 0.0)+ $15,000 x 0.50 x 0.614 = $193,904

LCCnew(2) = $15,000 x 0.937

+ 345/0.60 x $8.57 x 1.68+ 345/0.83 x $8.57 x (10.43 – 1.68)+ $15,000 x 0.57 x 0.614 = $48,253

LCCnew(3) = $15,000 x 0.878

+ 15/0.60 x $8.57 x 3.23+ 15/0.83 x $8.57 x (10.43 – 3.23)+ $15,000 x 0.63 x 0.614 = $9,147
Lowest LCC and Net S

3. $2,235 $9,147 2. $51,396 $48,253 1. $253,854 $193,904 

Boiler

# Existing LCC New LCC N
Oil Only Versus Gas/Oil 

A single-fuel, oil-fired boiler costs $10,000; are the same. Is it more cost-effective? 

Calculate LCC of new oil-fired bo

LCCnew = IC + AL/Effnew x Poil x UPV*

- IC x RF x SPVsp

LCCnew(oil)= $30,000 + 2,065/0.83 x $8.57 x 1

- $30,000 x 0.5 x 0.614

= $243,176
Lowest Life-Cycle C

New Gas/Oil-Fired Boiler $253New Oil-Fired Boiler $243Existing Oil-Fired Boiler $307

Option LC

What other issues need enter into the decision lowest LCC?
Exercise C1

Determine the LCC, using BLCC5, for the fcases:Location: Office building Annual heat load: 2,065 MBtuStudy period: 15 yearsFEMP discount rate: 3.3%Oil price: $1.20/gallon, 14Gas price: $1.00/therm, 10Maintenance similar for all options.
Exercise C1 (cont.

Case 1: Existing 3 - 700 kBtu oil-f

60% efficient, 15-year rem

Case 2: New 3 - 700 kBtu gas/oil-f

$15,000 each, 80/83% (gas30-year expected life, fired

Case 3: New 3 - 700 kBtu gas/oil-f

$15,000 each, 80/83% (gas30-year expected life, fired
Annual Energy Us

2,065x10 25,

6 

3 / (100,000 x .80)

2,065x10 17,7

6 

2 / (140,000 x .83)

2,065x10 24,5

6 

1 / (140,000 x .60)

Case # En
Alternative 1 – Existing Oil-Fir
Choose the Fuel Ty
Enter the Annual Consu

You can index the use here if needed.
Enter the Fuel Price 

Escalation Informat
Review the Summary LCC 
Alternative 2 – Gas/Oil Boilers B

Created by Copying Alterna
Enter New Energy Use 
Enter Initial Cost, Life

Residual Value
Review the Summary LCC 
Analyze Alternative 3 and Rev
Class Exercise C2

The owner of a commercial building in Maryland is considering the replaceinefficient (60%) distillate fuel oil-fired boilers with newer, more efficient (

heat load on the building is 2,065 MBtu distributed over the three boilers. #

140,000 Btu/gal and presently costs $1.20 per gallon. Because of cash flow, the owner has decided she cannot afford to replace alschedule is to replace one boiler now, another at the end of year two, and a tThe boiler control system presently stages one boiler on until it can no long

another boiler. Using this strategy, the lead boiler meets 1,704 MBtu of the 345 MBtu, and the last boiler only comes on to meet 15 MBtu of the load. She plans to use the first new boiler installed as the lead boiler. Compare the life-cycle cost of this approach against the status quo. Use a 1assume a 30-year life for the new boilers. The base date is specified as June discounting convention.Hint: You will need to determine the oil use of each boiler during the constenergy-indexing feature of BLCC5. You will also need to determine the remboiler for residual value calculation.
Class Exercise C2 (co

Boiler # 

Annual 

Load 

MBtu 

Fuel Used 

Gallons Year 1 Year 2 Year 3 

1 old 1,704 20,286 2 old 345 4,107 4,107 4,107 3 old 15 179 179 179 179 

 Total = 24,571 

1 new 1,704 14,664 14,664 14,664 14,664 2 new 345 2,969 2,969 3 new 15 129 

 Total = 17,762 18,950 18,950 17,812 

 Fraction 1 1 0.940 

Boiler Life Used Life Left 

Residual Value 

Factor 

1 15 15 0.502 13 17 0.573 11 19 0.63
C-28

Solution to Class Exercise C2 

NIST BLCC 5.0-01: Input Data Listing 

Consistent with Federal Life Cycle Cost Methodology and Procedures, 10 CFR, Part 436, Subpart A 

General Information 

File Name: C:\Program Files\BLCC5\projects\Class Exercise C2.xml 

Run Date: Thu Sep 20 10:34:35 EDT 2001 

Analysis Type: Federal Analysis, Agency-Funded Project 

Project Name: Class Exercise C2 

Project Location: Maryland 

Analyst: Gene Meyer 

Comment: Phased Boiler Replacement Versus Base Case of Do Nothing 

Base Date: June 1, 2001 

Service Date: June 1, 2001 

Study Period: 15 years 0 months (June 1, 2001 through May 31, 2016) 

Discount Rate: 3.3% 

Discounting Convention: End-of-Year 

Discount and Escalation Rates are REAL (exclusive of general inflation) 

Alternative: Existing 60% Boilers 

Energy: Distillate Fuel Oil (#1, #2) 

Annual Consumption: 24,571.0 Gal 

Price per Unit: $1.20000 

Demand Charge: $0 

Utility Rebate: $0 

End-Use: Industrial/Commercial boiler 

Rate Schedule: Commercial 

State: Maryland 

Usage Indices 

From Date Duration Usage Index 

June 1, 2001 Remaining 100% 

Escalation Rates 

From Date Duration Escalation 

April 1, 2001 1 year 0 months -9.59% 

April 1, 2002 1 year 0 months -5.10% 

April 1, 2003 1 year 0 months 0.65% 

April 1, 2004 1 year 0 months 0.64% 

April 1, 2005 1 year 0 months -1.27% 

April 1, 2006 1 year 0 months 1.29% 

April 1, 2007 1 year 0 months 0.64% 

April 1, 2008 1 year 0 months 0.84% 

April 1, 2009 1 year 0 months 1.67% 
C-29

April 1, 2010 1 year 0 months 0.62% 

April 1, 2011 1 year 0 months 0.82% 

April 1, 2012 1 year 0 months 1.01% 

April 1, 2013 1 year 0 months 0.60% 

April 1, 2014 1 year 0 months 2.59% 

April 1, 2015 1 year 0 months 1.36% 

April 1, 2016 1 year 0 months 0.77% 

April 1, 2017 1 year 0 months 0.95% 

April 1, 2018 1 year 0 months 1.13% 

April 1, 2019 1 year 0 months 1.12% 

April 1, 2020 1 year 0 months 0.37% 

April 1, 2021 1 year 0 months 0.18% 

April 1, 2022 1 year 0 months 0.37% 

April 1, 2023 1 year 0 months 0.37% 

April 1, 2024 1 year 0 months 0.36% 

April 1, 2025 1 year 0 months 0.36% 

April 1, 2026 1 year 0 months 0.36% 

April 1, 2027 1 year 0 months 0.36% 

April 1, 2028 1 year 0 months 0.36% 

April 1, 2029 1 year 0 months 0.18% 

April 1, 2030 1 year 0 months 0.36% 

April 1, 2031 Remaining 0.32% 

Component: 

Initial Investment 

Initial Cost (base-year $): $0 

Annual Rate of Increase: 0% 

Expected Asset Life: 0 years 0 months 

Residual Value Factor: 0% 

Cost-Phasing 

Cost Adjustment Factor: 0% 

Years/Months (from Date) Date Portion 

0 years 0 months June 1, 2001 100% 

Alternative: Phased Boiler Replacement 

Energy: Distillate Fuel Oil (#1, #2) 

Annual Consumption: 18,950.0 Therm 

Price per Unit: $1.20000 

Demand Charge: $0 

Utility Rebate: $0 

End-Use: Industrial/Commercial boiler 

Rate Schedule: Commercial 

State: Maryland 
C-30

Usage Indices 

From Date Duration Usage Index 

June 1, 2001 2 years 0 months 100% 

June 1, 2003 2 years 0 months 94% 

June 1, 2005 Remaining 93.7% 

Escalation Rates 

From Date Duration Escalation 

April 1, 2001 1 

year 0 months -9.59% 

April 1, 2002 1 

year 0 months -5.10% 

April 1, 2003 1 

year 0 months 0.65% 

April 1, 2004 1 

year 0 months 0.64% 

April 1, 2005 1 

year 0 months -1.27% 

April 1, 2006 1 

year 0 months 1.29% 

April 1, 2007 1 

year 0 months 0.64% 

April 1, 2008 1 

year 0 months 0.84% 

April 1, 2009 1 

year 0 months 1.67% 

April 1, 2010 1 year 0 months 0.62% 

April 1, 2011 1 

year 0 months 0.82% 

April 1, 2012 1 year 0 months 1.01% 

April 1, 2013 1 year 0 months 0.60% 

April 1, 2014 1 

year 0 months 2.59% 

April 1, 2015 1 year 0 months 1.36% 

April 1, 2016 1 

year 0 months 0.77% 

April 1, 2017 1 year 0 months 0.95% 

April 1, 2018 1 

year 0 months 1.13% 

April 1, 2019 1 

year 0 months 1.12% 

April 1, 2020 1 

year 0 months 0.37% 

April 1, 2021 1 year 0 months 0.18% 

April 1, 2022 1 

year 0 months 0.37% 

April 1, 2023 1 

year 0 months 0.37% 

April 1, 2024 1 year 0 months 0.36% 

April 1, 2025 1 

year 0 months 0.36% 

April 1, 2026 1 

year 0 months 0.36% 

April 1, 2027 1 

year 0 months 0.36% 

April 1, 2028 1 

year 0 months 0.36% 

April 1, 2029 1 year 0 months 0.18% 

April 1, 2030 1 year 0 months 0.36% 

April 1, 2031 Remaining 0.32% 

Component: Boiler #1 

Comment: Installed in year 1 

Initial Investment 

Initial Cost (baseyear $): $15,000 

Annual Rate of Increase: 0% 

Expected Asset Life: 30 years 0 months 

Residual Value Factor: 50% 
C-31

Cost-Phasing 

Cost Adjustment Factor: 0% 

Years/Months (from Date) Date Portion 

0 years 0 months June 1, 2001 100% 

Component: Boiler #2 

Comment: Installed at end of year two. 

Initial Investment 

Initial Cost (base-year $): $15,000 

Annual Rate of Increase: 0% 

Expected Asset Life: 32 years 0 months 

Residual Value Factor: 57% 

Cost-Phasing 

Cost Adjustment Factor: 0% 

Years/Months (from Date) Date Portion 

2 years 0 months June 1, 2003 100% 

Component: Boiler #3 

Comment: Installed at end of year 4 

Initial Investment 

Initial Cost (base-year $): $15,000 

Annual Rate of Increase: 0% 

Expected Asset Life: 34 years 0 months 

Residual Value Factor: 63% 

Cost-Phasing 

Cost Adjustment Factor: 0% 

Years/Months (from Date) Date Portion 

4 years 0 months June 1, 2005 100% 
C-32

NIST BLCC 5.0-01: Comparative Analysis 

Consistent with Federal Life Cycle Cost Methodology and Procedures, 10 CFR, Part 436, Subpart A 

Base Case: Existing 60% Boilers 

Alternative: Phased Boiler Replacement 

General Information 

File Name: C:\Program Files\BLCC5\projects\Class Exercise C2.xml 

Run Date: Thu Sep 20 10:44:20 EDT 2001 

Project Name: Class Exercise C2 

Project Location: Maryland 

Analysis Type: Federal Analysis, Agency-Funded Project 

Analyst: Gene Meyer 

Comment Phased Boiler Replacement Versus Base Case of Do Nothing 

Base Date of Study: June 1, 2001 

Service Date: June 1, 2001 

Study Period: 15 years 0 months(June 1, 2001 through May 31, 2016) 

Discount Rate: 3.3% 

Discounting Convention: End-of-Year 

Comparison of Present-Value Costs 

PV Life-Cycle Cost 

Base Case Alternative Savings from Alternative 

Initial Investment Costs: 

 Capital Requirements as of Base Date $0 $42,231 -$42,231 

Future Costs: 

 Energy Consumption Costs $312,870 $228,639 $84,231 

 Energy Demand Charges $0 $0 $0 

 Energy Utility Rebates $0 $0 $0 

 Water Costs $0 $0 $0 

 Recurring and Non-Recurring OM&R Costs $0 $0 $0 

 Capital Replacements $0 $0 $0 

 Residual Value at End of Study Period $0 -$15,670 $15,670 

------------ ------------ ------------ 

 Subtotal (for Future Cost Items) $312,870 $212,969 $99,901 

------------ ------------ ------------ 

Total PV Life-Cycle Cost $312,870 $255,200 $57,670 
C-33

Net Savings from Alternative Compared with Base Case 

PV of Non-Investment Savings $84,231 

- Increased Total Investment $26,561 

------------ 

Net Savings $57,670 

Savings-to-Investment Ratio (SIR) 

SIR = 3.17 

Adjusted Internal Rate of Return 

AIRR = 11.56% 

Payback Period 

Estimated Years to Payback (from beginning of Service Period) 

Simple Payback occurs in year 7 

Discounted Payback occurs in year 8 

Energy Savings Summary 

Energy Savings Summary (in stated units) 

Units are not the same for each energy type; can't report energy savings. 

Energy Savings Summary (in MBtu) 

Energy -----Average Annual Consumption----- Life-Cycle 

Type Base Case Alternative Savings Savings 

Distillate Fuel Oil (#1, #2) 3,729.1 MBtu 1,792.3 MBtu 1,936.8 MBtu 29,047.7 MBtu 

Emissions Reduction Summary 

Energy -----Average Annual Emissions----- Life-Cycle 

Type Base Case Alternative Reduction Reduction 

Distillate Fuel Oil (#1, #2) 

CO2 270,643.67 kg 130,079.04 kg 140,564.63 kg 2,108,180.79 kg 

SO2 1,935.98 kg 930.49 kg 1,005.49 kg 15,080.33 kg 

NOx 243.96 kg 117.26 kg 126.71 kg 1,900.37 kg 

Total: 

CO2 270,643.67 kg 130,079.04 kg 140,564.63 kg 2,108,180.79 kg 

SO2 1,935.98 kg 930.49 kg 1,005.49 kg 15,080.33 kg 

NOx 243.96 kg 117.26 kg 126.71 kg 1,900.37 kg 

Module D

Replacement of Functional S

to Improve Energy Efficie

• cost-effectiveness requirements for

– new systems or mandatory repla

functional systems

– optional replacement of function

• timing of optional system replacem• sensitivity analysis.

Objectives: Upon completion of this modulewill understand
Optional Replaceme

to Increase Energy Effi

• Entire investment cost must be just

just incremental cost.

• Timing of optional replacement is i

of remaining system life.

• Optimal timing is affected by chang

prices, technology, and other factor
PROBLEM STATEMENTThe existing facility, an 8100 sq. ft. government office building in Virginia, provides administrative 

and research areas. Over time, the increased use of devices such as individual work stations and print

requirements at the building. The building is currently cooled by several window air conditioners, whconsume excessive amounts of energy. On very hot days there are complaints about uncomfortably h

building is heated by electric baseboard heating. OptionsMaintain Existing SystemWith the current maintenance schedule, the present heating and cooling system could be kept functioInstall DX Split SystemInstall new “split-system” air-conditioning unit and associated elements required to provide adequate 

will provide a new air distribution system for the building, with central air conditioning throughout. Connect to Central Chilled Water PlantInstall piping network to connect the office building to the central chilled water plant on the site. distribution system for the building, with air conditioning throughout. This option, if cost-effectiv

System because it would allow centralized maintenance. A general overhaul of the Central Planconnection to the office building were done then, the initial investment cost would be reduced by aboElectric baseboard heating will continue to be used for the facility. The removed air conditionin

salvage value. Either upgrade will require a planning and installation period of one year. The equpersonnel in the office building but should not shut the office down

Exercise D1

Economic Evaluation of Air Conditioning Sys
Exercise D1 (cont.

ANALYSISPerform an LCC analysis to determine which of the available options results in th

sensitivity analysis for those of the uncertain variables that have the greatest iminvestment cost and electricity prices. 

Scenarios1. Analyze the outcomes, assuming that 

a) you will keep the existing system if its LCC is lower than the LCCs of thb) you have already decided to replace the existing system with one of the p

2. Perform sensitivity analysis by varying initial investment costs and electricity p

a) Determine critical inputs by changing all input values by 10% and cal

LCC.

b) Calculate NS for all alternatives by changing energy prices and investm

±50%.
• AC system in NAVFAC office build

Virginia

• Discount rate: 3.3%• Mid-year discounting• Constant-dollar analysis• Agency-funded project

General Project Inform
Key dates

• Base Date: June 20• Study period: 21 year• Implementation Period: 1 year• Service Date: June 20
Base Case: Keep Existing 

Initial cost: $0Energy consumption: 290,000 kWh/yrEnergy price: $0.08711/kWh, iAnn.-recurr. OM&R costs: $1,050, increasinNon-ann.rec. OM&R costs: $5,000 in 3-year 

year 18

Expected system life: 20 years
Alternative I: DX Split Sy

Initial cost: $210,000Energy consumption: 120,330 kWh/yEnergy price: $0.08711/kWh, Ann.-recurr. OM&R costs: $530Non-ann.rec. OM&R costs: $6,300 in yrs. 5Capital replacement cost: $31,130 in year 

Useful Life: 15 Residual Value 

Expected system life: 20 years
Alternative II: Central 

Connection

Initial cost: $265,000Energy consumption: 112,000 kWh/yrEnergy price: $0.08711/kWh, Ann.-recurr. OM&R costs: $126Non-ann.rec. OM&R costs: $950 in yrs 3, 9, Expected system life: 20 years
DX Split System - Cash 

Diagram

01 02 03 04 05 06 07 08 09 10 11 12 ... 

BD SD

Energy, OM&R

Inv. Rep. Rep. R

Repla
Key Dates
Energy Costs
Investment Costs
OM&R Costs
Lowest LCExisting S
Ex. S. DX SS

Total investment > 

Existing System and D
Existing System and CP 

Total investme

Ex. S. CPC
LCCs - Optional Replace

For optional replacement of a function

entire investment cost must be supported 

Base Case Costs Savings 

Ex. System DX SS 

Investment 0 - $210,00Replacement costs - - 18,517 Residual Value - 10,549 

Total Inv. Costs -$217,969 

PV energy costs $333,102 194,887 PV OM&R costs 39,257 18,369 

Total Operat’l Costs $213,257 Net Savings - -$ 4,712 
DX Split System and Central P

DX SS CPC
LCCs - Mandatory Repla

For new system or mandatory replacement of a

incremental investment cost must be supp

Costs 

DX SS CPC 

Investment $210,000 $265,000 Replacement costs 18,517 - Residual Value -10,549 - 

Total Inv. Costs $217,968 $265,000 

PV energy costs 138,214 134,141 PV OM&R costs 20,888 4,393 

Total Operat’l Costs $159,102 $138,534 Net Savings - 
LCCs of AC Systems (

Analysis results:

• If replacement is optional, Existing System has lo• If replacement is mandatory, DX Split System ha• Central Plant Connection is not cost-effective in e

Other considerations:

• Outcome may be changed by

– Change in energy prices, investment or OM&– Change in heating and cooling requirements, 

factors.

Evaluate other option:

• Postpone Central Plant Connection.
Sensitivity Analysi

Repeat economic evaluation w

more input values changed.

• Determine

– which input values are uncer– which input values are critic

• Evaluate 

– effect of changes on LCC, NS

other measure of economic e
Sensitivity Analysis (c

Identify critical inputs for DX Split 

Chan

Uncertain Input 10% Increase in $ Energy price/kWh $0.0958 $13,7Investment cost 231,000 21,0AR OM&R cost 583 7NAR OM&R cost 6,930 1,3

*Input values with highest impact on LCC.
Sensitivity Analysis (c

Sensitivity of Net Savings to Investment Costs

-300,000-200,000-100,000

0

100,000200,000300,000

-50 -25 -10 0 +10 +25 +50

Percent Change

Net Savings ($) 
Sensitivity Analysis (c

Sensitivity of Net Savings to Electricity Price

-150,000-100,000

-50,000

0

50,000

100,000150,000

-50 -25 -10 0 +10 +25 +50

Percent Change

PV Net Savings ($)
Postponed Central P

Connection

Postpone CP Connection by three year- Use cost phasing of initial investment - Use residual value factor of 15%. - Use indexing to postpone energy and - Include energy costs and OM&R cos

existing system for the three-year de

Perform Sensitivity Analysis- Increase electricity costs for DX Spli

35%.
PP CP Conn. - Cash F

Diagram

01 02 03 04 05 06 07 08 09 ... 14 15 16 

BD

Energy, OM&R

Inv. Rep. 

SD1

existing system

PP CP Conn.

Rep. SD

2
Cost Phasing of Initial Inv
Indexing of Energy U
Indexing of OM&R C
Lowest LCC Repor

**

Lowest LCCPostp. Centr. 
DX SS and Postponed C

DX Sp. Sys. PP CPC

Positive 
Hi-E SS and Imm. CP 

ImmediateCP Conn.

Hi-E. DX SS

Lower Li
Summary of LCC Re

DX SS CP PP

Investment cost $210,000 $265,000 $2Replacement costs $ 18,517 $ 0 $ Residual value -$ 10,549 $ 0 - $ 1Energy costs $138,214 $128,646 $17OM&R costs $ 20,888 $ 4,393 $ Total PV LCC $377,070 $398,039 $36
Comparison of LCC C

$372.4 $377.1K $363.5K $398.0K

Ex.S SS CP PP CP 
Summary of Analysis R

• Cost-effectiveness selection depends on ci

and timing. 

• Other considerations:

– Postponed CP Connection has higher 

energy consumption and emissions thainstallation of DX Split System. 

– LCC for postponed CP Connection do

productivity losses for period of delay

• Conclusion:

– Lowest LCC is one among many crite

decision making.
Class Exercise D2

Economic Evaluation of Air Conditioning Syst

Refer to the problem statement in Module D. Add Alternative 3 to BLCC5 project fi

Alternative 3: Postponed Central Plant ConnectionAssume that to avoid the expected decline in staff productivity during the summer m

upgrade to the DX Split System or the Central Plant Connection regardless of wh

effective or not. Determine whether the Central Plant Connection would be cost-effec

coincide with the planned general overhaul of the Central Plant.•Use the same inputs as above for Central Plant Connection, except for investment c

%.•Postpone Service Date by three years.•Use cost-phasing feature in BLCC5 to enter initial investment cost with a 0 % rate o

•Enter residual value factor for a period of three years (3/20 years = 15 %).•Use indexing feature to postpone occurrence of energy and OM&R costs.•Include in analysis energy costs and OM&R costs of the existing system for the thre

Perform Sensitivity AnalysisAlternative 4: - DX Split System with High Energy Consumption

Consider there is uncertainty about the energy consumption of the DX Split System 

be higher by 35 %. Determine how this scenario would change the selection of the m
D-38

Solution to Class Exercise D2 

NIST BLCC 5.0-01: Input Data Listing 

Consistent with Federal Life Cycle Cost Methodology and Procedures, 10 CFR, Part 436, Subpart A 

General Information 

File Name: C:\Program Files\BLCC5\projects\Class Exercise D2.xml 

Run Date: Thu Sep 20 11:07:37 EDT 2001 

Analysis Type: Federal Analysis, Agency-Funded Project 

Project Name: Class Exercise D2 

Project Location: Virginia 

Analyst: SKF 

Comment: Provide economical and effective air conditioning for the family housing office at the Dahlgren, 

VA Naval Station. 

Base Date: June 1, 2001 

Service Date: June 1, 2002 

Study Period: 21 years 0 months (June 1, 2001 through May 31, 2022) 

Discount Rate: 3.3% 

Discounting 

Convention: Mid-Year 

Discount and Escalation Rates are REAL (exclusive of general inflation) 

Alternative: Existing System 

Comment: Functional for 20 years with current maintenance and repair schedule 

Energy: Electricity 

Annual Consumption: 290,000.0 kWh 

Price per Unit: $0.08711 

Demand Charge: $0 

Utility Rebate: $0 

Location: Virginia 

Rate Schedule: Industrial 

State: Virginia 

Usage Indices 

From Date Duration Usage Index 

June 1, 2002 Remaining 100% 

Escalation Rates 

From Date Duration Escalation 

April 1, 2001 1 year 0 months -1.99% 

April 1, 2002 1 year 0 months -1.22% 

April 1, 2003 1 year 0 months -0.25% 

April 1, 2004 1 year 0 months -1.32% 

April 1, 2005 1 year 0 months -1.09% 

April 1, 2006 1 year 0 months -1.52% 

April 1, 2007 1 year 0 months -1.2% 
D-39

April 1, 2008 1 

year 0 months -0.87% 

April 1, 2009 1 

year 0 months -0.35% 

April 1, 2010 1 

year 0 months -0.79% 

April 1, 2011 1 

year 0 months -0.8% 

April 1, 2012 1 

year 0 months -0.27% 

April 1, 2013 1 

year 0 months 0.36% 

April 1, 2014 1 

year 0 months 0.36% 

April 1, 2015 1 

year 0 months 0.62% 

April 1, 2016 1 

year 0 months 0.79% 

April 1, 2017 1 

year 0 months 0.79% 

April 1, 2018 1 

year 0 months 0.43% 

April 1, 2019 1 

year 0 months 0.61% 

April 1, 2020 1 

year 0 months 0.26% 

April 1, 2021 1 

year 0 months 0.26% 

April 1, 2022 1 year 0 months 0.26% 

April 1, 2023 1 year 0 months 0.17% 

April 1, 2024 1 

year 0 months 0.26% 

April 1, 2025 1 

year 0 months 0.25% 

April 1, 2026 1 year 0 months 0.17% 

April 1, 2027 1 

year 0 months 0.25% 

April 1, 2028 1 

year 0 months 0.25% 

April 1, 2029 1 year 0 months 0.25% 

April 1, 2030 1 

year 0 months 0.17% 

April 1, 2031 Remaining 0.22% 

Component: Window AC Units 

Initial Investment 

Initial Cost (baseyear $): $0 

Annual Rate of Increase: 0% 

Expected Asset Life: 20 years 0 months 

Residual Value Factor: 0% 

Cost-Phasing 

Cost Adjustment Factor: 0% 

Years/Months (from Date) Date Portion 

0 years 0 months June 1, 2001 100% 

Recurring OM&R: Routine OM&R 

Amount: $1,050 

Annual Rate of Increase: 2.0% 

Usage Indices 

From Date Duration Factor 

June 1, 2002 Remainin

g 100% 

Non-Recurring OM&R: Major Repair1 

Years/Months: 3 years 0 months 

Amount: $5,000 
D-40

Annual Rate of Increase: 0% 

Non-Recurring OM&R: Major Repair2 

Years/Months: 6 years 0 months 

Amount: $5,000 

Annual Rate of Increase: 0% 

Non-Recurring OM&R: Major Repair3 

Years/Months: 9 years 0 months 

Amount: $5,000 

Annual Rate of Increase: 0% 

Non-Recurring OM&R: Major Repair4 

Years/Months: 12 years 0 months 

Amount: $5,000 

Annual Rate of Increase: 0% 

Non-Recurring OM&R: Major Repair5 

Years/Months: 15 years 0 months 

Amount: $5,000 

Annual Rate of Increase: 0% 

Non-Recurring OM&R: Major Repair6 

Years/Months: 18 years 0 months 

Amount: $5,000 

Annual Rate of Increase: 0% 

Alternative: DX Split System 

Comment: Install split-system central AC unit, with new air distribution system 

Energy: Electricity 

Annual Consumption: 120,330.0 kWh 

Price per Unit: $0.08711 

Demand Charge: $0 

Utility Rebate: $0 

Location: Virginia 

Rate Schedule: Industrial 

State: Virginia 

Usage Indices 

From Date Duration Usage Index 

June 1, 2002 Remaining 100% 

Escalation Rates 

From Date Duration Escalation 

April 1, 2001 1 year 0 months -1.99% 

April 1, 2002 1 year 0 months -1.22% 

April 1, 2003 1 year 0 months -0.25% 

April 1, 2004 1 year 0 months -1.32% 
D-41

April 1, 2005 1 year 0 months -1.09% 

April 1, 2006 1 year 0 months -1.52% 

April 1, 2007 1 year 0 months -1.2% 

April 1, 2008 1 year 0 months -0.87% 

April 1, 2009 1 year 0 months -0.35% 

April 1, 2010 1 year 0 months -0.79% 

April 1, 2011 1 year 0 months -0.8% 

April 1, 2012 1 year 0 months -0.27% 

April 1, 2013 1 year 0 months 0.36% 

April 1, 2014 1 year 0 months 0.36% 

April 1, 2015 1 year 0 months 0.62% 

April 1, 2016 1 year 0 months 0.79% 

April 1, 2017 1 year 0 months 0.79% 

April 1, 2018 1 year 0 months 0.43% 

April 1, 2019 1 year 0 months 0.61% 

April 1, 2020 1 year 0 months 0.26% 

April 1, 2021 1 year 0 months 0.26% 

April 1, 2022 1 year 0 months 0.26% 

April 1, 2023 1 year 0 months 0.17% 

April 1, 2024 1 year 0 months 0.26% 

April 1, 2025 1 year 0 months 0.25% 

April 1, 2026 1 year 0 months 0.17% 

April 1, 2027 1 year 0 months 0.25% 

April 1, 2028 1 year 0 months 0.25% 

April 1, 2029 1 year 0 months 0.25% 

April 1, 2030 1 year 0 months 0.17% 

April 1, 2031 Remaining 0.22% 

Component: AC System and Air Distribution 

Initial Investment 

Initial Cost (base-year $): $210,000 

Annual Rate of Increase: 0% 

Expected Asset Life: 20 years 0 months 

Residual Value Factor: 0% 

Cost-Phasing 

Cost Adjustment Factor: 0% 

Years/Months (from Date) Date Portion 

0 years 0 months June 1, 2001 100% 

Replacement: Compressor/Condens 

Years/Months: 15 years 0 months 

Amount: $31,130 

Annual Rate Of Increase: 0% 

Expected Asset Life: 15 years 0 months 

Residual Value Factor: 67% 
D-42

Recurring OM&R: Routine OM&R 

Amount: $530 

Annual Rate of Increase: 0% 

Usage Indices 

From Date Duration Factor 

June 1, 2002 Remaining 100% 

Non-Recurring OM&R: Scheduled Repair1 

Years/Months: 5 years 0 months 

Amount: $6,300 

Annual Rate of Increase: 0% 

Non-Recurring OM&R: Scheduled Repair2 

Years/Months: 10 years 0 months 

Amount: $6,300 

Annual Rate of Increase: 0% 

Non-Recurring OM&R: Scheduled Repair3 

Years/Months: 15 years 0 months 

Amount: $6,300 

Annual Rate of Increase: 0% 

Alternative: Central Plant Connection 

Comment: Install piping network to connect officebuilding to central chilled water plant 

Energy: Electricity 

Annual Consumption: 112,000.0 kWh 

Price per Unit: $0.08711 

Demand Charge: $0 

Utility Rebate: $0 

Location: Virginia 

Rate Schedule: Industrial 

State: Virginia 

Usage Indices 

From Date Duration Usage Index 

June 1, 2002 Remaining 100% 

Escalation Rates 

From Date Duration Escalation 

April 1, 2001 1 year 0 months -1.99% 

April 1, 2002 1 year 0 months -1.22% 

April 1, 2003 1 year 0 months -0.25% 

April 1, 2004 1 year 0 months -1.32% 

April 1, 2005 1 year 0 months -1.09% 

April 1, 2006 1 year 0 months -1.52% 

April 1, 2007 1 year 0 months -1.2% 

April 1, 2008 1 year 0 months -0.87% 
D-43

April 1, 2009 1 year 0 months -0.35% 

April 1, 2010 1 year 0 months -0.79% 

April 1, 2011 1 year 0 months -0.8% 

April 1, 2012 1 year 0 months -0.27% 

April 1, 2013 1 year 0 months 0.36% 

April 1, 2014 1 year 0 months 0.36% 

April 1, 2015 1 year 0 months 0.62% 

April 1, 2016 1 year 0 months 0.79% 

April 1, 2017 1 year 0 months 0.79% 

April 1, 2018 1 year 0 months 0.43% 

April 1, 2019 1 year 0 months 0.61% 

April 1, 2020 1 year 0 months 0.26% 

April 1, 2021 1 year 0 months 0.26% 

April 1, 2022 1 year 0 months 0.26% 

April 1, 2023 1 year 0 months 0.17% 

April 1, 2024 1 year 0 months 0.26% 

April 1, 2025 1 year 0 months 0.25% 

April 1, 2026 1 year 0 months 0.17% 

April 1, 2027 1 year 0 months 0.25% 

April 1, 2028 1 year 0 months 0.25% 

April 1, 2029 1 year 0 months 0.25% 

April 1, 2030 1 year 0 months 0.17% 

April 1, 2031 Remaining 0.22% 

Component: Piping Network and Air Distribution 

Initial Investment 

Initial Cost (base-year $): $265,000 

Annual Rate of Increase: 0% 

Expected Asset Life: 20 years 0 months 

Residual Value Factor: 0% 

Cost-Phasing 

Cost Adjustment Factor: 0% 

Years/Months (from Date) Date Portion 

0 years 0 months June 1, 2001 100% 

Recurring OM&R: Routine OM&R 

Amount: $126 

Annual Rate of Increase: 0% 

Usage Indices 

From Date Duration Factor 

June 1, 2002 Remaining 100% 

Non-Recurring OM&R: Scheduled Repair1 

Years/Months: 3 years 0 months 

Amount: $950 

Annual Rate of Increase: 0% 
D-44

Non-Recurring OM&R: Scheduled Repair2 

Years/Months: 9 years 0 months 

Amount: $950 

Annual Rate of Increase: 0% 

Non-Recurring OM&R: Scheduled Repair3 

Years/Months: 15 years 0 months 

Amount: $950 

Annual Rate of Increase: 0% 

Non-Recurring OM&R: Scheduled Repair1 

Years/Months: 18 years 0 months 

Amount: $950 

Annual Rate of Increase: 0% 

Alternative: Postponed Central Plant 

Connection 

Comment: Postpone installation of piping network to 2004 to coincide with general over- haul of Central Plant. The AC 

system would become operational in 2005. 

Energy: Electricity - after connection 

Annual Consumption: 112,000.0 kWh 

Price per Unit: $0.08711 

Demand Charge: $0 

Utility Rebate: $0 

Location: Virginia 

Rate Schedule: Industrial 

State: Virginia 

Usage Indices 

From Date Duration Usage Index 

June 1, 2002 3 years 0 months 0% 

June 1, 2005 Remaining 100% 

Escalation Rates 

From Date Duration Escalation 

April 1, 2001 1 year 0 months -1.99% 

April 1, 2002 1 year 0 months -1.22% 

April 1, 2003 1 year 0 months -0.25% 

April 1, 2004 1 year 0 months -1.32% 

April 1, 2005 1 year 0 months -1.09% 

April 1, 2006 1 year 0 months -1.52% 

April 1, 2007 1 year 0 months -1.2% 

April 1, 2008 1 year 0 months -0.87% 

April 1, 2009 1 year 0 months -0.35% 

April 1, 2010 1 year 0 months -0.79% 

April 1, 2011 1 year 0 months -0.8% 
D-45

April 1, 2012 1 

year 0 months -0.27% 

April 1, 2013 1 

year 0 months 0.36% 

April 1, 2014 1 

year 0 months 0.36% 

April 1, 2015 1 

year 0 months 0.62% 

April 1, 2016 1 

year 0 months 0.79% 

April 1, 2017 1 year 0 months 0.79% 

April 1, 2018 1 

year 0 months 0.43% 

April 1, 2019 1 

year 0 months 0.61% 

April 1, 2020 1 

year 0 months 0.26% 

April 1, 2021 1 

year 0 months 0.26% 

April 1, 2022 1 

year 0 months 0.26% 

April 1, 2023 1 

year 0 months 0.17% 

April 1, 2024 1 

year 0 months 0.26% 

April 1, 2025 1 

year 0 months 0.25% 

April 1, 2026 1 year 0 months 0.17% 

April 1, 2027 1 

year 0 months 0.25% 

April 1, 2028 1 

year 0 months 0.25% 

April 1, 2029 1 

year 0 months 0.25% 

April 1, 2030 1 year 0 months 0.17% 

April 1, 2031 Remaining 0.22% 

Energy: Electricity - before connection 

Annual Consumption: 290,000.0 kWh 

Price per Unit: $0.08711 

Demand Charge: $0 

Utility Rebate: $0 

Location: Virginia 

Rate Schedule: Industrial 

State: Virginia 

Usage Indices 

From Date Duration Usage Index 

June 1, 2002 3 

years 0 months 100% 

June 1, 2005 Remaining 0% 

Escalation Rates 

From Date Duration Escalation 

April 1, 2001 1 

year 0 months -1.99% 

April 1, 2002 1 year 0 months -1.22% 

April 1, 2003 1 

year 0 months -0.25% 

April 1, 2004 1 

year 0 months -1.32% 

April 1, 2005 1 

year 0 months -1.09% 

April 1, 2006 1 

year 0 months -1.52% 

April 1, 2007 1 

year 0 months -1.2% 

April 1, 2008 1 

year 0 months -0.87% 

April 1, 2009 1 

year 0 months -0.35% 

April 1, 2010 1 

year 0 months -0.79% 

April 1, 2011 1 

year 0 months -0.8% 

April 1, 2012 1 

year 0 months -0.27% 
D-46

April 1, 2013 1 year 0 months 0.36% 

April 1, 2014 1 year 0 months 0.36% 

April 1, 2015 1 year 0 months 0.62% 

April 1, 2016 1 year 0 months 0.79% 

April 1, 2017 1 year 0 months 0.79% 

April 1, 2018 1 year 0 months 0.43% 

April 1, 2019 1 year 0 months 0.61% 

April 1, 2020 1 year 0 months 0.26% 

April 1, 2021 1 year 0 months 0.26% 

April 1, 2022 1 year 0 months 0.26% 

April 1, 2023 1 year 0 months 0.17% 

April 1, 2024 1 year 0 months 0.26% 

April 1, 2025 1 year 0 months 0.25% 

April 1, 2026 1 year 0 months 0.17% 

April 1, 2027 1 year 0 months 0.25% 

April 1, 2028 1 year 0 months 0.25% 

April 1, 2029 1 year 0 months 0.25% 

April 1, 2030 1 year 0 months 0.17% 

April 1, 2031 Remaining 0.22% 

Component: Piping Network and Air Distribution 

Initial Investment 

Initial Cost (base-year $): $225,250 

Annual Rate of Increase: 0% 

Expected Asset Life: 20 years 0 months 

Residual Value Factor: 15% 

Cost-Phasing 

Cost Adjustment Factor: 0% 

Years/Months (from Date) Date Portion 

3 years 0 months June 1, 2004 100% 

Recurring OM&R: Routine OM&R - after connection 

Amount: $126 

Annual Rate of Increase: 0% 

Usage Indices 

From Date Duration Factor 

June 1, 2002 3 years 0 months 0% 

June 1, 2005 Remaining 100% 

Recurring OM&R: Routine OM&R - before connection 

Amount: $1,050 

Annual Rate of Increase: 2.0% 

Usage Indices 

From Date Duration Factor 

June 1, 2002 3 years 0 months 100% 
D-47

June 1, 2005 Remaining 0% 

Non-Recurring OM&R: Scheduled Repair1 

Years/Months: 6 years 0 months 

Amount: $950 

Annual Rate of Increase: 0% 

Non-Recurring OM&R: Scheduled Repair2 

Years/Months: 12 years 0 months 

Amount: $950 

Annual Rate of Increase: 0% 

Non-Recurring OM&R: Scheduled Repair3 

Years/Months: 18 years 0 months 

Amount: $950 

Annual Rate of Increase: 0% 

Alternative: DX Split System w/higher E-cost 

Comment: Install split-system central AC unit. Sensitivity Analysis with 35% increase in energy costs 

Energy: Electricity 

Annual Consumption: 162,446.0 kWh 

Price per Unit: $0.08711 

Demand Charge: $0 

Utility Rebate: $0 

Location: Virginia 

Rate Schedule: Industrial 

State: Virginia 

Usage Indices 

From Date Duration Usage Index 

June 1, 2002 Remaining 100% 

Escalation Rates 

From Date Duration Escalation 

April 1, 2001 1 year 0 months -1.99% 

April 1, 2002 1 year 0 months -1.22% 

April 1, 2003 1 year 0 months -0.25% 

April 1, 2004 1 year 0 months -1.32% 

April 1, 2005 1 year 0 months -1.09% 

April 1, 2006 1 year 0 months -1.52% 

April 1, 2007 1 year 0 months -1.2% 

April 1, 2008 1 year 0 months -0.87% 

April 1, 2009 1 year 0 months -0.35% 

April 1, 2010 1 year 0 months -0.79% 

April 1, 2011 1 year 0 months -0.8% 

April 1, 2012 1 year 0 months -0.27% 

April 1, 2013 1 year 0 months 0.36% 

April 1, 2014 1 year 0 months 0.36% 
D-48

April 1, 2015 1 year 0 months 0.62% 

April 1, 2016 1 year 0 months 0.79% 

April 1, 2017 1 year 0 months 0.79% 

April 1, 2018 1 year 0 months 0.43% 

April 1, 2019 1 year 0 months 0.61% 

April 1, 2020 1 year 0 months 0.26% 

April 1, 2021 1 year 0 months 0.26% 

April 1, 2022 1 year 0 months 0.26% 

April 1, 2023 1 year 0 months 0.17% 

April 1, 2024 1 year 0 months 0.26% 

April 1, 2025 1 year 0 months 0.25% 

April 1, 2026 1 year 0 months 0.17% 

April 1, 2027 1 year 0 months 0.25% 

April 1, 2028 1 year 0 months 0.25% 

April 1, 2029 1 year 0 months 0.25% 

April 1, 2030 1 year 0 months 0.17% 

April 1, 2031 Remaining 0.22% 

Component: Copy of: AC System and Air Distribution 

Initial Investment 

Initial Cost (base-year $): $210,000 

Annual Rate of Increase: 0% 

Expected Asset Life: 20 years 0 months 

Residual Value Factor: 0% 

Cost-Phasing 

Cost Adjustment Factor: 0% 

Years/Months (from Date) Date Portion 

0 years 0 months June 1, 2001 100% 

Replacement: Compressor/Condens 

Years/Months: 15 years 0 months 

Amount: $31,130 

Annual Rate Of Increase: 0% 

Expected Asset Life: 15 years 0 months 

Residual Value Factor: 67% 

Recurring OM&R: Routine OM&R 

Amount: $530

Annual Rate of Increase: 0% 

Usage Indices 

From Date Duration Factor 

June 1, 2002 Remaining 100% 
D-49

Non-Recurring OM&R: Scheduled Repair1 

Years/Months: 5 years 0 months 

Amount: $6,300 

Annual Rate of Increase: 0% 

Non-Recurring OM&R: Scheduled Repair2 

Years/Months: 10 years 0 months 

Amount: $6,300 

Annual Rate of Increase: 0% 

Non-Recurring OM&R: Scheduled Repair3 

Years/Months: 15 years 0 months 

Amount: $6,300 

Annual Rate of Increase: 0% 
D-50

NIST BLCC 5.0-01: Lowest LCC 

Consistent with Federal Life Cycle Cost Methodology and Procedures, 10 CFR, Part 436, Subpart A 

General Information 

File Name: C:\Program Files\BLCC5\projects\Class Exercise D2.xml 

Run Date: Thu Sep 20 11:18:23 EDT 2001 

Analysis Type: Federal Analysis, Agency-Funded Project 

Project Name: Class Exercise D2 

Project Location: Virginia 

Analyst: SKF 

Comment: Provide economical and effective air conditioning for the family housing office at the Dahlgren, VA 

Naval Station. 

Base Date: June 1, 2001 

Service Date: June 1, 2002 

Study Period: 21 years 0 months (June 1, 2001 through May 31, 2022) 

Discount Rate: 3.3% 

Discounting 

Convention: Mid-Year 

Lowest LCC 

Comparative Present-Value Costs of Alternatives 

(Shown in Ascending Order of Initial Cost, * = Lowest LCC) 

Alternative Initial Cost (PV) Life Cycle Cost (PV) 

Existing System $0 $372,359 

Postponed Central Plant Connection $204,340 $363,854 * 

DX Split System $210,000 $377,070 

DX Split System w/higher E-cost $210,000 $425,446 

Central Plant Connection $265,000 $398,039 
D-51

NIST BLCC 5.0-01: Summary LCC 

Consistent with Federal Life Cycle Cost Methodology and Procedures, 10 CFR, Part 436, Subpart A 

General Information 

File Name: C:\Program Files\BLCC5\projects\Class Exercise D2.xml 

Run Date: Thu Sep 20 11:20:22 EDT 2001 

Analysis Type: Federal Analysis, Agency-Funded Project 

Project Name: Class Exercise D2 

Project Location: Virginia 

Analyst: SKF 

Comment: Provide economical and effective air conditioning for the family housing office at the Dahlgren, 

VA Naval Station. 

Base Date: June 1, 2001 

Service Date: June 1, 2002 

Study Period: 21 years 0 months (June 1, 2001 through May 31, 2022) 

Discount Rate: 3.3% 

Discounting 

Convention: Mid-Year 

Discount and Escalation Rates are REAL (exclusive of general inflation) 

Alternative: Existing System 

LCC Summary 

Present Value Annual Value 

Initial Cost $0 $0 

Energy Consumption Costs $333,102 $22,241 

Energy Demand Costs $0 $0 

Energy Utility Rebates $0 $0 

Water Usage Costs $0 $0 

Water Disposal Costs $0 $0 

Annually Recurring OM&R Costs $18,318 $1,223 

Non-Annually Recurring OM&R Costs $20,939 $1,398 

Replacement Costs $0 $0 

Less Remaining Value $0 $0

------------ ------------

Total Life-Cycle Cost $372,359 $24,862 

Alternative: DX Split System 

LCC Summary 

Present Value Annual Value 

Initial Cost $210,000 $14,021 

Energy Consumption Costs $138,214 $9,228 

Energy Demand Costs $0 $0

Energy Utility Rebates $0 $0 

Water Usage Costs $0 $0 

Water Disposal Costs $0 $0 
D-52

Annually Recurring OM&R Costs $7,547 $504 

Non-Annually Recurring OM&R Costs $13,340 $891 

Replacement Costs $18,517 $1,236 

Less Remaining Value -$10,549 -$704 

------------ ------------

Total Life-Cycle Cost $377,070 $25,176 

Alternative: Central Plant Connection 

LCC Summary 

Present Value Annual Value 

Initial Cost $265,000 $17,694 

Energy Consumption Costs $128,646 $8,590 

Energy Demand Costs $0 $0 

Energy Utility Rebates $0 $0 

Water Usage Costs $0 $0 

Water Disposal Costs $0 $0 

Annually Recurring OM&R Costs $1,794 $120 

Non-Annually Recurring OM&R Costs $2,599 $174 

Replacement Costs $0 $0 

Less Remaining Value $0 $0 

------------ ------------

Total Life-Cycle Cost $398,039 $26,577 

Alternative: Postponed Central Plant 

Connection 

LCC Summary 

Present Value Annual Value 

Initial Cost $204,340 $13,644 

Energy Consumption Costs $170,211 $11,365

Energy Demand Costs $0 $0 

Energy Utility Rebates $0 $0 

Water Usage Costs $0 $0 

Water Disposal Costs $0 $0 

Annually Recurring OM&R Costs $4,498 $300 

Non-Annually Recurring OM&R Costs $1,892 $126 

Replacement Costs $0 $0 

Less Remaining Value -$17,088 -$1,141 

------------ ------------

Total Life-Cycle Cost $363,854 $24,294 
D-53

Alternative: DX Split System w/higher E-cost 

LCC Summary 

Present Value Annual Value 

Initial Cost $210,000 $14,021 

Energy Consumption Costs $186,590 $12,458 

Energy Demand Costs $0 $0 

Energy Utility Rebates $0 $0 

Water Usage Costs $0 $0 

Water Disposal Costs $0 $0 

Annually Recurring OM&R Costs $7,547 $504 

Non-Annually Recurring OM&R Costs $13,340 $891 

Replacement Costs $18,517 $1,236 

Less Remaining Value -$10,549 -$704 

------------ ------------

Total Life-Cycle Cost $425,446 $28,406 
D-54

NIST BLCC 5.0-01: Comparative Analysis

Consistent with Federal Life Cycle Cost Methodology and Procedures, 10 CFR, Part 436, Subpart A 

Base Case: Existing System 

Alternative: DX Split System 

General Information 

File Name: C:\Program Files\BLCC5\projects\Class Exercise D2.xml 

Run Date: Thu Sep 20 11:21:33 EDT 2001 

Project Name: Class Exercise D2 

Project Location: Virginia 

Analysis Type: Federal Analysis, Agency-Funded Project 

Analyst: SKF 

Comment Provide economical and effective air conditioning for the family housing office at the Dahlgren, 

VA Naval Station. 

Base Date of Study: June 1, 2001 

Service Date: June 1, 2002 

Study Period: 21 years 0 months(June 1, 2001 through May 31, 2022) 

Discount Rate: 3.3% 

Discounting 

Convention: Mid-Year 

Comparison of Present-Value Costs 

PV Life-Cycle Cost 

Base Case Alternative Savings from Alternative 

Initial Investment Costs: 

 Capital Requirements as of Base Date $0 $210,000 -$210,000 

Future Costs: 

 Energy Consumption Costs $333,102 $138,214 $194,887 

 Energy Demand Charges $0 $0 $0 

 Energy Utility Rebates $0 $0 $0 

 Water Costs $0 $0 $0 

 Recurring and Non-Recurring OM&R Costs $39,257 $20,888 $18,369 

 Capital Replacements $0 $18,517 -$18,517 

 Residual Value at End of Study Period $0 -$10,549 $10,549 

------------ ------------ ------------ 

 Subtotal (for Future Cost Items) $372,359 $167,070 $205,288 
D-55

------------ ------------ ------------ 

Total PV Life-Cycle Cost $372,359 $377,070 -$4,712 

Net Savings from Alternative Compared with Base Case 

PV of Non-Investment Savings $213,257 

- Increased Total Investment $217,969 

------------ 

Net Savings -$4,712 

Savings-to-Investment Ratio (SIR) 

SIR = 0.98 

SIR is lower than 1.0; project alternative is not cost effective. 

Adjusted Internal Rate of Return 

AIRR = 3.19% 

AIRR is lower than your discount rate; project alternative is not cost effective. 

Payback Period 

Estimated Years to Payback (from beginning of Service Period) 

Simple Payback occurs in year 15 

Simple Payback is negated in year 16 

Simple Payback occurs in year 17 

Energy Savings Summary 

Energy Savings Summary (in stated units) 

Energy -----Average Annual Consumption----- Life-Cycle 

Type Base Case Alternative Savings Savings 

Electricity 290,000.0 kWh 120,330.0 kWh 169,670.0 kWh 3,392,935.5 kWh 

Energy Savings Summary (in MBtu) 

Energy -----Average Annual Consumption----- Life-Cycle 

Type Base Case Alternative Savings Savings 

Electricity 989.5 MBtu 410.6 MBtu 578.9 MBtu 11,577.2 MBtu 
D-56

Emissions Reduction Summary 

Energy -----Average Annual Emissions----- Life-Cycle 

Type Base Case Alternative Reduction Reduction 

Electricity 

CO2 266,197.98 kg 110,453.80 kg 155,744.17 kg 3,114,457.09 kg 

SO2 575.32 kg 238.72 kg 336.60 kg 6,731.15 kg 

NOx 607.69 kg 252.15 kg 355.54 kg 7,109.85 kg 

Total: 

CO2 266,197.98 kg 110,453.80 kg 155,744.17 kg 3,114,457.09 kg 

SO2 575.32 kg 238.72 kg 336.60 kg 6,731.15 kg 

NOx 607.69 kg 252.15 kg 355.54 kg 7,109.85 kg 
Module E

Replace Chiller or Purchase C

• compare LCCs of capital investment

outsourcing,

• and when to include inflation estimat

LCCAs,

• use BLCC to evaluate contracted cos

include inflation adjustments.

Objectives: Upon completion of this modulehow to 
Pros and Cons of Chiller R

versus Chilled Water C

• CHILLER REPLACEMENT:

High initial investment costSignificant maintenance (building engineer needed o

Fixed output capacityScheduled shutdowns may be inconvenient or imprac

Performance degradation over timeNot subject to contract renewal negotiations -- less un

• CHILLED WATER CONTRACT:

Flexible contract lengthLow initial costNegligible maintenanceFlexible capacityHigher reliability; no down time for maintenanceMetered outputContract subject to renegotiation at expiration (unce
Chilled Water Contract R

Careful Analysis

• Capacity charge and energy charge• Extra energy charge for low 

aT water re

• Extra charge for unreturned chilled wat• Escalation clauses for capacity and energ

based on

aCPI and

agas prices

• Current dollar analysis required to inclu• Estimates of general inflation and nomin

escalation rates required
Exercise E1

230 Ton Chiller Replacement in Federal Building in Texas vs. C

Chiller Replacement:

Initial cost = $350,000Annual kWh cost (450,000 kWh @ $0.05/kAnnual kW demand charge = $5,000Annual make-up water cost = $2,100Annual in-house labor = $10,000Annual service contract/supplies = $5,000Expected life = 20 years with refurbishme

(@ 40% of initial cost)

Residual value = 0
Chilled Water Contract P

• Contract life negotiable:

– Capacity (demand) charges:– Monthly capacity charge = $13.00/ton– Excess capacity charge = $13.00/ton– Excess capacity “ratchet” = 12 months

– Partially subject to annual CPI adjustment:– Adj. factor = 0.40 (Pt/P

o) + 0.60 (CPIt / CPI

0

CPI in year t (CPI

0 = CPI at start of contrac

• Energy charges:

– Basic energy charge = $0.06/ton-h– Energy efficiency charge = $0.01/ton-h (bas

– Energy charge subject to annual CPI and g

adjustments

Adj. factor = 0.35 (Pt/P

0) + 0.65 (CPIt / CP

price in year t (P

0 = gas price at start of co
Current-Dollar or Con

Dollar Analysis?

• Use constant dollars when contract inclu

inflation adjustment for all costs.

• Use current dollars when contract has di

escalation rates for different costs.
Chiller Replacemen

20-Year Analysis

Current-dollar analysis using DOE discount rate Nominal discount rate = 6.1%, Inflation rate = 2

Cost atBase Date

Dis

Fa

$350,000

27,500

2,100

10,000

5,000

140,000

0

1111100

Initial costAnnual electric costAnnual make-up waterAnnual in-house laborAnnual service contractScheduled refurbishment (year 10)Residual value (year 20)

Total PV Cost 

a from Annual Supplement to Handbook 135, page 1
Purchase Chilled Wat

20-Year Analysis

Cost (base date prices)

D

F

$10,000

14,35221,528

9,555

17,745

Initial system modificationAnnual costs (20 years):Basic capacity charge (230 tons)$35,880 Amount not subject to CPI adj. (40%) Amount subject to CPI adj. (60%)Energy charge:(390,000 ton-hs@$0.07) $27,300 Amount subject to gas price adj. (35%) Amount subject to CPI adj. (65%)Total 20-year cost 

a Assumes 2.7% annual CPI increase, based on inflation assumption b Based on DOE industrial gas price escalation rates for region 3 wit
Chilled Water Purcha

10-Year Analysis

Cost at base date

D

F

$10,000

14,35221,528

9,555

17,745

Initial system modificationBasic capacity charge (230 tons)$35,880 Amount not subject to CPI adj. (40%) Amount subject to CPI adj. (60%)Energy charge:(390,000 ton-hs@$0.07) $27,300 Amount subject to gas price adj. (35%) Amount subject to CPI adj. (65%)Total 20-year cost 

a Assumes 2.7% annual CPI increase, based on inflation assumption b Based on DOE industrial gas price escalation rates for region 3 wit
Cost atBase Date

Dis

Fa

$350,000

27,500

2,100

10,000

5,000

35,000

0

Initial costAnnual electric cCostAnnual make-up waterAnnual in-house laborAnnual service contractResidual value (year 10) *

Total PV Cost 

Chiller Replacemen

10-Year Analysis

*Residual value based on 10 years remaining of 20-year life,less needed refurbishment. $175,000 - $140,000 = $35,000
Chiller Replacemen

Years 11 to 20

2.7% Inflation, 6.1% Discou

Cost atbase date

Dis

Fa

$350,000

27,500

2,100

10,000

5,000

140,000175,000

0.

5666

00

Initial costAnnual electric costAnnual make-up waterAnnual in-house laborAnnual Service contractScheduled refurbishment (year 10)Residual value (year 20)

Total PV Cost 

a SPV* for year 10 (2.7% inflation)b UPV* for 20 years - UPV* for 10 years c SPV* for year 20 (2.7% inflation)
LCC Summary

10-Year AnalysisPV 10-year chiller replacement costPV 10-year chilled water contract cost20-Year AnalysisPV 20-year chiller replacement costPV 20-year chilled water contract costPV 10-year contract with chiller replacement at year PV 10-year chilled water contract costPV 10-year chiller replacement at year 11
Set Project Informat
Enter Electricity U
Energy, Demand Char

and Escalation Rat
Water Use, Prices, and Es
Investment Costs
Annually Recurring OM&
Non-Annually Recur

OM&R Costs
Summary LCC fo

Replace Chiller Altern
Purchase Chilled Wa

Alternative
Non-Adjusted Capacity 
CPI-Adjusted Capacity 
DOE-Escalated Natura
CPI-Adjusted Natural 
Investment Cost
Summary LCC fo

Purchase Chilled Water A
Class Exercise E2

PROBLEM STATEMENTThe building energy coordinator has reviewed the analysis and has con

natural gas prices and DOE projections for energy escalation, it is coscontract to purchase chilled-water.However, he is concerned about the changing price and availability of 

decreasing supplies and a national trend towards summer peak electricagas. As a result, he wants to determine the rate of natural gas price esc

decision to purchase chilled water a bad decision, i.e. not cost-effective.His contract with the chilled water supplier is for a minimum of fi

breakeven natural gas price for a five-year study period. The breakeven 

where the net savings is zero (equal life-cycle costs for both alternatives).

Note: The chiller’s residual value will change based on the study 

refurbishment is not planned until the tenth year. For the analysis, assum

chiller for the five-year study period is 75 %.
Class Exercise E3

PROBLEM STATEMENTThe manager of the buildings is still uncertain about leaving the supply of chilled wasked you to compare the life-cycle cost of purchasing chilled water for a 20-year water for 10 years and then buying a chiller.To purchase chilled water for 10 years and then purchase a chiller has the following coPurchase chilled water contract cost = $10,000Purchase chiller in year 10 = $350,000First 10 yearsCapacity charge, $35,880, of which 40 % is not adjusted and 60 % is adjusted for infla

Energy charge, $27,300, of which 35 % is adjusted for changing natural gas prices and 

Years 11-20

Energy costs for 450,000 kWh at $0.05 per kWh plus $5,000 demand ch

electricity prices.Make-up water costs of $2,100 annually, adjusted for inflation.In-house labor of $2,100 annually.Service contract of $5,000 annually.

The chiller residual value after 10 years of use and needing a refurbishment will be $3

ten percent.
E-30

Solution to Class Exercise E2 

NIST BLCC 5.0-01: Input Data Listing 

Consistent with Federal Life Cycle Cost Methodology and Procedures, 10 CFR, Part 436, Subpart A 

General Information 

File Name: C:\Program Files\BLCC5\projects\Class Exercise 

E2.xml 

Run Date: Thu Sep 20 11:34:24 EDT 2001 

Analysis Type: Federal Analysis, Agency-Funded Project 

Project Name: Class Exercise E2 

Project Location: Texas 

Analyst: GMM 

Comment: Replace Chiller or Purchase Chilled Water. 

Base Date: April 1, 2001 

Service Date: April 1, 2001 

Study Period: 5 years 0 months (April 1, 2001 through March 31, 

2006) 

Discount Rate: 6.1% 

Discounting Convention: End-of-Year 

Discount and Escalation Rates are NOMINAL (inclusive of general inflation) 

Alternative: Chiller Replacement 

Energy: Electricity 

Annual Consumption: 450,000.0 kWh 

Price per Unit: $0.05000 

Demand Charge: $5,000 

Utility Rebate: $0 

Location: U.S. Average 

Rate Schedule: Industrial 

State: Texas 

Usage Indices 

From Date Duration Usage Index 

April 1, 2001 Remaining 100% 

Escalation Rates 

From Date Duration Escalation 

April 1, 2001 1 year 0 months 0.66% 

April 1, 2002 1 year 0 months 1.45% 

April 1, 2003 1 year 0 months 2.45% 

April 1, 2004 1 year 0 months 1.35% 

April 1, 2005 1 year 0 months 1.59% 

April 1, 2006 1 year 0 months 1.14% 

April 1, 2007 1 year 0 months 1.47% 

April 1, 2008 1 year 0 months 1.81% 
E-31

April 1, 2009 1 year 0 months 2.34% 

April 1, 2010 1 year 0 months 1.89% 

April 1, 2011 1 year 0 months 1.88% 

April 1, 2012 1 year 0 months 2.43% 

April 1, 2013 1 year 0 months 3.07% 

April 1, 2014 1 year 0 months 3.07% 

April 1, 2015 1 year 0 months 3.34% 

April 1, 2016 1 year 0 months 3.52% 

April 1, 2017 1 year 0 months 3.51% 

April 1, 2018 1 year 0 months 3.15% 

April 1, 2019 1 year 0 months 3.32% 

April 1, 2020 1 year 0 months 2.96% 

April 1, 2021 1 year 0 months 2.96% 

April 1, 2022 1 year 0 months 2.96% 

April 1, 2023 1 year 0 months 2.88% 

April 1, 2024 1 year 0 months 2.96% 

April 1, 2025 1 year 0 months 2.96% 

April 1, 2026 1 year 0 months 2.87% 

April 1, 2027 1 year 0 months 2.96% 

April 1, 2028 1 year 0 months 2.96% 

April 1, 2029 1 year 0 months 2.96% 

April 1, 2030 1 year 0 months 2.87% 

April 1, 2031 Remaining 2.93% 

Water: Make-up water 

Annual Usage Annual Disposal 

Units/Year Price/Unit Units/Year Price/Unit 

@Summer Rates 2,100.0 ThousGal $1.00000 0.0 ThousGal $0.00000 

@Winter Rates 0.0 ThousGal $0.00000 0.0 ThousGal $0.00000 

Escalation Rates - Usage 

From Date Duration Usage Cost Escalation 

April 1, 2001 Remaining 2.7% 

Escalation Rates - Disposal 

From Date Duration Disposal Cost Escalation 

April 1, 2001 Remaining 2.7% 

Usage Indices - Usage 

From Date Duration Index 

April 1, 2001 Remaining 100% 

Usage Indices - Disposal 

From Date Duration Index 

April 1, 2001 Remaining 100% 
E-32

Component: 

Initial Investment 

Initial Cost (base-year $): $350,000 

Annual Rate of Increase: 2.7% 

Expected Asset Life: 20 years 0 months 

Residual Value Factor: 75% 

Cost-Phasing 

Cost Adjustment Factor: 2.7% 

Years/Months (from Date) Date Portion 

0 years 0 months April 1, 2001 100% 

Recurring OM&R: Labor 

Amount: $10,000 

Annual Rate of Increase: 2.7% 

Usage Indices 

From Date Duration Factor 

April 1, 2001 Remaining 100% 

Recurring OM&R: Service Contract 

Amount: $5,000 

Annual Rate of Increase: 2.7% 

Usage Indices 

From Date Duration Factor 

April 1, 2001 Remaining 100% 

Alternative: Purchase Chilled water 

Energy: Capacity Non-CPI 

Annual Consumption: 0.0 kWh 

Price per Unit: $0.00000 

Demand Charge: $14,352 

Utility Rebate: $0 

Location: U.S. Average 

Rate Schedule: Industrial 

State: Texas 

Usage Indices 

From Date Duration Usage Index 

April 1, 2001 Remaining 100% 

Escalation Rates 

From Date Duration Escalation 

April 1, 2001 Remaining 0% 
E-33

Energy: Capacity CPI Adjusted 

Annual Consumption: 0.0 kWh 

Price per Unit: $0.00000 

Demand Charge: $21,528 

Utility Rebate: $0 

Location: U.S. Average 

Rate Schedule: Industrial 

State: Texas 

Usage Indices 

From Date Duration Usage Index 

April 1, 2001 Remainin

g 100% 

Escalation Rates 

From Date Duration Escalation 

Energy: Energy - Natural Gas Adjusted 

Annual Consumption: 9,555.0 Therm 

Price per Unit: $1.00000 

Demand Charge: $0 

Utility Rebate: $0 

End-Use: Industrial Boiler, uncontrolled 

Rate Schedule: Industrial 

State: Texas 

Usage Indices 

From Date Duration Usage Index 

April 1, 2001 Remainin

g 100% 

Escalation Rates 

From Date Duration Escalation 

April 1, 2001 Remainin

g 23% 

Energy: Energy - CPI Adjusted 

Annual Consumption: 17,745.0 Therm 

Price per Unit: $1.00000 

Demand Charge: $0 

Utility Rebate: $0 

End-Use: Industrial Boiler, uncontrolled 

Rate Schedule: Industrial 

State: Texas 

Usage Indices 

From Date Duration Usage Index 

April 1, 2001 Remainin

g 100% 

Escalation Rates 

From Date Duration Escalation 

April 1, 2001 Remainin

g 2.7% 
E-34

Component: 

Initial Investment 

Initial Cost (base-year $): $10,000 

Annual Rate of Increase: 2.7% 

Expected Asset Life: 20 years 0 months 

Residual Value Factor: 0% 

Cost-Phasing 

Cost Adjustment Factor: 2.7% 

Years/Months (from Date) Date Portion 

0 years 0 months April 1, 2001 100% 
E-35

Breakeven Analysis for Purchase Chiller versus Chilled Water 

Nominal Escalation Rate Net Savings LCC Chiller LCC Chilled Water

2.7% $32,757 $324,737 $291,980

7.7% $26,159 $324,737 $298,578

12.7% $18,684 $324,737 $306,053

17.7% $10,237 $324,737 $314,500

22.7% $717 $324,737 $324,020

27.7% -$9,987 $324,737 $334,724

Breakeven occurs at about 23 percent nominal escalation rate. 

Net Savings versus Natural Gas Escalation

-$15,000

-$10,000

-$5,000

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0%

Natural Gas Nominal Escalation Rate

Net Savings
E-36

Solution to Class Exercise E3 

NIST BLCC 5.0-01: Input Data Listing 

Consistent with Federal Life Cycle Cost Methodology and Procedures, 10 CFR, Part 436, Subpart A 

General Information 

File Name: C:\Program Files\BLCC5\projects\Class Exercise E3.xml 

Run Date: Thu Sep 20 11:51:03 EDT 2001 

Analysis Type: Federal Analysis, Agency-Funded Project 

Project Name: Class Exercise E3 

Project Location: Texas 

Analyst: GMM 

Comment: Purchase chilled water for 10 years and then chiller versus purchase chilled water for 20 

years 

Base Date: April 1, 2001 

Service Date: April 1, 2001 

Study Period: 20 years 0 months (April 1, 2001 through March 31, 2021) 

Discount Rate: 6.1% 

Discounting Convention: End-of-Year 

Discount and Escalation Rates are NOMINAL (inclusive of general inflation) 

Alternative: Chilled water and then chiller 

Energy: Capacity - Non CPI 

Annual Consumption: 0.0 kWh 

Price per Unit: $0.00000 

Demand Charge: $14,352 

Utility Rebate: $0 

End-Use: Industrial Boiler, uncontrolled 

Rate Schedule: Industrial 

State: Texas 

Usage Indices 

From Date Duration Usage Index 

April 1, 2001 10 years 0 months 100% 

April 1, 2011 Remaining 0% 

Escalation Rates 

From Date Duration Escalation 

April 1, 2001 Remaining 0% 

Energy: Natural Gas 

Annual Consumption: 9,555.0 Therm 

Price per Unit: $1.00000 

Demand Charge: $0 

Utility Rebate: $0 

End-Use: Industrial Boiler, uncontrolled 
E-37

Rate Schedule: Industrial 

State: Texas 

Usage Indices 

From Date Duration Usage Index 

April 1, 2001 10 

years 0 months 100% 

April 1, 2011 Remaining 0% 

Escalation Rates 

From Date Duration Escalation 

April 1, 2001 1 

year 0 months -8.86% 

April 1, 2002 1 

year 0 months -7.90% 

April 1, 2003 1 year 0 months -2.37% 

April 1, 2004 1 

year 0 months 3.06% 

April 1, 2005 1 

year 0 months 4.12% 

April 1, 2006 1 

year 0 months 4.45% 

April 1, 2007 1 

year 0 months 4.42% 

April 1, 2008 1 

year 0 months 3.38% 

April 1, 2009 1 

year 0 months 3.71% 

April 1, 2010 1 year 0 months 3.36% 

April 1, 2011 1 

year 0 months 3.36% 

April 1, 2012 1 

year 0 months 4.01% 

April 1, 2013 1 year 0 months 3.67% 

April 1, 2014 1 year 0 months 4.30% 

April 1, 2015 1 

year 0 months 4.28% 

April 1, 2016 1 year 0 months 4.57% 

April 1, 2017 1 

year 0 months 4.53% 

April 1, 2018 1 

year 0 months 4.80% 

April 1, 2019 1 year 0 months 5.35% 

April 1, 2020 1 

year 0 months 4.42% 

April 1, 2021 1 

year 0 months 4.11% 

April 1, 2022 1 year 0 months 3.81% 

April 1, 2023 1 

year 0 months 4.08% 

April 1, 2024 1 

year 0 months 4.06% 

April 1, 2025 1 

year 0 months 4.04% 

April 1, 2026 1 

year 0 months 4.02% 

April 1, 2027 1 

year 0 months 4.01% 

April 1, 2028 1 

year 0 months 3.99% 

April 1, 2029 1 

year 0 months 4.23% 

April 1, 2030 1 

year 0 months 3.96% 

April 1, 2031 Remaining 4.04% 

Energy: Capacity - CPI adjusted 

Annual Consumption: 0.0 kWh 

Price per Unit: $0.00000 

Demand Charge: $21,528 

Utility Rebate: $0 

End-Use: Industrial Boiler, uncontrolled 
E-38

Rate Schedule: Industrial 

State: Texas 

Usage Indices 

From Date Duration Usage Index 

April 1, 2001 10 

years 0 months 100% 

April 1, 2011 Remaining 0% 

Escalation Rates 

From Date Duration Escalation 

April 1, 2001 Remainin

g 2.7% 

Energy: Energy - CPI adjusted 

Annual Consumption: 17,745.0 Therm 

Price per Unit: $1.00000 

Demand Charge: $0 

Utility Rebate: $0 

End-Use: Industrial Boiler, uncontrolled 

Rate Schedule: Industrial 

State: Texas 

Usage Indices 

From Date Duration Usage Index 

April 1, 2001 10 

years 0 months 100% 

April 1, 2011 Remaining 0% 

Escalation Rates 

From Date Duration Escalation 

April 1, 2001 Remainin

g 2.7% 

Energy: Electricity 

Annual Consumption: 450,000.0 kWh 

Price per Unit: $0.05000 

Demand Charge: $5,000 

Utility Rebate: $0 

Location: U.S. Average 

Rate Schedule: Industrial 

State: Texas 

Usage Indices 

From Date Duration Usage Index 

April 1, 2001 10 

years 0 months 0% 

April 1, 2011 Remaining 100% 

Escalation Rates 

From Date Duration Escalation 

April 1, 2001 1 

year 0 months 0.66% 

April 1, 2002 1 

year 0 months 1.45% 

April 1, 2003 1 year 0 months 2.45% 
E-39

April 1, 2004 1 

year 0 months 1.35% 

April 1, 2005 1 

year 0 months 1.59% 

April 1, 2006 1 

year 0 months 1.14% 

April 1, 2007 1 

year 0 months 1.47% 

April 1, 2008 1 

year 0 months 1.81% 

April 1, 2009 1 

year 0 months 2.34% 

April 1, 2010 1 

year 0 months 1.89% 

April 1, 2011 1 

year 0 months 1.88% 

April 1, 2012 1 

year 0 months 2.43% 

April 1, 2013 1 

year 0 months 3.07% 

April 1, 2014 1 

year 0 months 3.07% 

April 1, 2015 1 

year 0 months 3.34% 

April 1, 2016 1 

year 0 months 3.52% 

April 1, 2017 1 year 0 months 3.51% 

April 1, 2018 1 

year 0 months 3.15% 

April 1, 2019 1 

year 0 months 3.32% 

April 1, 2020 1 

year 0 months 2.96% 

April 1, 2021 1 year 0 months 2.96% 

April 1, 2022 1 

year 0 months 2.96% 

April 1, 2023 1 

year 0 months 2.88% 

April 1, 2024 1 year 0 months 2.96% 

April 1, 2025 1 

year 0 months 2.96% 

April 1, 2026 1 

year 0 months 2.87% 

April 1, 2027 1 year 0 months 2.96% 

April 1, 2028 1 

year 0 months 2.96% 

April 1, 2029 1 

year 0 months 2.96% 

April 1, 2030 1 year 0 months 2.87% 

April 1, 2031 Remaining 2.93% 

Water: Make-up water 

Annual Usage Annual Disposal 

Units/Year Price/Unit Units/Year Price/Unit 

@Summer Rates 2,100.0 L $1.00000 0.0 L $0.00000 

@Winter Rates 0.0 L $0.00000 0.0 L $0.00000 

Escalation Rates - Usage 

From Date Duration Usage Cost Escalation 

April 1, 2001 Remainin

g 2.7% 

Escalation Rates - Disposal 

From Date Duration Disposal Cost Escalation 

April 1, 2001 Remainin

g 2.7% 

Usage Indices - Usage 

From Date Duration Index 

April 1, 2001 10 

years 0 months 0% 

April 1, 2011 Remaining 100% 
E-40

Usage Indices - Disposal 

From Date Duration Index 

April 1, 2001 Remaining 100% 

Component: Purchase chilled water for 10 years 

Initial Investment 

Initial Cost (base-year $): $10,000 

Annual Rate of Increase: 2.7% 

Expected Asset Life: 1 year 0 months 

Residual Value Factor: 0% 

Cost-Phasing 

Cost Adjustment Factor: 2.7% 

Years/Months (from Date) Date Portion 

0 years 0 months April 1, 2001 100% 

Component: Purchase Chiller 

Initial Investment 

Initial Cost (base-year $): $350,000 

Annual Rate of Increase: 2.7% 

Expected Asset Life: 20 years 0 months 

Residual Value Factor: 10% 

Cost-Phasing 

Cost Adjustment Factor: 2.7% 

Years/Months (from Date) Date Portion 

10 years 0 months April 1, 2011 100% 

Recurring OM&R: In-house labor 

Amount: $10,000 

Annual Rate of Increase: 2.7% 

Usage Indices 

From Date Duration Factor 

April 1, 2001 10 years 0 months 0% 

April 1, 2011 Remaining 100% 

Recurring OM&R: Service contract 

Amount: $5,000 

Annual Rate of Increase: 2.7% 

Usage Indices 

From Date Duration Factor 

April 1, 2001 10 years 0 months 0% 

April 1, 2011 Remaining 100% 
E-41

Alternative: 20 Year Chilled Water 

Energy: Copy of: Capacity - Non CPI 

Annual Consumption: 0.0 kWh 

Price per Unit: $0.00000 

Demand Charge: $14,352 

Utility Rebate: $0 

End-Use: Industrial Boiler, uncontrolled 

Rate Schedule: Industrial 

State: Texas 

Usage Indices 

From Date Duration Usage Index 

April 1, 2001 20 years 0 months 100% 

April 1, 2021 Remaining 100% 

Escalation Rates 

From Date Duration Escalation 

April 1, 2001 Remaining 0% 

Energy: Copy of: Natural Gas 

Annual Consumption: 9,555.0 Therm 

Price per Unit: $1.00000 

Demand Charge: $0 

Utility Rebate: $0 

End-Use: Industrial Boiler, uncontrolled 

Rate Schedule: Industrial 

State: Texas 

Usage Indices 

From Date Duration Usage Index 

April 1, 2001 20 years 0 months 100% 

April 1, 2021 Remaining 100% 

Escalation Rates 

From Date Duration Escalation 

April 1, 2001 1 year 0 months -8.86% 

April 1, 2002 1 year 0 months -7.90% 

April 1, 2003 1 year 0 months -2.37% 

April 1, 2004 1 year 0 months 3.06% 

April 1, 2005 1 year 0 months 4.12% 

April 1, 2006 1 year 0 months 4.45% 

April 1, 2007 1 year 0 months 4.42% 

April 1, 2008 1 year 0 months 3.38% 

April 1, 2009 1 year 0 months 3.71% 

April 1, 2010 1 year 0 months 3.36% 

April 1, 2011 1 year 0 months 3.36% 

April 1, 2012 1 year 0 months 4.01% 
E-42

April 1, 2013 1 

year 0 months 3.67% 

April 1, 2014 1 

year 0 months 4.30% 

April 1, 2015 1 

year 0 months 4.28% 

April 1, 2016 1 

year 0 months 4.57% 

April 1, 2017 1 

year 0 months 4.53% 

April 1, 2018 1 

year 0 months 4.80% 

April 1, 2019 1 

year 0 months 5.35% 

April 1, 2020 1 

year 0 months 4.42% 

April 1, 2021 1 

year 0 months 4.11% 

April 1, 2022 1 

year 0 months 3.81% 

April 1, 2023 1 

year 0 months 4.08% 

April 1, 2024 1 

year 0 months 4.06% 

April 1, 2025 1 

year 0 months 4.04% 

April 1, 2026 1 year 0 months 4.02% 

April 1, 2027 1 

year 0 months 4.01% 

April 1, 2028 1 

year 0 months 3.99% 

April 1, 2029 1 year 0 months 4.23% 

April 1, 2030 1 

year 0 months 3.96% 

April 1, 2031 Remaining 4.04% 

Energy: Copy of: Capacity - CPI adjusted 

Annual Consumption: 0.0 kWh 

Price per Unit: $0.00000 

Demand Charge: $21,528 

Utility Rebate: $0 

End-Use: Industrial Boiler, uncontrolled 

Rate Schedule: Industrial 

State: Texas 

Usage Indices 

From Date Duration Usage Index 

April 1, 2001 20 

years 0 months 100% 

April 1, 2021 Remaining 100% 

Escalation Rates 

From Date Duration Escalation 

April 1, 2001 Remainin

g 2.7% 

Energy: Copy of: Energy - CPI adjusted 

Annual Consumption: 17,745.0 Therm 

Price per Unit: $1.00000 

Demand Charge: $0 

Utility Rebate: $0 

End-Use: Industrial Boiler, uncontrolled 

Rate Schedule: Industrial 

State: Texas 

Usage Indices 

From Date Duration Usage Index 
E-43

April 1, 2001 20 years 0 months 100% 

April 1, 2021 Remaining 100% 

Escalation Rates 

From Date Duration Escalation 

April 1, 2001 Remaining 2.7% 

Component: Copy of: Purchase chilled water for 10 years 

Initial Investment 

Initial Cost (base-year $): $10,000 

Annual Rate of Increase: 2.7% 

Expected Asset Life: 1 year 0 months 

Residual Value Factor: 0% 

Cost-Phasing 

Cost Adjustment Factor: 2.7% 

Years/Months (from Date) Date Portion 

0 years 0 months April 1, 2001 100% 
E-44

NIST BLCC 5.0-01: Detailed LCC Analysis 

Consistent with Federal Life Cycle Cost Methodology and Procedures, 10 CFR, Part 436, Subpart A 

General Information 

File Name: C:\Program Files\BLCC5\projects\Class Exercise E3.xml 

Run Date: Thu Sep 20 13:25:39 EDT 2001 

Analysis Type: Federal Analysis, Agency-Funded Project 

Project Name: Class Exercise E3 

Project Location: Texas 

Analyst: GMM 

Comment: Purchase chilled water for 10 years and then chiller versus purchase chilled water for 20 

years 

Base Date: April 1, 2001 

Service Date: April 1, 2001 

Study Period: 20 years 0 months (April 1, 2001 through March 31, 2021) 

Discount Rate: 6.1% 

Discounting Convention: End-of-Year 

Discount and Escalation Rates are NOMINAL (inclusive of general inflation) 

Alternative: Chilled water and then chiller 

Initial Cost Data (not Discounted) 

Initial Capital Costs 

(adjusted for price escalation) 

Initial Capital Costs for All Components: $466,832 

Component: Purchase chilled water for 10 years 

Cost-Phasing 

Date Portion Yearly Cost 

April 1, 2001 100% $10,000 

------------ ------------

Total (for Component) $10,000 

Component: Purchase Chiller 

Cost-Phasing 

Date Portion Yearly Cost 

April 1, 2011 100% $456,832 

------------ ------------

Total (for Component) $456,832 

Energy Costs: Capacity - Non CPI 

(base-year dollars) 

Average Average Average Average 

Annual Usage Price/Unit Annual Cost Annual Demand Annual Rebate 

0.0 kWh $0.00000 $0 $7,176 $0 
E-45

Energy Costs: Natural Gas 

(base-year dollars) 

Average Average Average Average 

Annual Usage Price/Unit Annual Cost Annual Demand Annual Rebate 

4,777.5 Therm $1.00000 $4,778 $0 $0 

Energy Costs: Capacity - CPI adjusted 

(base-year dollars) 

Average Average Average Average 

Annual Usage Price/Unit Annual Cost Annual Demand Annual Rebate 

0.0 kWh $0.00000 $0 $10,764 $0 

Energy Costs: Energy - CPI adjusted 

(base-year dollars) 

Average Average Average Average 

Annual Usage Price/Unit Annual Cost Annual Demand Annual Rebate 

8,872.5 Therm $1.00000 $8,872 $0 $0 

Energy Costs: Electricity 

(base-year dollars) 

Average Average Average Average 

Annual Usage Price/Unit Annual Cost Annual Demand Annual Rebate 

225,000.0 kWh $0.05000 $11,250 $2,500 $0 

Water Costs: Make-up water 

(base-year dollars) 

Average Annual Usage Average Annual Disposal Average Annual 

Water Units/Year Price/Unit Units/Year Price/Unit Cost 

@ Summer Rates 1,050.0 L $1.00000 0.0 L $0.00000 $1,050 

@ Winter Rates 0.0 L $0.00000 0.0 L $0.00000 $0 

Life-Cycle Cost Analysis 

Present Value Annual Value 

Initial Capital Costs $262,979 $23,095 

 

Energy Costs 

 Energy Consumption Costs $336,857 $29,584 

 Energy Demand Charges $313,579 $27,539 

 Energy Utility Rebates $0 $0 

------------ ------------

 Subtotal (for Energy): $650,437 $57,123 

 

Water Usage Costs $12,753 $1,120 

Water Disposal Costs $0 $0 

 

Operating, Maintenance & Repair Costs 
E-46

 Component: Purchase chilled water for 10 years 

 Annually Recurring Costs $0 $0 

 Non-Annually Recurring Costs $0 $0 

 Component: Purchase Chiller 

 Annually Recurring Costs $91,089 $8,000 

 Non-Annually Recurring Costs $0 $0 

------------ ------------

 Subtotal (for OM&R): $91,089 $8,000 

 

Replacements to Capital Components 

 Component: Purchase chilled water for 10 years $0 $0 

 Component: Purchase Chiller $0 $0 

------------ ------------

 Subtotal (for Replacements): $0 $0 

 

Residual Value of Original Capital Components 

 Component: Purchase chilled water for 10 years $0 $0 

 Component: Purchase Chiller -$18,285 -$1,606 

------------ ------------

 Subtotal (for Residual Value): -$18,285 -$1,606 

 

Residual Value of Capital Replacements 

 Component: Purchase chilled water for 10 years $0 $0 

 Component: Purchase Chiller $0 $0 

------------ ------------

 Subtotal (for Residual Value): $0 $0 

 

Total Life-Cycle Cost $998,972 $87,732 

Emissions Summary 

Energy Name Annual Life-Cycle 

Capacity - Non CPI: 

CO2 0.00 kg 0.00 kg 

SO2 0.00 kg 0.00 kg 

NOx 0.00 kg 0.00 kg 

Natural Gas: 

CO2 25,236.45 kg 504,659.81 kg 

SO2 203.67 kg 4,072.76 kg 

NOx 29.74 kg 594.78 kg 

Capacity - CPI adjusted: 

CO2 0.00 kg 0.00 kg 

SO2 0.00 kg 0.00 kg 

NOx 0.00 kg 0.00 kg 

Energy - CPI adjusted: 

CO2 46,867.68 kg 937,225.37 kg 
E-47

SO2 378.24 kg 7,563.70 kg 

NOx 55.24 kg 1,104.60 kg 

Electricity: 

CO2 218,094.01 kg 4,361,283.00 kg 

SO2 664.29 kg 13,284.00 kg 

NOx 657.00 kg 13,138.20 kg 

Total: 

CO2 290,198.14 kg 5,803,168.18 kg 

SO2 1,246.19 kg 24,920.47 kg 

NOx 741.98 kg 14,837.59 kg 

Alternative: 20 Year Chilled Water 

Initial Cost Data (not Discounted) 

Initial Capital Costs 

(adjusted for price escalation) 

Initial Capital Costs for All Components: $10,000 

Component: Copy of: Purchase chilled water for 10 years 

Cost-Phasing 

Date Portion Yearly Cost 

April 1, 2001 100% $10,000 

------------ ------------

Total (for Component) $10,000 

Energy Costs: Copy of: Capacity - Non CPI 

(base-year dollars) 

Average Average Average Average 

Annual Usage Price/Unit Annual Cost Annual Demand Annual Rebate 

0.0 kWh $0.00000 $0 $14,352 $0 

Energy Costs: Copy of: Natural Gas 

(base-year dollars) 

Average Average Average Average 

Annual Usage Price/Unit Annual Cost Annual Demand Annual Rebate 

9,555.0 Therm $1.00000 $9,555 $0 $0 

Energy Costs: Copy of: Capacity - CPI adjusted 

(base-year dollars) 

Average Average Average Average 

Annual Usage Price/Unit Annual Cost Annual Demand Annual Rebate 

0.0 kWh $0.00000 $0 $21,528 $0 

Energy Costs: Copy of: Energy - CPI adjusted 

(base-year dollars) 

Average Average Average Average 

Annual Usage Price/Unit Annual Cost Annual Demand Annual Rebate 
E-48

17,745.0 Therm $1.00000 $17,745 $0 $0 

Life-Cycle Cost Analysis 

Present Value Annual Value 

Initial Capital Costs $10,000 $878 

 

Energy Costs 

 Energy Consumption Costs $371,605 $32,635 

 Energy Demand Charges $475,072 $41,722 

 Energy Utility Rebates $0 $0 

------------ ------------ 

 Subtotal (for Energy): $846,676 $74,357 

 

Water Usage Costs $0 $0 

Water Disposal Costs $0 $0 

 

Operating, Maintenance & Repair Costs 

 Component: Copy of: Purchase chilled water for 10 years 

 Annually Recurring Costs $0 $0 

 Non-Annually Recurring Costs $0 $0 

------------ ------------ 

 Subtotal (for OM&R): $0 $0 

 

Replacements to Capital Components 

 Component: Copy of: Purchase chilled water for 10 years $0 $0 

------------ ------------ 

 Subtotal (for Replacements): $0 $0 

 

Residual Value of Original Capital Components 

 Component: Copy of: Purchase chilled water for 10 years $0 $0 

------------ ------------ 

 Subtotal (for Residual Value): $0 $0 

 

Residual Value of Capital Replacements 

 Component: Copy of: Purchase chilled water for 10 years $0 $0 

------------ ------------ 

 Subtotal (for Residual Value): $0 $0 

 

Total Life-Cycle Cost $856,676 $75,235 
E-49

Emissions Summary 

Energy Name Annual Life-Cycle 

Copy of: Capacity - Non CPI: 

CO2 0.00 kg 0.00 kg 

SO2 0.00 kg 0.00 kg 

NOx 0.00 kg 0.00 kg 

Copy of: Natural Gas: 

CO2 50,472.89 kg 1,009,319.63 kg 

SO2 407.33 kg 8,145.53 kg 

NOx 59.49 kg 1,189.57 kg 

Copy of: Capacity - CPI adjusted: 

CO2 0.00 kg 0.00 kg 

SO2 0.00 kg 0.00 kg 

NOx 0.00 kg 0.00 kg 

Copy of: Energy - CPI adjusted: 

CO2 93,735.37 kg 1,874,450.74 kg 

SO2 756.47 kg 15,127.41 kg 

NOx 110.48 kg 2,209.20 kg 

Total: 

CO2 144,208.26 kg 2,883,770.36 kg 

SO2 1,163.81 kg 23,272.94 kg 

NOx 169.96 kg 3,398.77 kg 
E-50

NIST BLCC 5.0-01: Comparative Analysis

Consistent with Federal Life Cycle Cost Methodology and Procedures, 10 CFR, Part 436, Subpart A 

Base Case: Chilled water and then chiller 

Alternative: 20 Year Chilled Water 

General Information 

File Name: C:\Program Files\BLCC5\projects\Class Exercise E3.xml 

Run Date: Thu Sep 20 11:54:01 EDT 2001 

Project Name: Class Exercise E3 

Project Location: Texas 

Analysis Type: Federal Analysis, Agency-Funded Project 

Analyst: GMM 

Comment Purchase chilled water for 10 years and then chiller versus purchase chilled water for 20 years 

Base Date of Study: April 1, 2001 

Service Date: April 1, 2001 

Study Period: 20 years 0 months(April 1, 2001 through March 31, 2021) 

Discount Rate: 6.1% 

Discounting Convention: End-of-Year 

Comparison of Present-Value Costs 

PV Life-Cycle Cost 

Base Case Alternative Savings from Alternative 

Initial Investment Costs: 

 Capital Requirements as of Base Date $262,979 $10,000 $252,979 

Future Costs: 

 Energy Consumption Costs $336,857 $371,605 -$34,747 

 Energy Demand Charges $313,579 $475,072 -$161,492 

 Energy Utility Rebates $0 $0 $0 

 Water Costs $12,753 $0 $12,753 

 Recurring and Non-Recurring OM&R Costs $91,089 $0 $91,089 

 Capital Replacements $0 $0 $0 

 Residual Value at End of Study Period -$18,285 $0 -$18,285 

------------ ------------ ------------ 

 Subtotal (for Future Cost Items) $735,993 $846,676 -$110,683 

------------ ------------ ------------ 

Total PV Life-Cycle Cost $998,972 $856,676 $142,296 

Net Savings from Alternative Compared with Base Case 

PV of Non-Investment Savings -$92,398 

- Increased Total Investment -$234,694 

------------ 
E-51

Net Savings $142,296 

Savings-to-Investment Ratio (SIR) 

SIR = 0.39 

SIR is lower than 1.0; project alternative is not cost effective. 

Adjusted Internal Rate of Return 

AIRR = 1.26% 

AIRR is lower than your discount rate; project alternative is not cost effective. 

Payback Period 

Estimated Years to Payback (from beginning of Service Period) 

Simple Payback occurs in year 1 

Discounted Payback occurs in year 1 

Energy Savings Summary 

Energy Savings Summary (in stated units) 

Units for every energy type not the same, can't report energy savings 

Energy Savings Summary (in MBtu) 

Energy -----Average Annual Consumption----- Life-Cycle 

Type Base Case Alternative Savings Savings 

Electricity 767.7 MBtu 0.0 MBtu 767.7 MBtu 15,352.5 MBtu 

Natural Gas 1,365.0 MBtu 2,730.0 MBtu -1,365.0 MBtu -27,296.4 MBtu 

Emissions Reduction Summary 

Energy -----Average Annual Emissions----- Life-Cycle 

Type Base Case Alternative Reduction Reduction 

Electricity 

CO2 218,094.01 kg 0.00 kg 218,094.01 kg 4,361,283.00 kg 

SO2 664.29 kg 0.00 kg 664.29 kg 13,284.00 kg 

NOx 657.00 kg 0.00 kg 657.00 kg 13,138.20 kg 

Natural Gas 

CO2 72,104.13 kg 144,208.26 kg -72,104.13 kg -1,441,885.18 kg 

SO2 581.90 kg 1,163.81 kg -581.90 kg -11,636.47 kg 

NOx 84.98 kg 169.96 kg -84.98 kg -1,699.39 kg 

Total: 

CO2 290,198.14 kg 144,208.26 kg 145,989.88 kg 2,919,397.82 kg 

SO2 1,246.19 kg 1,163.81 kg 82.39 kg 1,647.53 kg 

NOx 741.98 kg 169.96 kg 572.02 kg 11,438.81 kg 

Module F

Evaluation of Alternative Financi

Objectives: Upon completion of this moduleknow how to• structure alternative financing (AF

for LCCA.

– Energy Savings Performance Co

(ESPCs)

– Utility Energy Services Contract

• use BLCC5 to perform the analysis
Steps in LCCA of AF Co

• Select the systems and equipment to 

and at what level.

• Perform LCCAs for individual ECM• Determine which ECMs to bundle.• Evaluate project for cost-effectiven

compared with status quo or other 
• Acquisition and debt service

– Principal– Interest

• Performance Period Expenses

– Management and administration– Measurement and verification– Overhead and profit– O&M *– Repair and replacement*

• Down payment• Energy costs* Capitalization of traditional operating expenses b

between investment and operational costs.

Typical AF Costs and B
Bundling of ECM

• Bundling of independent projects

– Each individual project should be cost– EO 13123 allows bundling of non-cost

ECMs with those that generate high N

– Bundling does not guarantee maximiz

for government investments overall.

• Bundling of interdependent projects

– Analysts must account for interaction 

systems.

– Energy consumption of different comb

needs to be recalculated.
Exercise F1

Evaluation of ESPC Contract

PROBLEM STATEMENT The building manager of the Jefferson Training Facility in Tennessee has bepossibility of financing, through an Energy Savings Performance Contract, hot water system and other energy conservation measures. In collaboration 

identified five retrofit measures, which, according to the ESCO proposal, wsavings of approximately $120K annually. With the current maintenance anexisting system could be kept functional for another 25 years. Options Maintain status quo with current maintenance and repair schedule. Install the following Energy Conservation Measures (ECMs:

1. Install new natural gas hot water boilers ($262,500).2. Convert existing, electric DHW heating system to natural gas DHW sys

3. Install campus-wide direct digital control (DDC) system ($412,500).4. Improve lighting system ($250,000).5. Convert constant HW and CW loops to variable flow ($187,500).
Exercise F1 (cont.

ANALYSISPerform an LCC analysis to determine whether the project would be life-cy

financed. Are the expected non-discounted annual savings sufficient in proposed contract payments? Does your analysis confirm the ESCO’s operational savings of $120K? 

ScenarioThe building manager has already performed LCCAs on the individual ECM

effective. She has decided to bundle the ECMs into one project, which base case of doing nothing.
General project inform

• ECMs in Training Facility, Jeffers• current-dollar analysis• end-of-year discounting• discount rate: 6.1% nominal• inflation rate: 2.7%• DOE energy price escalation rates• all costs, except debt service paym

at rate of inflation
Key Dates

• Base date: June 20• Implementation period: 1 year• Service date: June 20• Contract period: 20 year• Study period: 25 year
Base Case: Status Q

Initial cost: $0Energy consumption: 4,584,396 kWhEnergy price: $0.04324/kWhAR OM&R costs: $18,300Expected system life: 25 years
Alternative: ESPC 

Initial cost paid by agency: $29,283Total capital costs financed: $1,133,217Annual contract costs:

Debt service: $109,856, fiPerformance period expenses: $7,047, incr

Annual energy costs:

pre-impl. period: Electricity: 

at $0.04324

post-impl. period: Natural Ga

at $0.46/the
Alternative: ESPC (co

AR OM&R costs

pre-impl. period: $18,300contract period: included in contrapost-contract period: $4,871

Expected system life: 25 years

residual value: 4% 
ESPC Project Timin

1

Study

Base PeriodDate

2 3 4 56 7 8 

Contract Payments

Implementation

Occupancy or Full

System Operation

Energy Savings
ESPC: Debt Servic
ESPC: Performance Perio
ESPC: Electricity Us
ESPC: Natural Gas U
ESPC: Initial Investmen
ESPC: OM&R Cos
Comparative Analysis R

Lowest LCC
Comparative Analysis R

contract term

AnnuaSaving

(non-d

Annual 

(non-d
Annualized PV Savin

Use Uniform Capital Recovery Factoannualize Net Savings.Annual NS = Total Net Savings x UC

= $1,078,882 x 0.0790= $85,232

(UCR = 1/UPV, calculated using BLCC4 DISCOU
Summary LCC Rep

BC: Do Annual

Alt: EAnnu

Annualized P$261,887 - $
Summary of Analysis R

• ESPC project is cost-effective.

– LCC lower than for status quo (Lowe– positive NS for alternative (Comparat

Report)

– annual non-discounted operational sa

contract payments (Comparative Ana

– operational savings proposed by ESCO 

• Other considerations:

– emissions reduction achieved with ES

(Comparative Analysis Report)
Class Exercise F2

Financing Solar Water Heating System 

for A U.S. Coast Guard Base

PROBLEM STATEMENTThe U.S. Coast Guard (CG) in Honolulu is seeking to evaluate the feasibility of utility financing to reheating system with a solar water heating system for 280 residences. To maintain the existing system

the rate of 28 tanks per year (assuming a 10-year useful life), with the first set of tank replacements bdate. As an alternative, they could replace the existing systems with an energy-efficient solar system 

through a contract with the local utility company and would be ready for operation in one year. CG wof the total initial capital investment of $1,000,000 at the base date and finance the remaining 85 percbeginning one year from the base date. GG performs a life-cycle cost analysis to determine if the util

the base case of keeping the existing system.General InformationLocation: Honolulu, HIBase date: June 2001Service date: June 2002 for both the base case and the alternativeStudy period: 20 years from base dateGovernment discount rate: 6.1 percent (including inflation)Discounting convention: Amounts discounted from end of each year to base dateRate of general inflation: 2.7 percent (use current-dollar analysis) Electricity price: $0.05/kWh, industrial rate
Class Exercise F2 (co

Base Case: Maintain and Repair Existing SystemAnnual electricity cost: $148,750 (= 2,975,000 kWh at $0.05)Initial capital investment: NoneCapital replacement costs: 

Years 6, 11, and 16: $23,760 for anode replacements

Annually recurring OM&R costs: $32,220 for tank replacements, at the rate of 28 tanks pe

Alternative 1: Solar Water Heating System Financed through Utility Contract

Contract-related data:Contract term: 10 years, beginning one year from base dateLoan payments: $123,833 per year during contract term, fixedAdministrative costs: $1,000 per year during contract term, increasing at the rOversight costs: $1,800 at contract date Annual electricity cost: $27,100 (= 542,000 kWh at $0.05)Initial capital investment: $1,000,000 

15% (=$150,000) down payment at base date 85% (= $850,000) financed through UC
Class Exercise F2 (co

Capital Replacement costs:Year 11: $30,000 for replacing anodes and controlsYear 11: $230,400 for replacing tanksYear 16: $18,580 for replacing valves, residual value 73%Annually recurring OM&R costs: $7,600 for routine maintenance, included in loan 

payment during contract term
F-27

Solution to Class Exercise F2 

NIST BLCC 5.0-01: Input Data Listing 

Consistent with Federal Life Cycle Cost Methodology and Procedures, 10 CFR, Part 436, Subpart A 

General Information 

File Name: C:\Program Files\BLCC5\projects\Class Exercise F2.xml 

Run Date: Thu Sep 20 13:43:55 EDT 2001 

Analysis Type: Federal Analysis, Financed Project 

Project Name: Class Exercise F2 

Project Location: Hawaii 

Analyst: CDE 

Comment: Evaluate feasibility of replacing electric resistance water heating system with solar system financed 

through utility energy services contract 

Base Date: June 1, 2001 

Study Period: 20 years 0 months (June 1, 2001 through May 31, 2021) 

Discount Rate: 6.1% 

Discounting 

Convention: End-of-Year 

Discount and Escalation Rates are NOMINAL (inclusive of general inflation) 

Alternative: Existing system 

Comment: Maintaining the system requires tank replacements at a rate of 28 tanks per year 

Energy: Electricity 

Annual Consumption: 2,975,000.0 kWh 

Price per Unit: $0.05000 

Demand Charge: $0 

Utility Rebate: $0 

Location: Hawaii 

Rate Schedule: Industrial 

State: Hawaii 

Usage Indices 

From Date Duration Usage Index 

June 1, 2001 1 year 0 months 0% 

June 1, 2002 Remaining 100% 

Escalation Rates 

From Date Duration Escalation 

April 1, 2001 1 year 0 months -1.36% 

April 1, 2002 1 year 0 months -1.16% 

April 1, 2003 1 year 0 months 1.16% 

April 1, 2004 1 year 0 months -2.15% 

April 1, 2005 1 year 0 months -1.74% 

April 1, 2006 1 year 0 months -3.57% 

April 1, 2007 1 year 0 months -1.14% 
F-28

April 1, 2008 1 

year 0 months 1.37% 

April 1, 2009 1 

year 0 months 1.06% 

April 1, 2010 1 

year 0 months 1.53% 

April 1, 2011 1 

year 0 months 1.81% 

April 1, 2012 1 

year 0 months 2.8% 

April 1, 2013 1 

year 0 months 3.8% 

April 1, 2014 1 

year 0 months 3% 

April 1, 2015 1 

year 0 months 2.8% 

April 1, 2016 1 year 0 months 3.88% 

April 1, 2017 1 

year 0 months 2.60% 

April 1, 2018 1 

year 0 months 2.41% 

April 1, 2019 1 

year 0 months 3.58% 

April 1, 2020 1 

year 0 months 3.09% 

April 1, 2021 1 year 0 months 2.89% 

April 1, 2022 1 

year 0 months 2.89% 

April 1, 2023 1 

year 0 months 2.89% 

April 1, 2024 1 

year 0 months 2.89% 

April 1, 2025 1 year 0 months 2.89% 

April 1, 2026 1 

year 0 months 2.89% 

April 1, 2027 1 

year 0 months 2.99% 

April 1, 2028 1 year 0 months 2.89% 

April 1, 2029 1 year 0 months 2.89% 

April 1, 2030 1 

year 0 months 2.89% 

April 1, 2031 Remaining 2.91% 

Component: 

Initial Investment 

Initial Cost Paid By Agency (baseyear $): $0 

Initial Cost Financed (base-year $): $0 

Annual Rate of Increase: 2.7% 

Expected Asset Life: 20 years 0 months 

Residual Value Factor: 0% 

Cost-Phasing 

Cost Adjustment Factor: 2.7% 

Years/Months (from Date) Date Portion 

0 years 0 months June 1, 2001 100% 

Replacement: Year 6 Anode Replacement 

Years/Months: 6 years 0 months 

Amount: $23,760 

Annual Rate Of Increase: 2.7% 

Expected Asset Life: 5 years 0 months 

Residual Value Factor: 0% 

Replacement: Year 11 Anode Replacement 

Years/Months: 11 years 0 months 
F-29

Amount: $23,760 

Annual Rate Of Increase: 2.7% 

Expected Asset Life: 5 years 0 months 

Residual Value Factor: 0% 

Replacement: Year 16 Anode Replacement 

Years/Months: 16 years 0 months 

Amount: $23,760 

Annual Rate Of Increase: 2.7% 

Expected Asset Life: 5 years 0 months 

Residual Value Factor: 20% 

Recurring OM&R: Tank replacement 

Amount: $32,220 

Annual Rate of Increase: 2.7% 

Usage Indices 

From Date Duration Factor 

June 1, 2001 1 year 0 months 0% 

June 1, 2002 Remaining 100% 

Alternative: Solar Water Heating System 

Comment: 85% of the cost of the solar water heating system will be financed through a utility contract 

Recurring Contract: Annual Loan Payment 

Amount: $123,833 

Annual Rate of Increase: 0% 

Usage Indices 

From Date Duration Factor 

June 1, 2001 1 year 0 months 0% 

June 1, 2002 10 years 0 months 100% 

June 1, 2012 Remaining 0% 

Recurring Contract: Administrative Costs 

Amount: $1,000 

Annual Rate of Increase: 2.7% 

Usage Indices 

From Date Duration Factor 

June 1, 2001 1 year 0 months 0% 

June 1, 2002 10 years 0 months 100% 

June 1, 2012 Remaining 0% 

Non-Recurring Contract: Oversight Cost 

Years/Months: 1 year 0 months 

Amount: $1,800 

Annual Rate of Increase: 2.7% 
F-30

Energy: Electricity 

Annual Consumption: 542,000.0 kWh 

Price per Unit: $0.05000 

Demand Charge: $0 

Utility Rebate: $0 

Location: Hawaii 

Rate Schedule: Industrial 

State: Hawaii 

Usage Indices 

From Date Duration Usage Index 

June 1, 2001 1 

year 0 months 0% 

June 1, 2002 Remaining 100% 

Escalation Rates 

From Date Duration Escalation 

April 1, 2001 1 

year 0 months -1.36% 

April 1, 2002 1 

year 0 months -1.16% 

April 1, 2003 1 year 0 months 1.16% 

April 1, 2004 1 

year 0 months -2.15% 

April 1, 2005 1 

year 0 months -1.74% 

April 1, 2006 1 year 0 months -3.57% 

April 1, 2007 1 

year 0 months -1.14% 

April 1, 2008 1 

year 0 months 1.37% 

April 1, 2009 1 year 0 months 1.06% 

April 1, 2010 1 

year 0 months 1.53% 

April 1, 2011 1 

year 0 months 1.81% 

April 1, 2012 1 year 0 months 2.8% 

April 1, 2013 1 

year 0 months 3.8% 

April 1, 2014 1 year 0 months 3% 

April 1, 2015 1 

year 0 months 2.8% 

April 1, 2016 1 

year 0 months 3.88% 

April 1, 2017 1 

year 0 months 2.60% 

April 1, 2018 1 

year 0 months 2.41% 

April 1, 2019 1 

year 0 months 3.58% 

April 1, 2020 1 

year 0 months 3.09% 

April 1, 2021 1 

year 0 months 2.89% 

April 1, 2022 1 

year 0 months 2.89% 

April 1, 2023 1 

year 0 months 2.89% 

April 1, 2024 1 

year 0 months 2.89% 

April 1, 2025 1 

year 0 months 2.89% 

April 1, 2026 1 

year 0 months 2.89% 

April 1, 2027 1 

year 0 months 2.99% 

April 1, 2028 1 

year 0 months 2.89% 

April 1, 2029 1 

year 0 months 2.89% 

April 1, 2030 1 

year 0 months 2.89% 

April 1, 2031 Remaining 2.91% 
F-31

Component: 

Initial Investment 

Initial Cost Paid By Agency (base-year $): $150,000 

Initial Cost Financed (base-year $): $850,000 

Annual Rate of Increase: 2.7% 

Expected Asset Life: 20 years 0 months 

Residual Value Factor: 0% 

Cost-Phasing 

Cost Adjustment Factor: 2.7% 

Years/Months (from Date) Date Portion 

0 years 0 months June 1, 2001 100% 

Replacement: Anodes/Controls 

Years/Months: 11 years 0 months 

Amount: $30,000 

Annual Rate Of Increase: 2.7% 

Expected Asset Life: 10 years 0 months 

Residual Value Factor: 0% 

Replacement: Tanks 

Years/Months: 11 years 0 months 

Amount: $230,400 

Annual Rate Of Increase: 2.7% 

Expected Asset Life: 10 years 0 months 

Residual Value Factor: 0% 

Replacement: Valves 

Years/Months: 16 years 0 months 

Amount: $18,580 

Annual Rate Of Increase: 2.7% 

Expected Asset Life: 15 years 0 months 

Residual Value Factor: 73% 

Recurring OM&R: Routine OM&R 

Amount: $7,600 

Annual Rate of Increase: 2.7% 

Usage Indices 

From Date Duration Factor 

June 1, 2001 11 years 0 months 0% 

June 1, 2012 Remaining 100% 
F-32

NIST BLCC 5.0-01: Detailed LCC Analysis 

Consistent with Federal Life Cycle Cost Methodology and Procedures, 10 CFR, Part 436, Subpart A 

General Information 

File Name: C:\Program Files\BLCC5\projects\Class Exercise F2.xml 

Run Date: Thu Sep 20 13:46:39 EDT 2001 

Analysis Type: Federal Analysis, Financed Project 

Project Name: Class Exercise F2 

Project Location: Hawaii 

Analyst: CDE 

Comment: Evaluate feasibility of replacing electric resistance water heating system with solar system financed 

through utility energy services contract 

Base Date: June 1, 2001 

Study Period: 20 years 0 months (June 1, 2001 through May 31, 2021) 

Discount Rate: 6.1% 

Discounting 

Convention: End-of-Year 

Discount and Escalation Rates are NOMINAL (inclusive of general inflation) 

Alternative: Existing system 

Initial Cost Data (not Discounted) 

Initial Capital Costs Paid By Agency 

(adjusted for price escalation) 

Initial Capital Costs for All Components: $0 

Component: 

Cost-Phasing 

Date Portion Yearly Cost 

June 1, 2001 100% $0 

------------ ------------

Total (for Component) $0 

Initial Capital Costs Financed 

(base-year dollars) 

Initial Capital Costs for All Components: $0 

Component: 

Initial Cost Financed $0 

Energy Costs: Electricity 

(base-year dollars) 

Average Average Average Average 

Annual Usage Price/Unit Annual Cost Annual Demand Annual Rebate 

2,826,331.5 kWh $0.05000 $141,317 $0 $0 

Life-Cycle Cost Analysis 
F-33

Present Value Annual Value 

Initial Capital Costs Paid By Agency $0 $0 

 

Contract-Related Costs 

 Annually Recurring Contract Costs $0 $0 

 Non-Annually Recurring Contract Costs $0 $0 

------------ ------------

 Subtotal (for Contract): $0 $0 

 

Energy Costs 

 Energy Consumption Costs $1,560,685 $137,063 

 Energy Demand Charges $0 $0 

 Energy Utility Rebates $0 $0 

------------ ------------

 Subtotal (for Energy): $1,560,685 $137,063 

 

Water Usage Costs $0 $0 

Water Disposal Costs $0 $0 

 

Operating, Maintenance & Repair Costs 

 Component: 

 Annually Recurring Costs $435,177 $38,218 

 Non-Annually Recurring Costs $0 $0 

------------ ------------

 Subtotal (for OM&R): $435,177 $38,218 

 

Replacements to Capital Components 

 Component: $50,312 $4,419 

------------ ------------

 Subtotal (for Replacements): $50,312 $4,419 

 

Residual Value of Original Capital Components 

 Component: $0 $0 

------------ ------------

 Subtotal (for Residual Value): $0 $0 

 

Residual Value of Capital Replacements 

 Component: -$2,483 -$218 

------------ ------------

 Subtotal (for Residual Value): -$2,483 -$218 

 

Total Life-Cycle Cost $2,043,691 $179,482 
F-34

Emissions Summary 

Energy Name Annual Life-Cycle 

Electricity: 

CO2 2,206,103.08 kg 44,116,021.53 kg 

SO2 3,883.12 kg 77,651.78 kg 

NOx 4,182.29 kg 83,634.39 kg 

Total: 

CO2 2,206,103.08 kg 44,116,021.53 kg 

SO2 3,883.12 kg 77,651.78 kg 

NOx 4,182.29 kg 83,634.39 kg 

Alternative: Solar Water Heating System 

Initial Cost Data (not Discounted) 

Initial Capital Costs Paid By Agency 

(adjusted for price escalation) 

Initial Capital Costs for All Components: $150,000 

Component: 

Cost-Phasing 

Date Portion Yearly Cost 

June 1, 2001 100% $150,000 

------------ ------------

Total (for Component) $150,000 

Initial Capital Costs Financed 

(base-year dollars) 

Initial Capital Costs for All Components: $850,000 

Component: 

Initial Cost Financed $850,000 

Energy Costs: Electricity 

(base-year dollars) 

Average Average Average Average 

Annual Usage Price/Unit Annual Cost Annual Demand Annual Rebate 

514,914.8 kWh $0.05000 $25,746 $0 $0 

Life-Cycle Cost Analysis 

Present Value Annual Value 

Initial Capital Costs Paid By Agency $150,000 $13,173 

 

Contract-Related Costs 

 Annually Recurring Contract Costs $863,785 $75,860 

 Non-Annually Recurring Contract Costs $1,743 $153 
F-35

------------ ------------

 Subtotal (for Contract): $865,527 $76,013 

 

Energy Costs 

 Energy Consumption Costs $284,333 $24,971 

 Energy Demand Charges $0 $0 

 Energy Utility Rebates $0 $0 

------------ ------------

 Subtotal (for Energy): $284,333 $24,971 

 

Water Usage Costs $0 $0 

Water Disposal Costs $0 $0 

 

Operating, Maintenance & Repair Costs 

 Component: 

 Annually Recurring Costs $40,834 $3,586 

 Non-Annually Recurring Costs $0 $0 

------------ ------------

 Subtotal (for OM&R): $40,834 $3,586 

 

Replacements to Capital Components 

 Component: $193,243 $16,971 

------------ ------------

 Subtotal (for Replacements): $193,243 $16,971 

 

Residual Value of Original Capital Components 

 Component: $0 $0 

------------ ------------

 Subtotal (for Residual Value): $0 $0 

 

Residual Value of Capital Replacements 

 Component: -$7,086 -$622 

------------ ------------

 Subtotal (for Residual Value): -$7,086 -$622 

 

Total Life-Cycle Cost $1,526,852 $134,092 
F-36

Emissions Summary 

Energy Name Annual Life-Cycle 

Electricity: 

CO2 401,918.61 kg 8,037,271.82 kg 

SO2 707.45 kg 14,146.98 kg 

NOx 761.95 kg 15,236.92 kg 

Total: 

CO2 401,918.61 kg 8,037,271.82 kg 

SO2 707.45 kg 14,146.98 kg 

NOx 761.95 kg 15,236.92 kg 
F-37

NIST BLCC 5.0-01: Comparative Analysis 

Consistent with Federal Life Cycle Cost Methodology and Procedures, 10 CFR, Part 436, Subpart A 

Base Case: Existing system 

Alternative: Solar Water Heating System 

General Information 

File Name: C:\Program Files\BLCC5\projects\Class Exercise F2.xml 

Run Date: Thu Sep 20 13:52:25 EDT 2001 

Project Name: Class Exercise F2 

Project Location: Hawaii 

Analysis Type: Federal Analysis, Financed Project 

Analyst: CDE 

Comment Evaluate feasibility of replacing electric resistance water heating system with solar system financed 

through utility energy services contract 

Base Date of Study: June 1, 2001 

Service Date: June 1, 2001 

Study Period: 20 years 0 months(June 1, 2001 through May 31, 2021) 

Discount Rate: 6.1% 

Discounting 

Convention: End-of-Year 

Comparison of Present-Value Costs 

PV Life-Cycle Cost 

Base Case Alternative Savings from Alternative 

Initial Investment Costs Paid By Agency: 

 Capital Requirements as of Base Date $0 $150,000 -$150,000 

Future Costs: 

 Recurring and Non-Recurring Contract Costs $0 $865,527 -$865,527 

 Energy Consumption Costs $1,560,685 $284,333 $1,276,352 

 Energy Demand Charges $0 $0 $0 

 Energy Utility Rebates $0 $0 $0 

 Water Costs $0 $0 $0 

 Recurring and Non-Recurring OM&R Costs $435,177 $40,834 $394,343 

 Capital Replacements $50,312 $193,243 -$142,931 

 Residual Value at End of Study Period -$2,483 -$7,086 $4,603 

------------ ------------ ------------ 

 Subtotal (for Future Cost Items) $2,043,691 $1,376,852 $666,840 

------------ ------------ ------------ 

Total PV Life-Cycle Cost $2,043,691 $1,526,852 $516,840 

Net Savings from Alternative Compared with Base Case 

PV of Operational Savings $1,670,694 
F-38

- PV of Differential Costs $1,153,855 

------------ 

Net Savings $516,840 

NOTE: Meaningful SIR, AIRR and Payback can not be computed for Financed 

Projects. 

Comparison of Contract Payments and Savings 

from Alternative 

(undiscounted) 

Savings in Savings in Savings in Savings in 

Year Beginning Contract Costs Energy Costs Total Operational Costs Total Costs 

Jun 2001 $0 $0 $0 -$150,000 

Jun 2002 -$126,736 $119,101 $153,081 $26,345 

Jun 2003 -$124,916 $119,827 $154,726 $29,810 

Jun 2004 -$124,945 $117,330 $153,171 $28,225 

Jun 2005 -$124,975 $114,938 $151,746 $26,771 

Jun 2006 -$125,006 $111,293 $149,094 $24,087 

Jun 2007 -$125,038 $110,474 $149,298 $52,137 

Jun 2008 -$125,070 $111,931 $151,802 $26,732 

Jun 2009 -$125,104 $113,206 $154,153 $29,049 

Jun 2010 -$125,138 $114,985 $157,037 $31,898 

Jun 2011 -$125,173 $117,256 $160,445 $35,272 

Jun 2012 $0 $120,728 $154,620 -$162,607 

Jun 2013 $0 $125,149 $159,956 $159,956 

Jun 2014 $0 $128,856 $164,601 $164,601 

Jun 2015 $0 $132,697 $169,410 $169,410 

Jun 2016 $0 $137,561 $175,265 $175,265 

Jun 2017 $0 $141,095 $179,816 $187,750 

Jun 2018 $0 $144,760 $184,526 $184,526 

Jun 2019 $0 $149,834 $190,675 $190,675 

Jun 2020 $0 $154,396 $196,336 $211,347 

Energy Savings Summary 

Energy Savings Summary (in stated units) 

Energy -----Average Annual Consumption----- Life-Cycle 

Type Base Case Alternative Savings Savings 

Electricity 2,826,331.5 kWh 514,914.8 kWh 2,311,416.6 kWh 46,222,004.1 kWh 

Energy Savings Summary (in MBtu) 

Energy -----Average Annual Consumption----- Life-Cycle 

Type Base Case Alternative Savings Savings 

Electricity 9,643.8 MBtu 1,757.0 MBtu 7,886.9 MBtu 157,716.0 MBtu 
F-39

Emissions Reduction Summary 

Energy -----Average Annual Emissions----- Life-Cycle 

Type Base Case Alternative Reduction Reduction 

Electricity 

CO2 2,206,103.08 kg 401,918.61 kg 1,804,184.46 kg 36,078,749.71 kg 

SO2 3,883.12 kg 707.45 kg 3,175.67 kg 63,504.80 kg 

NOx 4,182.29 kg 761.95 kg 3,420.34 kg 68,397.47 kg 

Total: 

CO2 2,206,103.08 kg 401,918.61 kg 1,804,184.46 kg 36,078,749.71 kg 

SO2 3,883.12 kg 707.45 kg 3,175.67 kg 63,504.80 kg 

NOx 4,182.29 kg 761.95 kg 3,420.34 kg 68,397.47 kg 

Module G

Class Exercises
Class Exercise G1

Water Conservation

A military barracks at Fort Meade, MD, housing 200 enlisted men, uses 800year at a cost of $4.00/1000 gallons of use plus $5.00/1000 gallons sewer ch

scheduled to be replaced with a new barracks in seven years. A water consethat will reduce usage and disposal by 25 % at an initial cost of $5,000 and 

maintenance costs over the seven years of remaining building life. All of thlife expectancy of seven years or more. Water usage and disposal prices are average of 5 %/year over general inflation for the remaining life of the build

years of the barracks’ life, the occupancy level (and thus water consumptioncurrent level.The base date and service date are specified as June 2001. Use the mid-yeaUsing BLCC5, compute the life-cycle water-related costs before and after thNet Savings and Savings-to-Investment Ratio. Would you recommend this 
Class Exercise G2

Chiller Replacement

As energy manager of a federal research facility, you are tasked with replacchiller, which has an expected remaining life of 10 years but must be replacYou have submitted technical specifications and operating conditions to all 

and asked for bid responses which are to include the following cost and eneannual energy costs based on current electricity costs, and the operating sch

manufacturers must calculate annual energy usage and peak energy usage fostandardized energy-estimating method. You inform the manufacturers that the lowest 25-year life-cycle cost, using current FEMP LCC criteria (3.3 % escalation rates (South (Texas), industrial rates) and the BLCC computer prcalculations. Since you expect that maintenance costs after the end of the 1

be similar for all systems, O&M costs can be ignored after year 10. Current $.048/kWh for electricity usage (same during winter and summer) and $104peak kW demand. (Multiply the maximum annual kW demand by $104 to gcharge.) Water costs and other operating costs are assumed to be similar fo

of this competition. The base date and service date for all LCC analyses are the end-of-year discounting convention.
Class Exercise G2 (co

Three manufacturers responded to this submission, with the following pro

 Best Freeze Icy Nights Snow Drift First Cost $360,000 $256,000 $310,000 Annual kWh 3,125,407 2,984,564 2,728,486 Maximum kW 600 560 530 Service Contract Year:  1 $4,000 $10,000 $0  2 $4,000 $10,000 $0  3 $6,000 $10,000 $0  4 $6,000 $10,000 $0  5 $8,000 $10,000 $15,000  6 $8,000 $10,000 $15,000  7 $10,000 $10,000 $15,000  8 $10,000 $10,000 $15,000  9 $20,000 $10,000 $15,000  10 $20,000 $10,000 $15,000 LCC $3,761,950 $3,494,229 $3,293,624 

Your job is to check the LCC computations submitted by each of the manwho has won the bid competitions.
Class Exercise G3

Alternative Financing of Energy Conservation P

A federal agency in Arizona is considering replacing an existing lighting sywith a new lighting/daylighting system financed through a utility contract. is expected to be operational for another 15 years. Use BLCC5 to perform aProject InformationLocation: ArizonaBase Date: June 2001Study Period: 15 yearsContract Term: 10 yearsDiscount Rate: 6.1%Annual Rate of Inflation: 2.7%Discounting Convention: end-of-year
Class Exercise G3 (co

Base CaseInitial Investment Cost: 0Energy Type: Electricity

Annual Usage: 1,082,633 kWhPrice: $0.04600/kWh, commercialAnnual Demand Charge: $30,105

Annual OM&R costs: $5,600AlternativeAmount Borrowed: $390,480Expected Life: 20 yearsResidual Value Factor: 25%Annual Contract Payment: $62,000, fixedEnergy Type: ElectricityAnnual Usage: 206,911 kWhPrice: $0.04600/kWh, commercialAnnual Demand Charge: $3,311Annual OM&R: $0 during contract term

$3,000 in years 11 through 15
Class Exercise G4

Lease Versus Buy Decision (BLCC4 Exercise

A federal government agency is considering building a new office building office space on land that it already owns at an initial cost of $5,000,000. A p

to build the same building on private land across the street from the propose

the government for 20 years at an annual lease rate of $500,000, with an anntied directly to the rate of general inflation. Major building maintenance, wh

$200,000 per year at current prices, is included in the lease amount. All utili

operating-related costs will be the same for both buildings. The building has 

and a residual value at the end of the study period equal to 50% of its initial Which alternative is more advantageous to the government?Use the Federal Analysis--Projects Subject to OMB A-94 Module in BLCC

for the base date and service date. Use the end-of-year discounting conventi

of general inflation is 2.7%. Can this analysis be performed in constant doll
G-8

Solution to Class Exercise G1 

NIST BLCC 5.0-01: Input Data Listing 

Consistent with Federal Life Cycle Cost Methodology and Procedures, 10 CFR, Part 436, Subpart A 

General Information 

File Name: C:\Program Files\BLCC5\projects\Class Exercise 

G1.xml 

Run Date: Thu Sep 20 14:08:19 EDT 2001 

Analysis Type: Federal Analysis, Agency-Funded Project 

Project Name: Class Exercise G1 

Project Location: Maryland 

Analyst: ASR 

Comment: Military Barracks at Fort Meade, MD 

Base Date: June 1, 2001 

Service Date: June 1, 2001 

Study Period: 7 years 0 months (June 1, 2001 through May 31, 2008) 

Discount Rate: 3.3% 

Discounting Convention: Mid-Year 

Discount and Escalation Rates are REAL (exclusive of general inflation) 

Alternative: Existing 

Water: Water 

Annual Usage Annual Disposal 

Units/Year Price/Unit Units/Year Price/Unit 

@Summer Rates 800.0 ThousGal $4.00000 800.0 ThousGal $5.00000 

@Winter Rates 0.0 ThousGal $0.00000 0.0 ThousGal $0.00000 

Escalation Rates - Usage 

From Date Duration Usage Cost Escalation 

June 1, 2001 Remaining 5.00% 

Escalation Rates - Disposal 

From Date Duration Disposal Cost Escalation 

June 1, 2001 Remaining 5.00% 

Usage Indices - Usage 

From Date Duration Index 

June 1, 2001 5 years 0 months 100% 

June 1, 2006 Remaining 50% 

 
G-9

Usage Indices - Disposal 

From Date Duration Index 

June 1, 2001 5 years 0 months 100% 

June 1, 2006 Remaining 50% 

Component: 

Initial Investment 

Initial Cost (base-year $): $0 

Annual Rate of Increase: 0% 

Expected Asset Life: 0 years 0 months 

Residual Value Factor: 0% 

Cost-Phasing 

Cost Adjustment Factor: 0% 

Years/Months (from Date) Date Portion 

0 years 0 months June 1, 2001 100% 

Alternative: Water Project 

Water: Water 

Annual Usage Annual Disposal 

Units/Year Price/Unit Units/Year Price/Unit 

@Summer Rates 600.0 ThousGal $4.00000 600.0 ThousGal $5.00000 

@Winter Rates 0.0 ThousGal $0.00000 0.0 ThousGal $0.00000 

Escalation Rates - Usage 

From Date Duration Usage Cost Escalation 

June 1, 2001 Remaining 5.00% 

Escalation Rates - Disposal 

From Date Duration Disposal Cost Escalation 

June 1, 2001 Remaining 5.00% 

Usage Indices - Usage 

From Date Duration Index 

June 1, 2001 5 years 0 months 100% 

June 1, 2006 Remaining 50% 

Usage Indices - Disposal 

From Date Duration Index 

June 1, 2001 5 years 0 months 100% 

June 1, 2006 Remaining 50% 

Component: 

Initial Investment 

Initial Cost (base-year $): $5,000 
G-10

Annual Rate of Increase: 0% 

Expected Asset Life: 7 years 0 months 

Residual Value Factor: 0% 

Cost-Phasing 

Cost Adjustment Factor: 0% 

Years/Months (from Date) Date Portion 

0 years 0 months June 1, 2001 100% 
G-11

NIST BLCC 5.0-01: Comparative Analysis 

Consistent with Federal Life Cycle Cost Methodology and Procedures, 10 CFR, Part 436, Subpart A 

Base Case: Existing 

Alternative: Water Project 

General Information 

File Name: C:\Program Files\BLCC5\projects\Class Exercise G1.xml 

Run Date: Thu Sep 20 14:10:47 EDT 2001 

Project Name: Class Exercise G1 

Project Location: Maryland 

Analysis Type: Federal Analysis, Agency-Funded Project 

Analyst: ASR 

Comment Military Barracks at Fort Meade, MD 

Base Date of Study: June 1, 2001 

Service Date: June 1, 2001 

Study Period: 7 years 0 months(June 1, 2001 through May 31, 2008) 

Discount Rate: 3.3% 

Discounting Convention: Mid-Year 

Comparison of Present-Value Costs 

PV Life-Cycle Cost 

Base Case Alternative Savings from Alternative 

Initial Investment Costs: 

 Capital Requirements as of Base Date $0 $5,000 -$5,000 

Future Costs: 

 Energy Consumption Costs $0 $0 $0 

 Energy Demand Charges $0 $0 $0 

 Energy Utility Rebates $0 $0 $0 

 Water Costs $45,450 $34,088 $11,363 

 Recurring and Non-Recurring OM&R Costs $0 $0 $0 

 Capital Replacements $0 $0 $0 

 Residual Value at End of Study Period $0 $0 $0 

------------ ------------ ------------ 

 Subtotal (for Future Cost Items) $45,450 $34,088 $11,363 

------------ ------------ ------------ 

Total PV Life-Cycle Cost $45,450 $39,088 $6,363 

Net Savings from Alternative Compared with Base Case 

PV of Non-Investment Savings $11,363 

- Increased Total Investment $5,000 

------------ 

Net Savings $6,363 
G-12

Savings-to-Investment Ratio (SIR) 

SIR = 2.27 

Adjusted Internal Rate of Return 

AIRR = 16.16% 

Payback Period 

Estimated Years to Payback (from beginning of Service Period) 

Simple Payback occurs in year 3 

Discounted Payback occurs in year 3 
G-13

Solution to Class Exercise G2 

NIST BLCC 5.0-01: Input Data Listing 

Consistent with Federal Life Cycle Cost Methodology and Procedures, 10 CFR, Part 436, Subpart A 

General Information 

File Name: C:\Program Files\BLCC5\projects\Class Exercise 

G2.xml 

Run Date: Thu Sep 20 14:23:51 EDT 2001 

Analysis Type: Federal Analysis, Agency-Funded Project 

Project Name: Class Exercise G2 

Project Location: Texas 

Analyst: ASR 

Base Date: June 1, 2001 

Service Date: June 1, 2001 

Study Period: 25 years 0 months (June 1, 2001 through May 31, 2026) 

Discount Rate: 3.3% 

Discounting Convention: End-of-Year 

Discount and Escalation Rates are REAL (exclusive of general inflation) 

Alternative: Best Freeze 

Energy: Electricity 

Annual Consumption: 3,125,407.0 kWh 

Price per Unit: $0.04800 

Demand Charge: $62,400 

Utility Rebate: $0 

Location: Texas 

Rate Schedule: Industrial 

State: Texas 

Usage Indices 

From Date Duration Usage Index 

June 1, 2001 Remaining 100% 

Escalation Rates 

From Date Duration Escalation 

April 1, 2001 1 year 0 months -1.99% 

April 1, 2002 1 year 0 months -1.22% 

April 1, 2003 1 year 0 months -0.25% 

April 1, 2004 1 year 0 months -1.32% 

April 1, 2005 1 year 0 months -1.09% 

April 1, 2006 1 year 0 months -1.52% 

April 1, 2007 1 year 0 months -1.2% 

April 1, 2008 1 year 0 months -0.87% 

April 1, 2009 1 year 0 months -0.35% 
G-14

April 1, 2010 1 

year 0 months -0.79% 

April 1, 2011 1 

year 0 months -0.8% 

April 1, 2012 1 

year 0 months -0.27% 

April 1, 2013 1 

year 0 months 0.36% 

April 1, 2014 1 

year 0 months 0.36% 

April 1, 2015 1 

year 0 months 0.62% 

April 1, 2016 1 

year 0 months 0.79% 

April 1, 2017 1 year 0 months 0.79% 

April 1, 2018 1 

year 0 months 0.43% 

April 1, 2019 1 

year 0 months 0.61% 

April 1, 2020 1 

year 0 months 0.26% 

April 1, 2021 1 

year 0 months 0.26% 

April 1, 2022 1 

year 0 months 0.26% 

April 1, 2023 1 year 0 months 0.17% 

April 1, 2024 1 

year 0 months 0.26% 

April 1, 2025 1 

year 0 months 0.25% 

April 1, 2026 1 

year 0 months 0.17% 

April 1, 2027 1 year 0 months 0.25% 

April 1, 2028 1 

year 0 months 0.25% 

April 1, 2029 1 

year 0 months 0.25% 

April 1, 2030 1 year 0 months 0.17% 

April 1, 2031 Remaining 0.22% 

Component: 

Initial Investment 

Initial Cost (baseyear $): $360,000 

Annual Rate of Increase: 0% 

Expected Asset Life: 25 years 0 months 

Residual Value Factor: 0% 

Cost-Phasing 

Cost Adjustment Factor: 0% 

Years/Months (from Date) Date Portion 

0 years 0 months June 1, 2001 100% 

Non-Recurring OM&R: Year 1 

Years/Months: 1 year 0 months 

Amount: $4,000 

Annual Rate of Increase: 0% 

Non-Recurring OM&R: Year 2 

Years/Months: 2 years 0 months 

Amount: $4,000 

Annual Rate of Increase: 0% 

Non-Recurring OM&R: Year 3 

Years/Months: 3 years 0 months 
G-15

Amount: $6,000 

Annual Rate of Increase: 0% 

Non-Recurring OM&R: Year 4 

Years/Months: 4 years 0 months 

Amount: $6,000 

Annual Rate of Increase: 0% 

Non-Recurring OM&R: Year 5 

Years/Months: 5 years 0 months 

Amount: $8,000 

Annual Rate of Increase: 0% 

Non-Recurring OM&R: Year 6 

Years/Months: 6 years 0 months 

Amount: $8,000 

Annual Rate of Increase: 0% 

Non-Recurring OM&R: Year 7 

Years/Months: 7 years 0 months 

Amount: $10,000 

Annual Rate of Increase: 0% 

Non-Recurring OM&R: Year 8 

Years/Months: 8 years 0 months 

Amount: $10,000 

Annual Rate of Increase: 0% 

Non-Recurring OM&R: Year 9 

Years/Months: 9 years 0 months 

Amount: $20,000 

Annual Rate of Increase: 0% 

Non-Recurring OM&R: Year 10 

Years/Months: 10 years 0 months 

Amount: $20,000 

Annual Rate of Increase: 0% 

Alternative: Icy Nights 

Energy: Electricity 

Annual Consumption: 2,984,564.0 kWh 

Price per Unit: $0.04800 

Demand Charge: $58,240 

Utility Rebate: $0 

Location: Texas 

Rate Schedule: Industrial 

State: Texas 
G-16

Usage Indices 

From Date Duration Usage Index 

June 1, 2001 Remainin

g 100% 

Escalation Rates 

From Date Duration Escalation 

April 1, 2001 1 

year 0 months -1.99% 

April 1, 2002 1 

year 0 months -1.22% 

April 1, 2003 1 

year 0 months -0.25% 

April 1, 2004 1 

year 0 months -1.32% 

April 1, 2005 1 

year 0 months -1.09% 

April 1, 2006 1 

year 0 months -1.52% 

April 1, 2007 1 

year 0 months -1.2% 

April 1, 2008 1 

year 0 months -0.87% 

April 1, 2009 1 

year 0 months -0.35% 

April 1, 2010 1 

year 0 months -0.79% 

April 1, 2011 1 year 0 months -0.8% 

April 1, 2012 1 

year 0 months -0.27% 

April 1, 2013 1 year 0 months 0.36% 

April 1, 2014 1 year 0 months 0.36% 

April 1, 2015 1 

year 0 months 0.62% 

April 1, 2016 1 year 0 months 0.79% 

April 1, 2017 1 

year 0 months 0.79% 

April 1, 2018 1 

year 0 months 0.43% 

April 1, 2019 1 year 0 months 0.61% 

April 1, 2020 1 

year 0 months 0.26% 

April 1, 2021 1 

year 0 months 0.26% 

April 1, 2022 1 year 0 months 0.26% 

April 1, 2023 1 

year 0 months 0.17% 

April 1, 2024 1 

year 0 months 0.26% 

April 1, 2025 1 year 0 months 0.25% 

April 1, 2026 1 

year 0 months 0.17% 

April 1, 2027 1 

year 0 months 0.25% 

April 1, 2028 1 

year 0 months 0.25% 

April 1, 2029 1 

year 0 months 0.25% 

April 1, 2030 1 year 0 months 0.17% 

April 1, 2031 Remaining 0.22% 

Component: 

Initial Investment 

Initial Cost (baseyear $): $256,000 

Annual Rate of Increase: 0% 

Expected Asset Life: 25 years 0 months 

Residual Value Factor: 0% 

Cost-Phasing 

Cost Adjustment Factor: 0% 
G-17

Years/Months (from Date) Date Portion 

0 years 0 months June 1, 2001 100% 

Non-Recurring OM&R: Year 1 

Years/Months: 1 year 0 months 

Amount: $10,000 

Annual Rate of Increase: 0% 

Non-Recurring OM&R: Year 2 

Years/Months: 2 years 0 months 

Amount: $10,000 

Annual Rate of Increase: 0% 

Non-Recurring OM&R: Year 3 

Years/Months: 3 years 0 months 

Amount: $10,000 

Annual Rate of Increase: 0% 

Non-Recurring OM&R: Year 4 

Years/Months: 4 years 0 months 

Amount: $10,000 

Annual Rate of Increase: 0% 

Non-Recurring OM&R: Year 5 

Years/Months: 5 years 0 months 

Amount: $10,000 

Annual Rate of Increase: 0% 

Non-Recurring OM&R: Year 6 

Years/Months: 6 years 0 months 

Amount: $10,000 

Annual Rate of Increase: 0% 

Non-Recurring OM&R: Year 7 

Years/Months: 7 years 0 months 

Amount: $10,000 

Annual Rate of Increase: 0% 

Non-Recurring OM&R: Year 8 

Years/Months: 8 years 0 months 

Amount: $10,000 

Annual Rate of Increase: 0% 

Non-Recurring OM&R: Year 9 

Years/Months: 9 years 0 months 

Amount: $10,000 

Annual Rate of Increase: 0% 
G-18

Non-Recurring OM&R: Year 10 

Years/Months: 10 years 0 months 

Amount: $10,000 

Annual Rate of Increase: 0% 

Alternative: Snow Drift 

Energy: Electricity 

Annual Consumption: 2,728,486.0 kWh 

Price per Unit: $0.04800 

Demand Charge: $55,120 

Utility Rebate: $0 

Location: Texas 

Rate Schedule: Industrial 

State: Texas 

Usage Indices 

From Date Duration Usage Index 

June 1, 2001 Remainin

g 100% 

Escalation Rates 

From Date Duration Escalation 

April 1, 2001 1 

year 0 months -1.99% 

April 1, 2002 1 year 0 months -1.22% 

April 1, 2003 1 

year 0 months -0.25% 

April 1, 2004 1 

year 0 months -1.32% 

April 1, 2005 1 year 0 months -1.09% 

April 1, 2006 1 

year 0 months -1.52% 

April 1, 2007 1 

year 0 months -1.2% 

April 1, 2008 1 year 0 months -0.87% 

April 1, 2009 1 

year 0 months -0.35% 

April 1, 2010 1 

year 0 months -0.79% 

April 1, 2011 1 

year 0 months -0.8% 

April 1, 2012 1 

year 0 months -0.27% 

April 1, 2013 1 year 0 months 0.36% 

April 1, 2014 1 

year 0 months 0.36% 

April 1, 2015 1 

year 0 months 0.62% 

April 1, 2016 1 

year 0 months 0.79% 

April 1, 2017 1 

year 0 months 0.79% 

April 1, 2018 1 

year 0 months 0.43% 

April 1, 2019 1 

year 0 months 0.61% 

April 1, 2020 1 

year 0 months 0.26% 

April 1, 2021 1 

year 0 months 0.26% 

April 1, 2022 1 

year 0 months 0.26% 

April 1, 2023 1 

year 0 months 0.17% 

April 1, 2024 1 

year 0 months 0.26% 

April 1, 2025 1 

year 0 months 0.25% 
G-19

April 1, 2026 1 

year 0 months 0.17% 

April 1, 2027 1 

year 0 months 0.25% 

April 1, 2028 1 

year 0 months 0.25% 

April 1, 2029 1 

year 0 months 0.25% 

April 1, 2030 1 

year 0 months 0.17% 

April 1, 2031 Remaining 0.22% 

Component: 

Initial Investment 

Initial Cost (baseyear $): $310,000 

Annual Rate of Increase: 0% 

Expected Asset Life: 25 years 0 months 

Residual Value Factor: 0% 

Cost-Phasing 

Cost Adjustment Factor: 0% 

Years/Months (from Date) Date Portion 

0 years 0 months June 1, 2001 100% 

Non-Recurring OM&R: Year 1 

Years/Months: 1 year 0 months 

Amount: $0 

Annual Rate of Increase: 0% 

Non-Recurring OM&R: Year 2 

Years/Months: 2 years 0 months 

Amount: $0 

Annual Rate of Increase: 0% 

Non-Recurring OM&R: Year 3 

Years/Months: 3 years 0 months 

Amount: $0 

Annual Rate of Increase: 0% 

Non-Recurring OM&R: Year 4 

Years/Months: 4 years 0 months 

Amount: $0 

Annual Rate of Increase: 0% 

Non-Recurring OM&R: Year 5 

Years/Months: 5 years 0 months 

Amount: $15,000 

Annual Rate of Increase: 0% 

Non-Recurring OM&R: Year 6 

Years/Months: 6 years 0 months 

Amount: $15,000 

Annual Rate of Increase: 0% 
G-20

Non-Recurring OM&R: Year 7 

Years/Months: 7 years 0 months 

Amount: $15,000 

Annual Rate of Increase: 0% 

Non-Recurring OM&R: Year 8 

Years/Months: 8 years 0 months 

Amount: $15,000 

Annual Rate of Increase: 0% 

Non-Recurring OM&R: Year 9 

Years/Months: 9 years 0 months 

Amount: $15,000 

Annual Rate of Increase: 0% 

Non-Recurring OM&R: Year 10 

Years/Months: 10 years 0 months 

Amount: $15,000 

Annual Rate of Increase: 0% 
G-21

NIST BLCC 5.0-01: Summary LCC 

Consistent with Federal Life Cycle Cost Methodology and Procedures, 10 CFR, Part 436, Subpart A 

General Information 

File Name: C:\Program Files\BLCC5\projects\Class Exercise 

G2.xml 

Run Date: Thu Sep 20 14:28:42 EDT 2001 

Analysis Type: Federal Analysis, Agency-Funded Project 

Project Name: Class Exercise G2 

Project Location: Texas 

Analyst: ASR 

Base Date: June 1, 2001 

Service Date: June 1, 2001 

Study Period: 25 years 0 months (June 1, 2001 through May 31, 2026) 

Discount Rate: 3.3% 

Discounting Convention: End-of-Year 

Discount and Escalation Rates are REAL (exclusive of general inflation) 

Alternative: Best Freeze 

LCC Summary 

Present Value Annual Value 

Initial Cost $360,000 $21,373 

Energy Consumption Costs $2,348,369 $139,422 

Energy Demand Costs $976,794 $57,992 

Energy Utility Rebates $0 $0 

Water Usage Costs $0 $0 

Water Disposal Costs $0 $0 

Annually Recurring OM&R Costs $0 $0 

Non-Annually Recurring OM&R Costs $76,787 $4,559 

Replacement Costs $0 $0 

Less Remaining Value $0 $0 

------------ ------------

Total Life-Cycle Cost $3,761,950 $223,345 

Alternative: Icy Nights 

LCC Summary 

Present Value Annual Value 

Initial Cost $256,000 $15,199 

Energy Consumption Costs $2,242,542 $133,139 

Energy Demand Costs $911,675 $54,126 

Energy Utility Rebates $0 $0 

Water Usage Costs $0 $0 

Water Disposal Costs $0 $0 
G-22

Annually Recurring OM&R Costs $0 $0 

Non-Annually Recurring OM&R Costs $84,012 $4,988 

Replacement Costs $0 $0 

Less Remaining Value $0 $0 

------------ ------------

Total Life-Cycle Cost $3,494,229 $207,451 

Alternative: Snow Drift 

LCC Summary 

Present Value Annual Value 

Initial Cost $310,000 $18,405 

Energy Consumption Costs $2,050,130 $121,715 

Energy Demand Costs $862,835 $51,226 

Energy Utility Rebates $0 $0 

Water Usage Costs $0 $0 

Water Disposal Costs $0 $0 

Annually Recurring OM&R Costs $0 $0 

Non-Annually Recurring OM&R Costs $70,659 $4,195 

Replacement Costs $0 $0 

Less Remaining Value $0 $0 

------------ ------------

Total Life-Cycle Cost $3,293,624 $195,541 
G-23

Solution to Class Exercise G3 

NIST BLCC 5.0-01: Input Data Listing 

Consistent with Federal Life Cycle Cost Methodology and Procedures, 10 CFR, Part 436, Subpart A 

General Information 

File Name: C:\Program Files\BLCC5\projects\Class Exercise G3.xml 

Run Date: Thu Sep 20 14:31:20 EDT 2001 

Analysis Type: Federal Analysis, Financed Project 

Project Name: Class Exercise G3 

Project Location: Arizona 

Analyst: ASR 

Comment: Replace existing lighting system with new system financed through a utility 

contract. 

Base Date: June 1, 2001 

Study Period: 15 years 0 months (June 1, 2001 through May 31, 2016) 

Discount Rate: 6.1% 

Discounting Convention: End-of-Year 

Discount and Escalation Rates are NOMINAL (inclusive of general inflation) 

Alternative: Existing 

Comment: Base Case: Keep existing system for remaining 15 years of its useful life. 

Energy: Electricity 

Annual Consumption: 1,082,633.0 kWh 

Price per Unit: $0.04600 

Demand Charge: $30,105 

Utility Rebate: $0 

Location: Arizona 

Rate Schedule: Commercial 

State: Arizona 

Usage Indices 

From Date Duration Usage Index 

June 1, 2001 Remaining 100% 

Escalation Rates 

From Date Duration Escalation 

April 1, 2001 1 year 0 months -0.6% 

April 1, 2002 1 year 0 months -0.34% 

April 1, 2003 1 year 0 months 1.51% 

April 1, 2004 1 year 0 months -1.38% 

April 1, 2005 1 year 0 months -0.65% 

April 1, 2006 1 year 0 months -2.21% 

April 1, 2007 1 year 0 months 0.04% 

April 1, 2008 1 year 0 months 1.64% 
G-24

April 1, 2009 1 year 0 months 1.07% 

April 1, 2010 1 year 0 months 1.96% 

April 1, 2011 1 year 0 months 1.78% 

April 1, 2012 1 year 0 months 2.87% 

April 1, 2013 1 year 0 months 3.98% 

April 1, 2014 1 year 0 months 2.93% 

April 1, 2015 1 year 0 months 2.99% 

April 1, 2016 1 year 0 months 3.78% 

April 1, 2017 1 year 0 months 2.53% 

April 1, 2018 1 year 0 months 2.13% 

April 1, 2019 1 year 0 months 3.27% 

April 1, 2020 1 year 0 months 3.04% 

April 1, 2021 1 year 0 months 2.93% 

April 1, 2022 1 year 0 months 2.87% 

April 1, 2023 1 year 0 months 2.87% 

April 1, 2024 1 year 0 months 2.87% 

April 1, 2025 1 year 0 months 2.92% 

April 1, 2026 1 year 0 months 2.87% 

April 1, 2027 1 year 0 months 2.87% 

April 1, 2028 1 year 0 months 2.92% 

April 1, 2029 1 year 0 months 2.87% 

April 1, 2030 1 year 0 months 2.92% 

April 1, 2031 Remaining 2.89% 

Component: Existing System 

Comment: Keep existing system for the remaining 15 years of its useful life. 

Initial Investment 

Initial Cost Paid By Agency (base-year $): $0 

Initial Cost Financed (base-year $): $0 

Annual Rate of Increase: 2.7% 

Expected Asset Life: 15 years 0 months 

Residual Value Factor: 0% 

Cost-Phasing 

Cost Adjustment Factor: 2.7% 

Years/Months (from Date) Date Portion 

0 years 0 months June 1, 2001 100% 

Recurring OM&R: OM&R Cost 

Amount: $5,600 

Annual Rate of Increase: 2.7% 

Usage Indices 

From Date Duration Factor 

June 1, 2001 Remaining 100% 
G-25

Alternative: Lighting Retrofit 

Recurring Contract: Annual Contract Payment 

Amount: $62,000 

Annual Rate of Increase: 0% 

Usage Indices 

From Date Duration Factor 

June 1, 2001 10 years 0 months 100% 

June 1, 2011 Remaining 0% 

Energy: Electricity 

Annual Consumption: 206,911.0 kWh 

Price per Unit: $0.04600 

Demand Charge: $3,311 

Utility Rebate: $0 

Location: Arizona 

Rate Schedule: Commercial 

State: Arizona 

Usage Indices 

From Date Duration Usage Index 

June 1, 2001 Remaining 100% 

Escalation Rates 

From Date Duration Escalation 

April 1, 2001 1 year 0 months -0.6% 

April 1, 2002 1 year 0 months -0.34% 

April 1, 2003 1 year 0 months 1.51% 

April 1, 2004 1 year 0 months -1.38% 

April 1, 2005 1 year 0 months -0.65% 

April 1, 2006 1 year 0 months -2.21% 

April 1, 2007 1 year 0 months 0.04% 

April 1, 2008 1 year 0 months 1.64% 

April 1, 2009 1 year 0 months 1.07% 

April 1, 2010 1 year 0 months 1.96% 

April 1, 2011 1 year 0 months 1.78% 

April 1, 2012 1 year 0 months 2.87% 

April 1, 2013 1 year 0 months 3.98% 

April 1, 2014 1 year 0 months 2.93% 

April 1, 2015 1 year 0 months 2.99% 

April 1, 2016 1 year 0 months 3.78% 

April 1, 2017 1 year 0 months 2.53% 

April 1, 2018 1 year 0 months 2.13% 

April 1, 2019 1 year 0 months 3.27% 

April 1, 2020 1 year 0 months 3.04% 

April 1, 2021 1 year 0 months 2.93% 
G-26

April 1, 2022 1 year 0 months 2.87% 

April 1, 2023 1 year 0 months 2.87% 

April 1, 2024 1 year 0 months 2.87% 

April 1, 2025 1 year 0 months 2.92% 

April 1, 2026 1 year 0 months 2.87% 

April 1, 2027 1 year 0 months 2.87% 

April 1, 2028 1 year 0 months 2.92% 

April 1, 2029 1 year 0 months 2.87% 

April 1, 2030 1 year 0 months 2.92% 

April 1, 2031 Remaining 2.89% 

Component: New System 

Comment: Install new lighting/daylighting system financed through UC contract 

Initial Investment 

Initial Cost Paid By Agency (base-year $): $0 

Initial Cost Financed (base-year $): $390,480 

Annual Rate of Increase: 2.7% 

Expected Asset Life: 20 years 0 months 

Residual Value Factor: 25% 

Cost-Phasing 

Cost Adjustment Factor: 2.7% 

Years/Months (from Date) Date Portion 

0 years 0 months June 1, 2001 100% 

Recurring OM&R: Post-Contract OM Costs 

Amount: $3,000 

Annual Rate of Increase: 2.7% 

Usage Indices 

From Date Duration Factor 

June 1, 2001 10 years 0 months 0% 

June 1, 2011 Remaining 100% 
G-27

NIST BLCC 5.0-01: Comparative Analysis 

Consistent with Federal Life Cycle Cost Methodology and Procedures, 10 CFR, Part 436, Subpart A 

Base Case: Existing 

Alternative: Lighting Retrofit 

General Information 

File Name: C:\Program Files\BLCC5\projects\Class Exercise G3.xml 

Run Date: Thu Sep 20 14:33:10 EDT 2001 

Project Name: Class Exercise G3 

Project Location: Arizona 

Analysis Type: Federal Analysis, Financed Project 

Analyst: ASR 

Comment Replace existing lighting system with new system financed through a utility contract. 

Base Date of Study: June 1, 2001 

Service Date: June 1, 2001 

Study Period: 15 years 0 months(June 1, 2001 through May 31, 2016) 

Discount Rate: 6.1% 

Discounting Convention: End-of-Year 

Comparison of Present-Value Costs 

PV Life-Cycle Cost 

Base Case Alternative Savings from Alternative 

Initial Investment Costs Paid By Agency: 

 Capital Requirements as of Base Date $0 $0 $0 

Future Costs: 

 Recurring and Non-Recurring Contract Costs $0 $454,492 -$454,492 

 Energy Consumption Costs $488,520 $93,365 $395,155 

 Energy Demand Charges $295,313 $32,479 $262,834 

 Energy Utility Rebates $0 $0 $0 

 Water Costs $0 $0 $0 

 Recurring and Non-Recurring OM&R Costs $65,432 $9,847 $55,585 

 Capital Replacements $0 $0 $0 

 Residual Value at End of Study Period $0 -$59,988 $59,988 

------------ ------------ ------------ 

 Subtotal (for Future Cost Items) $849,264 $530,195 $319,070 

------------ ------------ ------------ 

Total PV Life-Cycle Cost $849,264 $530,195 $319,070 
G-28

Net Savings from Alternative Compared with Base Case 

PV of Operational Savings $713,574 

- PV of Differential Costs $394,504 

------------ 

Net Savings $319,070 

NOTE: Meaningful SIR, AIRR and Payback can not be computed for Financed 

Projects. 

Comparison of Contract Payments and Savings 

from Alternative 

(undiscounted) 

Savings in Savings in Savings in Savings in 

Year Beginning Contract Costs Energy Costs Total Operational Costs Total Costs 

Jun 2001 -$62,000 $66,707 $72,457 $10,457 

Jun 2002 -$62,000 $66,682 $72,588 $10,588 

Jun 2003 -$62,000 $67,374 $73,439 $11,439 

Jun 2004 -$62,000 $66,526 $72,755 $10,755 

Jun 2005 -$62,000 $65,923 $72,320 $10,320 

Jun 2006 -$62,000 $64,710 $71,280 $9,280 

Jun 2007 -$62,000 $64,906 $71,653 $9,653 

Jun 2008 -$62,000 $65,909 $72,839 $10,839 

Jun 2009 -$62,000 $66,709 $73,825 $11,825 

Jun 2010 -$62,000 $67,993 $75,302 $13,302 

Jun 2011 $0 $69,327 $72,812 $72,812 

Jun 2012 $0 $71,443 $75,022 $75,022 

Jun 2013 $0 $74,159 $77,834 $77,834 

Jun 2014 $0 $76,336 $80,111 $80,111 

Jun 2015 $0 $78,712 $82,589 $228,159 

Energy Savings Summary 

Energy Savings Summary (in stated units) 

Energy -----Average Annual Consumption----- Life-Cycle 

Type Base Case Alternative Savings Savings 

Electricity 1,082,633.0 kWh 206,911.0 kWh 875,722.0 kWh 13,134,031.8 kWh 

 

Energy Savings Summary (in MBtu) 

Energy -----Average Annual Consumption----- Life-Cycle 

Type Base Case Alternative Savings Savings 

Electricity 3,694.1 MBtu 706.0 MBtu 2,988.1 MBtu 44,815.2 MBtu 

 
G-29

Emissions Reduction Summary 

Energy -----Average Annual Emissions----- Life-Cycle 

Type Base Case Alternative Reduction Reduction 

Electricity 

CO2 881,777.18 kg 168,523.77 kg 713,253.41 kg 10,697,336.55 kg 

SO2 1,080.53 kg 206.51 kg 874.02 kg 13,108.51 kg 

NOx 2,880.63 kg 550.54 kg 2,330.09 kg 34,946.56 kg 

Total: 

CO2 881,777.18 kg 168,523.77 kg 713,253.41 kg 10,697,336.55 kg 

SO2 1,080.53 kg 206.51 kg 874.02 kg 13,108.51 kg 

NOx 2,880.63 kg 550.54 kg 2,330.09 kg 34,946.56 kg 
G-30

Solution to Class Exercise G4 

****************************************************************************** 

* N I S T B L C C: I N P U T D A T A L I S T I N G (ver. 4.9-01 ) * 

****************************************************************************** 

FILE NAME: G4-1 

FILE LAST MODIFIED ON 09-20-2001/14:35:22 

PROJECT NAME: Class Exercise G4 

PROJECT ALTERNATIVE: buy 

COMMENT: (NONE) 

GENERAL DATA: 

------------- 

ANALYSIS TYPE: Federal Analysis--Projects Subject to OMB A-94 

BASE DATE FOR LCC ANALYSIS: JUN 2001 

STUDY PERIOD: 20 YEARS, 0 MONTHS 

SERVICE DATE: JUN 2001 

DISCOUNT AND INTEREST RATES ARE Real (exclusive of general inflation) 

DISCOUNT RATE: 3.2% 

End-of-year discounting convention 

Escalation rates do not include general inflation 

CAPITAL ASSET COST DATA: 

------------------------ 

INITIAL COST (BASE YEAR $) 5000000 

EXPECTED ASSET LIFE (YRS/MTHS) 50/0 

RESALE VALUE FACTOR 50.00% 

AVG PRICE ESC RATE(SERVICE PD.) 0.00% 

NUMBER OF REPLACEMENTS 0 

NO REPLACEMENTS 

OPERATING, MAINTENANCE, AND REPAIR COST DATA: 

--------------------------------------------- 

ANNUAL RECUR OM&R COST ($): 200000 

ESCALATION RATE FOR OM&R: 0.00% 

No non-annually-recurring OM&R costs reported. 

ENERGY-RELATED DATA: 

----------------- 

NUMBER OF ENERGY TYPES = 0 
G-31

****************************************************************************** 

* N I S T B L C C: I N P U T D A T A L I S T I N G (ver. 4.9-01 ) * 

****************************************************************************** 

FILE NAME: G4-2 

FILE LAST MODIFIED ON 09-20-2001/14:35:38 

PROJECT NAME: Class Exercise G4 

PROJECT ALTERNATIVE: lease 

COMMENT: (NONE) 

GENERAL DATA: 

------------- 

ANALYSIS TYPE: Federal Analysis--Projects Subject to OMB A-94 

BASE DATE FOR LCC ANALYSIS: JUN 2001 

STUDY PERIOD: 20 YEARS, 0 MONTHS 

SERVICE DATE: JUN 2001 

DISCOUNT AND INTEREST RATES ARE Real (exclusive of general inflation) 

DISCOUNT RATE: 3.2% 

End-of-year discounting convention 

Escalation rates do not include general inflation 

CAPITAL ASSET COST DATA: 

------------------------ 

INITIAL COST (BASE YEAR $) 0 

EXPECTED ASSET LIFE (YRS/MTHS) 50/0 

RESALE VALUE FACTOR 0.00% 

AVG PRICE ESC RATE(SERVICE PD.) 0.00% 

NUMBER OF REPLACEMENTS 0 

NO REPLACEMENTS 

OPERATING, MAINTENANCE, AND REPAIR COST DATA: 

--------------------------------------------- 

ANNUAL RECUR OM&R COST ($): 500000 

ESCALATION RATE FOR OM&R: 0.00% 

No non-annually-recurring OM&R costs reported. 

ENERGY-RELATED DATA: 

----------------- 

NUMBER OF ENERGY TYPES = 0 
G-32

 BLCC Summary for Project: Class Exercise G4 

 Alternative: buy 

 Filename: G4-1.DAT Date of Analysis: 09-20-2001/14:37:18 

 Analysis Type: Federal Analysis--Projects Subject to OMB A-94 

 Study Period: 20.00 Years (JUN 2001 through MAY 2021) 

 Discount Rate: 3.20% 

 --------------------------------------------------------------------------- 

 Present Value Annual Value 

 Initial Cost (as of Service Date) $5,000,000 $342,324 

 Annually Recurring OM&R Costs $2,921,209 $200,000 

 Less: Remaining Value ( $1,331,516) ( $91,162) 

 -------------------------------------- ------------ ------------ 

 Total LCC $6,589,693 $451,162 

 BLCC Summary for Project: Class Exercise G4 

 Alternative: lease 

 Filename: G4-2.DAT Date of Analysis: 09-20-2001/14:37:30 

 Analysis Type: Federal Analysis--Projects Subject to OMB A-94 

 Study Period: 20.00 Years (JUN 2001 through MAY 2021) 

 Discount Rate: 3.20% 

 --------------------------------------------------------------------------- 

 Present Value Annual Value 

 Initial Cost (as of Service Date) $0 $0 

 Annually Recurring OM&R Costs $7,303,022 $500,000 

 Less: Remaining Value ( $0) ( $0) 

 -------------------------------------- ------------ ------------ 

 Total LCC $7,303,022 $500,000 
Appropriate LCC Economic Measures (Evaluation Criterion

NS

Type of Decision

LCC

Level of Efficiency

System Selection

Combination of 

Interdependent Systems

SIR AIRR 

Economic Measures of Evaluation and Their Uses

no

yes 

(>1.0)

no

yes 

(descending order)**

yes 

(>0)

yes 

(maximum)

Project Priority 

(Independent Projects)

yes 

(minimum) Accept/Reject

yes 

(descending order)**

nonono

yes 

(>discount rate)

* Discounted Payback measure is consistent with LCC only if (1) cumulative net savings after payback is reached do not turn negative, any, are included if payback is > or = study period. ** Fund in descending order of SIR or AIRR until budget is exhausted. Group of projects that fits within budget and has greatest overa

yes 

(minimum)

yes 

(minimum)

yes 

(maximum)

yes 

(maximum combined 

NS)

yes 

(minimum combined 

LCC)

no

nono

 AC-1

Acronyms 

 

AIRR 

Adjusted Internal Rate of Return 

BOA 

Basic Ordering Agreement 

Btu 

British Thermal Units 

DoD 

Department of Defense 

DOE 

Department of Energy 

DPB 

Discounted Payback 

ECM 

Energy Conservation Measure 

ESCO 

Energy Services Company 

ESPC 

Energy Savings Performance Contract 

FEMP 

Federal Energy Management Programs 

HVAC 

Heating, Ventilation, and Air Conditioning 

GJ 

Gigajoule (10

9

 joules) 

kWh 

Kilowatt Hours 

LCC 

Life-Cycle Costs or Life-Cycle Costing 

MBtu 

MBtu (10

6

 x Btu) 

NS 

Net Savings 

OM&R 

Operation, Maintenance, and (Routine) Repairs 

OMB 

Office of Management and Budget 

PB 

Payback 

P/C/I 

Planning/Contructions or Installation Period 

SIR 

Savings-to-Investment Ratio 

SPB 

Simple Payback 
 AC-2

SPV 

Single Present Value (Factor) 

TLCC 

Total Life-Cycle Costs 

UC or UESC 

Utility Contract or Utility Energy Services Contract 

UPV 

Uniform Present Value (Factor) 

UPV* 

Modified Uniform Present Value (Factor) 

 
 GL-1

Glossary 

Adjusted Internal Rate of Return (AIRR) 

Annual yield from a project over the Study Period, taking into account investment of interim 

amounts. 

Alternative Building System 

An installation or modification of an installation in a building intended primarily to reduce 

energy or water consumption or allow the use of renewable energy sources, or a primarily 

energy- or water-saving building system, including a renewable energy system, for 

consideration as part of the design for a new federal building. 

Amount Financed 

Includes Implementation Costs and usually Financing Procurement Costs to comprise the 

amount borrowed by the Government agency to implement energy conservation measures. 

Annually Recurring Costs 

Those costs incurred each year in an equal, constant dollar amount throughout the Study 

Period, or that change from year to year at a known rate. 

Annual Value (Annual Worth) 

The time-equivalent value of past, present, or future cash flows expressed as an Annually 

Recurring Uniform amount over the Study Period. 

Annual Value (Annual Worth or Uniform Capital Recovery) Factor 

A discount factor by which a present dollar amount may be multiplied to find its equivalent 

Annual Value, based on a given Discount Rate and a given period of time. 

Base Case 

The situation against which an Alternative Building System is compared. 

Base Date 

The beginning of the first year of the Study Period, generally the date on which the LifeCycle Cost analysis is conducted. 

Base Year 

The first year of the Study Period, generally the year in which the Life-Cycle Cost analysis is 

conducted. 

Base-Year Energy Costs 

The quantity of energy delivered to the boundary of a Federal Building in the Base Year, 

multiplied by the Base-Year Price of fuel. 

Base-Year Price 

The price of a good or service as of the Base Date. 

Cash Flow 

The stream of costs and benefits (expressed for the purpose of this requirement in Constant 

Dollars) resulting from a project investment. 

Compound Interest Factors or Formulas 

See Discount Factors or Formulas. 

Constant Dollars 

Dollars of uniform purchasing power tied to a reference year (usually the Base Year) and 

exclusive of general price inflation or deflation. 

Contract Payments 

An agreed-upon payment made annually or non-annually by the agency to repay the loan 

provided by an ESCO or UC for implementing energy savings measures. 
 GL-2

Contract Period or Contract Term 

The time period proposed by the contractor for repaying the loan provided to a Government 

agency to implement energy savings measures. It begins at the contract award date and 

includes the Installation Period and the Energy Savings Performance Period. 

Cost Adjustment Factor 

The average annual rate at which the phased-in cost of a capital component is adjusted to its 

value in any year of the Planning/Construction/Installation Period. The Cost Adjustment 

Factor can, for example, be a contractual rate (sometimes equal to zero) or a rate determined 

by the agency. 

Cost Effective 

The condition whereby an Alternative Building System saves more than it costs over the 

Study Period, where all Cash Flows are assessed in Constant Dollars and discounted to 

reflect the Time Value of Money. 

Current Dollars 

Dollars of nonuniform purchasing power, including general price inflation or deflation, in 

which actual prices are stated. (With zero inflation or deflation, current dollars are identical 

to constant dollars.) 

Debt Service 

The sum of interest payments and principal payments which comprise or are part of the 

Contract Payment to an ESCO or UC. 

Demand Charge 

That portion of the charge for electric service based on the plant and equipment costs 

associated with supplying the electricity consumed. 

Differential Cost 

The difference in the costs of an Alternative Building System and the Base Case. 

Differential Energy Price Escalation Rate 

The difference between a projected general rate of Inflation and the projected rate of price 

increase assumed for energy. 

Discount Factors 

Multiplicative numbers used to convert Cash Flows occurring at different times to their 

equivalent amount at a common time. Discount factors are obtained by solving Discount 

Formulas based upon one dollar of value and an assumed Discount Rate and time. 

Discount Formula 

An expression of a mathematical relationship which enables the conversion of dollars at a 

given point in time to their equivalent amount at some other point in time. 

Discount Rate 

The rate of interest, reflecting the investor's Time Value of Money (or opportunity cost), that 

is used in Discount Formulas or to select Discount Factors which in turn are used to convert 

("discount") Cash Flows to a common time. Real Discount Rates reflect Time Value of 

Money apart from changes in the purchasing power of the dollar and are used to discount 

Constant Dollar Cash Flows; Nominal Discount Rates include changes in the purchasing 

power of the dollar and are used to discount Current Dollar Cash Flows. 

Discounted Payback Period 

The time required for the cumulative savings from an investment to pay back the Investment 

Costs and other accrued costs, taking into account the Time Value of Money. 
 GL-3

Discounting 

A technique for converting Cash Flows occurring over time to time-equivalent values, at a 

common point in time, adjusting for the Time Value of Money. 

Disposal Cost 

See Residual Value. 

Economic Life 

That period of time over which a Building or Building System is considered to be the lowestcost alternative for satisfying a particular need. 

Energy Conservation Measure (ECM) 

Defined as the installation of new equipment/facilities, modification, or alteration of existing 

government equipment/facilities, or revised operations and maintenance procedures to reduce 

energy consumption of facilities/energy systems. 

Energy Cost 

The annual cost of fuel or energy used to operate a building or building system, as billed by 

the utility or supplier (including Demand Charges, if any). Energy Costs are incurred during 

the Service Period only. Energy consumed in the construction or installation of a new 

building or building system is not included in this cost. 

Energy Savings Performance Contracts 

Contracts authorized by the Energy Policy Act of 1992 (EPACT), which offer alternative 

financing of energy and water efficiency improvements in federal buildings and allow the 

Federal Government to retain a portion of the energy savings and all equipment installed. 

Energy Savings Performance Period (ESPC)

The period (typically in years) from the date an ECM is operational and accepted by the 

Government agency to the end of the Contract Period. The Energy Savings Performance 

Period may also be referred to as the "service period." 

Federal Government 

The U.S. Government. 

Financing Procurement Costs 

May be added to Implementation Costs to comprise the total amount financed by an ESCO or 

UC. 

Future Value 

The time-equivalent value of past, present, or future Cash Flows expressed as of some future 

point in time. 

Implementation Costs 

May include survey costs, feasibility study costs, design expenses, and construction costs, 

which may be paid by an agency or included in the Contract Payment proposed by ESCO or 

UC. 

Initial Investment Costs 

The initial costs of design, engineering, purchase, and installation, exclusive of "Sunk Costs," 

all of which are assumed to occur as a lump sum at the beginning of the Base Year or during 

the Planning/Construction/Installation Period for purposes of making the life-cycle cost 

analysis. 

Inflation 

A rise in the general price level, or, put another way, a decline in the general purchasing 

power of the dollar. 
 GL-4

Installation Period 

The period from the date of contract award to the date all contracted energy conservation 

measures are operational and accepted by the agency. Installation period may also be referred 

to as "construction period." 

Internal Rate of Return 

Annual yield from a project over the Study Period, i.e., the compound rate of interest which, 

when used to discount Cash Flows of an Alternative Building System, will result in zero Net 

Savings (Net Benefits). 

Life-Cycle Cost (LCC) 

The total discounted dollar costs of owning, operating, maintaining, and disposing of a 

building or building system over the Study Period (see Life-Cycle Cost Analysis). 

Life-Cycle Cost Analysis (LCCA) 

A method of economic evaluation that sums discounted dollar costs of initial investment (less 

Resale, Retention, or Salvage Value), replacements, operations (including energy and water 

usage), and maintenance and repair of a building or building system over the Study Period 

(see Life-Cycle Cost). Also, as used in this program, LCCA is a general approach to 

economic evaluation encompassing several related economic evaluation measures, including 

Life-Cycle Cost (LCC), Net Benefits (NB) or Net Savings (NS), Savings-to-Investment Ratio 

(SIR), and Adjusted Internal Rate of Return (AIRR), all of which take into account long-term 

dollar impacts of a project. 

Liquid Petroleum Gas (LPG) 

Propane, butane, ethane, pentane, or natural gasoline. 

Market Interest Rate 

The nominal loan interest rate (including inflation) applied by the ESCO or UC to the 

Amount Financed to compute annual Contract Payments. 

Measures of Economic Evaluation 

The various ways in which project cash flows can be combined and presented to describe a 

measure of project cost effectiveness. The measures used to evaluate FEMP projects are LifeCycle Cost (LCC), Net Savings (NS), Savings-to-Investment Ratio (SIR), Adjusted Internal 

Rate of Return (AIRR). Discounted Payback (DPB) and Simple Payback (SPB) are measures 

of evaluation not fully consistent with the LCC method but are used as supplementary 

measures in some federal programs. 

Modified Uniform Present Value (Worth) (UPV* or UPW*) Factor 

A discount factor used to convert an annual amount escalating at a constant rate to a timeequivalent Present Value. The FEMP UPV* Factor indicates a discount factor from a special 

set published by the U.S. Department of Energy, Federal Energy Management Program, for 

computing present value energy costs based on variable energy price projections. 

Mutually Exclusive Projects 

Projects where the acceptance of one precludes acceptance of the others. Examples are 

whether to use single-glazing, double-glazing or triple-glazing for a window; or R11, R19, or 

R30 levels of insulation in an attic. 

Net Savings (Net Benefits) 

Time-adjusted savings (or benefits) less time-adjusted differential costs taken over the Study 

Period for an Alternative Building System relative to the base case. 

Nominal Discount Rate 

The rate of interest (market interest rate) reflecting the time value of money stemming from 

both inflation and the real earning power of money over time. 
 GL-5

Nonmutually Exclusive Projects 

Projects where the acceptance of one alternative does not preclude the acceptance of the 

others. Examples are wall insulation and ceiling insulation. 

Nonrecurring Costs 

Costs that are not uniformly incurred annually over the Study Period. 

Nonfuel Operation, Maintenance, and Repair (OM&R) Costs 

Labor and material costs required for routine upkeep, repair, and operation, exclusive of 

energy costs. 

Nonmutually Exclusive Projects 

Projects where the acceptance of one does not preclude the acceptance of the others. 

Examples are wall insulation and ceiling insulation. (For contrast, see Mutually Exclusive.) 

Performance Period Expenses 

May include management/administration costs, operation and maintenance costs, repair and 

replacement costs, measurement and verification costs, permits and licenses costs, insurance 

costs, property taxes, and other costs (e.g., "margin"), which may be paid by agency or 

included in the Contract Payment proposed by ESCO or UC. 

Planning/Construction Period 

The period beginning with the Base Date and continuing up to the Service Date, during 

which only Initial Investment Costs are incurred. 

Post-Contract Period 

The period between the end of the Contract Period (Contract Term) and the end of the Study 

Period. 

Present Value (Present Worth) 

The time-equivalent value of past, present or future Cash Flows as of the beginning of the 

Base Year. 

Present Value (Present Worth) Factor 

A discount factor by which a future dollar amount may be multiplied to find its equivalent 

Present Value as of the Base Date. Single Present Value Factorsare used to convert single 

future amounts to Present Values. Uniform Present Value Factors and Modified Present 

Value Factors are used to convert Annually Recurring amounts to Present Values. 

Real Discount Rate 

The rate of interest reflecting the portion of the time value of money attributable to the real 

earning power of money over time and not to general price inflation. 

Renewable Energy 

Energy obtained from sources that are essentially inexhaustible (unlike, for instance, fossil 

fuels of which there is a limited supply). Renewable sources of energy include wind energy, 

geothermal energy, hydroelectric energy, photovoltaic and solar energy, biomass, and waste. 

Replacement Costs 

Future costs included in the capital budget to replace a building system during the Study 

Period. 

Resale Value 

See Residual Value. 

Residual Value 

The estimated value, net of any Disposal Costs, of any building or building system removed 

or replaced during the Study Period; or remaining at the end of the Study Period; or 

recovered through resale or reuse at the end of the Study Period (also called Resale Value or 

Salvage Value, or Retention Value). 
 GL-6

Retention Value 

See Residual Value. 

Retrofit 

The installation of an Alternative Building System in an Existing Federal Building. 

Risk Attitude 

The willingness of decision makers to take chances or to gamble on investments of uncertain 

outcome. Risk attitudes are generally classified as risk-averse, risk-neutral, or risk-taking. 

Risk Exposure 

The probability of investing in a project whose economic outcome is less favorable than what 

is economically acceptable. 

Salvage Value 

See Residual Value. 

Savings-to-Investment Ratio (SIR) 

A ratio computed from a numerator of discounted energy and/or water savings, plus (less) 

savings (increases) in Nonfuel Operation and Maintenance Costs, and a denominator of 

increased Investment Costs plus (less) increased (decreased) Replacement Costs, net of 

Residual Value (all in present-value terms), for an Alternative Building System as compared 

with a Base Case. 

Sensitivity Analysis 

Testing the outcome of an evaluation to changes in the values of one or more system 

parameters from the initially assumed values. 

Service Date 

The point in time during the Study Period when a building or building system is put into use, 

and operating, maintenance, and repair costs (including energy and water costs) begin to be 

incurred. 

Service Period 

The period of time starting with the Service Date and continuing through the end of the Study 

Period. 

Simple Payback Period (SPB) 

A measure of the length of time required for cumulative savings from a project to recover the 

Investment Cost and other accrued costs, without taking into account the Time Value of 

Money. 

Single Present Value (Worth) (SPV or SPW) Factor 

The discount factor used to convert single future benefit and cost amounts to Present Value. 

Study Period 

The length of the time period covered by the economic evaluation. This includes both the 

Planning/Construction Period and the Service Period. 

Sunk Costs 

Costs which have been incurred or committed to prior to the Life-Cycle Cost analysis and 

which, therefore, should not be considered in making a current project decision since the 

costs cannot be changed. 

Time-of-Use Rate 

The charge for service during periods of the day based on the cost of supplying the service at 

that particular time of the day. 

Time Value of Money 

The time-dependent value of money. If project Cash Flows are stated in Constant Dollars, 

their adjustment to a common time basis is necessary to take into account the real earning 

potential of investments over time. If project cash flows are stated in Current Dollars, their 
 GL-7

adjustment to a common time basis is necessary to take into account not only the real earning 

potential over time, but also price inflation or deflation. 

Uniform Present Value (Worth) (UPV or UPW) Factor 

The discount factor used to convert uniform annual values to a time-equivalent Present 

Value. 

Useful Life 

The period of time over which a Building or Building System continues to generate benefits 

or savings. 

Utility Contracts (UC) or Utility Energy Services Contracts (UESC) 

Contracts (Area-Wide Contracts or Basic Ordering Agreements) between a government 

agency and a utility company, which allow the Federal Government to implement energy and 

water conservation measures through financing provided by the utility. 

 CE-1

COURSE EVALUATION 

PURPOSE: It is our objective to present a useful and effective training course. You are the final authority on 

whether that objective has been met. Your completion of this form, therefore, will play an important part in our 

future planning. Please do not feel bound to limit your remarks to questions on this form. Your comments on 

any aspect of the course will be appreciated. 

COURSE TITLE 

LOCATION 

Dates Attended 

From To 

 RESPONSES 

(Check the response closest to your opinion) 

 Strongly 

 Agree 

 Agree Disagree N/A 

a. was well organized 

b. was complete and suitable 

1. 

Course 

Material 

c. was readable (printed well)

a. was related to the course 

b. was good quality 

2. 

Audio-Visual 

Material 

c. was sufficient in number 

a. was a reasonable length 

b. was worth recommending to others 

c. contributed to my knowledge and skills 

3. 

Course 

d. accomplished announced purpose 

a. Subject was thoroughly covered 

b. Course expectations, requirements, and 

 objectives were made clear 

c. Participation was encouraged 

4. 

 Instruction 

d. Time in class was spent effectively 

a. were comfortable 

b. included a manageable number of students 

5. 

Classrooms 

c. were appropriate for this course 

a. were prepared for class 

b. stimulated my interest in subject area 

6. 

Instructors 

c. made course a worthwhile learning 

 experience 

REMARKS: 
 CE-2

 COURSE EVALUATION (Continued) 

 

 7. OVERALL INSTRUCTOR EVALUATION (Check your opinion) 

a. Knowledge of the subject T Excellent T Good T Fair T Poor 

b. Ability to teach T Excellent T Good T Fair T Poor 

 8. WOULD YOU ADD OR EMPHASIZE ANY SUBJECT MATTER AREAS IN SUBSEQUENT 

 COURSE SESSIONS? 

T yes T no If "yes," list these areas and give your reasons: 

 9. WOULD YOU DELETE OR DE-EMPHASIZE ANY SUBJECT-MATTER AREAS? 

T yes T no If "yes," list these areas and give your reasons: 

10. AS A RESULT OF YOUR PARTICIPATION IN THIS COURSE, WHAT ADDITIONAL RELATED 

TRAINING SHOULD BE MADE AVAILABLE? 

11. OTHER COMMENTS. PLEASE MAKE ANY COMMENTS RELATIVE TO THIS COURSE, 

EITHER GENERAL OR SPECIFIC. 

SIGNATURE AND TITLE (optional) ORGANIZATION DATE