NCJ Number
65366
Date Published
1976
Length
112 pages
Annotation
GOVERNMENT ENERGY MANAGEMENT PROGRAMS ARE PROMOTING LIFE CYCLE COSTING ANALYSIS TECHNIQUES. THIS GUIDEBOOK SHOWS HOW TO USE THESE TECHNIQUES FOR ENERGY CONSERVATION PROJECTS IN EXISTING FACILITIES.
Abstract
LIFE CYCLE COSTING IS A METHOD FOR EXPENDITURE EVALUATION WHICH RECOGNIZES THE SUM TOTAL OF ALL COSTS ASSOCIATED WITH THE EXPENDITURE DURING THE TIME IT IS IN USE. PARAMETERS FOR CAPITAL EXPENDITURES THAT EMPHASIZE ENERGY CONSERVATION QUANTIFY SUCH FEATURES AS DISCOUNT RATES, ENERGY ESCALATION RATES, STUDY PERIOD, SALVAGE VALUE, BTU MEASUREMENT, AND ANALYSIS TECHNIQUES. BY USING THESE ANALYSIS CONCEPTS, BUDGET REQUESTS FOR ENERGY CONSERVATION PROGRAMS CAN BE STANDARDIZED AND RESULT IN A COMMON MEASUREMENT BASIS. THE FORMAT AND MEASUREMENT STATISTICS REQUIRED ALLOW A COMPARABLE RANKING OF BUDGET CONTENDERS, THUS ENSURING MAXIMUM BENEFIT FOR THE FUNDS EXPENDED. THE LEVEL OF ANALYSIS REQUIRED FOR EACH PROJECT IS DICTATED BY ITS INDIVIDUAL MAGNITUDE AND COMPLEXITY. ELEMENTS TO BE CONSIDERED IN LIFE CYCLE ESTIMATIONS ARE INITIAL CAPITAL INVESTMENT COST, ANNUAL OPERATING AND ROUTINE MAINTENANCE COSTS, MAJOR REPAIRS AND COMPONENT REPLACEMENT, AND RESIDUAL VALUES. ANOTHER FACTOR, TIMING, IS USED TO JUDGE WHEN COSTS OR BENEFITS OCCUR AND WHEN REPLACEMENTS ARE NEEDED. PROCEDURES FOR GATHERING LIFE CYCLE COSTING DATA PERTAINING TO ENERGY CONSERVATION COMPRISE SEVEN STEPS: (1) ESTIMATE PRESENT BASELINE ANNUAL ENERGY CONSUMPTION; (2) ESTIMATE INVESTMENT COSTS FOR EACH PROJECT; (3) ESTIMATE ANNUAL ENERGY SAVINGS FOR EACH PROPOSED CONSERVATION PROJECT AS INDIVIDUAL 'STAND ALONE' PROJECTS; (4) PERFORM A NOMOGRAM ANALYSIS TO RANK IN ORDER OF SAVINGS/INVESTMENT (5) ADJUST ENERGY SAVINGS FOR EACH CONSERVATION PROJECT AS REQUIRED ASSUMING THE PROJECT RANKED BEST IN STEP FOUR HAS BEEN COMPLETED; (6) REPEAT STEP FOUR FOR REMAINING OPPORTUNITIES; AND (7) CONTINUE REPEATING STEPS FIVE AND SIX UNTIL AN OPTIMUM GROUPING OF ENERGY CONSERVATION PROJECTS IS SELECTED. TABULAR DATA ARE INCLUDED. THE APPENDIX PROVIDES (1) DEFINITIONS OF ECONOMIC TERMS, (2) AVERAGE USEFUL LIFE OF ENERGY CONSERVATION COMPONENTS, (3) ANNUAL AND ACCUMULATIVE PRESENT VALUE TABLES, AND (4) ANNUAL AND ACCUMULATIVE PRESENT VALUE FACTORS PRECALCULATED FOR DIFFERENTIAL ESCALATION RATES. (MRK)