Chapter 13: Economic Analysis and Green Buildings

Published

October 1, 2002

Author(s)

S Fuller

Abstract

Building economics, value engineering, and cost engineering are the three main fields that explicitly include an economic evaluation in building-related project analyses. The common theme that ties the three disciplines together is that each is concerned with improving the allocation of resources by implementing only projects that are cost-effective. A number of methods can be used to measure economic efficiency. Life-cycle Cost (LCC) analysis is one of the most straightforward and easily understandable methods of evaluation; it is used in all three of these fields. Certified Value Specialists and Cost Engineers of ten present their economic analysis results also in terms of Payback Period (PB) or Internal Rate of Return (IRR). Building Economists usually include, in addition, measures of Net Savings (NS) and Savings-to-Investment Ratio (SIR) to cover all aspects of an economic analysis. Except for payback, all of these supplementary measures are consistent with the life-cycle costing principle of assessing the long-term costs of ownership. The payback measure usually ignores costs and benefits that are incurred after payback of initial costs is achieved.

Citation

Green Building: Project Planning & Cost Estimating

Pub Type

Journals

Keywords

life cycle cost analysis

Citation

Fuller, S. (2002), Chapter 13: Economic Analysis and Green Buildings, Green Building: Project Planning & Cost Estimating (Accessed April 19, 2024)