Want to improve your chances of convincing bean counters that investments in energy projects are worthwhile? Stop talking about payback periods and start talking about return on investment, said speakers at the Facility Decisions conference and exposition in Las Vegas.Alan Whitson, president, The Corporate Realty, Design & Management Institute, asked members of the audience what payback periods their organizations would approve. No hands went up at 10 years; few went up at five. But a five-year payback equals a 20 percent ROI, Whitson pointed out. A four-year payback offers a 25 percent return. And if a project pays for itself in three years, the ROI is 33 percent. Those numbers give facility executives a much more powerful tool to sell energy efficiency projects than payback periods provide.Putting a project in terms of ROI may help facility executives win funding for projects that exceed the organization's stated investment horizon, Richard Lubinski, president of Think Energy Management, told the audience at a session at Facility Decisions. Consider an organization that is willing to consider only energy efficiency investments with payback periods of 18 months or less. By that criterion, a project with a 50 percent ROI will be turned down. When the energy project is put in terms of ROI, the finance department may be willing to consider its investment horizon, Lubinski said.
Check this free program out to do SIR, ROI, Simple Payback Carbon, From FEMP.
Building Life-Cycle Cost (BLCC) Programs
The Building Life-Cycle Cost Program BLCC 5.3-09 is a program developed by the National Institute of Standards and Technology (NIST) to provide computational support for the analysis of capital investments in buildings. EERC 1.0-09b is a program to calculate an escalation rate for contract payments for financed projects when payments are based on projected annual energy cost savings. Handbook 135 (PDF 9.2 MB), the Life-Cycle Costing Manual for the Federal Energy Management Program (FEMP), explains in detail the principles of life-cycle cost analysis and integrates them with the FEMP criteria. The Annual Supplement to Handbook 135 (ASHB 135), Energy Price Indices and Discount Factors for Life-Cycle Cost Analysis, contains tables of present-value factors calculated with the same discount rates and energy price projections as are used in the computer programs. The documents are available as Adobe Acrobat PDFs. Download Adobe Reader.
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