Handbook 135 is a guide to understanding the life-cycle cost (LCC) methodology and criteria established by the Federal Energy Management Program (FEMP) for the economic evaluation of energy and water conservation projects and renewable energy projects in all federal buildings. It expands on the life-cycle cost methods and criteria contained in the FEMP rules published in 10 CFR 436, Subpart A, which applies to all federal agencies. The purpose of this handbook is to facilitate the implementation of the FEMP rules by explaining the LCC method, defining the measures of economic performance used, describing the assumptions and procedures to follow in performing evaluations, giving examples, and noting NIST computer software available for computation and reporting purposes. An annual supplement to Handbook 135, Energy Price Indices and Discount Factors for LCC Analysis, NISTIR 85-3273-X is also published by NIST to provide the current discount rate and discount factors needed for conducting an LCC analysis in accordance with the FEMP rules. This annual supplement is required when using Handbook 135.This new edition of Handbook 135 replaces the 1987 version. The new edition is extensively revised and organized around the key steps in an LCC analysis. There are no longer separate sections for new and existing buildings and for solar programs, as the methodology no longer distinguishes between these projects.

Rising real energy prices serve as an incentive for energy consumers to become energy conservers. Energy conservation does not imply a life style of austerity, however, but rather a more effective utilization of energy resources. This is especially true in the case of space heating and cooling operations in residential buildings. Increased resistance to heat transfer in the building envelope, as well as a more efficient heating, ventilating, and air conditioning (HVAC) system, are direct and nearly perfect substitutes for energy consumption.However, most of the nation's stock of housing units were constructed in a period of relatively low energy costs, lower HVAC requirements, and in a building market where first costs dominated design decisions. As a result, these buildings use considerably more energy than newer buildings designed to reflect higher energy costs and to minimize present-value life-cycle HVAC costs. Still, many energy conservation techniques (ECT's) which increase energy efficiency in new housing can be retrofitted into existing housing with a considerable savings potential in life-cycle HVAC costs. Homeowners in general are aware of many of these techniques, such as insulation, storm windows and doors, and weather stripping. However, opinions differ as to the extent to which these ECT's should be utilized.In general the homeowner is not able to cope with the complex thermal engineering and economic analysis necessary to determine the optimal size or allocation of an energy conservation budget for his own home.'""'"Moyers , John C, "The Value of Thermal Insulation in Residential Construction: Economics and the

BEST CaM AVLABLE IiiBLANK PA PREFACE More than a decade after the first shock from escalating energy prices, millions of buildings in the United States still reflect the days when oil cost 18-per gallon. Buildings continue to be built without adequate regard for energy conservation. The resulting cost to building owners is enormous, and the waste of national resources is serious. It is important to continue the effort to adjust buildings and equipment to reflect the higher cost of energy today.Reflecting governmental concern over the inefficient use of energy in buildings, the U.S. Department of Energy was required by legislation and by Presidential Executive Order* to develop methods and procedures to be used in evaluating the long-run cost consequences of alternative designs and systems for Federal buildings, taking into account the cost of energy. The Department was also directed to make available to the building industry the methods, procedures, and related aids developed for Federal use. This book was sponsored by the Department of Energy and prepared by the National Bureau of Standards in response to this directive. ACKNOWLEDGMENTSThe authors wish to thank Mr. William Bethea, Head of the Federal Programs Office, Mr. Dean Devine, also of the Federal Programs Office, and Mr. Thomas Benson and Mr. Elmer Smith, formerly with the Office, for their valuable support and direction throughout this endeavor.Credit is due to Dr. Harold Marshall, Head of the Applied Economics Group, Dr. Stephen Weber and Mr. Matthew Wiener, also of the Applied Economics Group, and Mr. Joseph Greenberg, of the Center for Building Technology, for their valuable technical and editorial comments. Appreciation is extended to Ms. Sieglinde Fuller and Ms. Bobbie Lippiatt, both of the Applied Economics Group, for their assistance in preparing the tables in Appendix B, Part I. Appreciation is also extended to Ms. Laurene Linsenmayer for supervising the typing of the manuscript, and to Ms. Amy House and Ms. Margaret Robinson for their assistance with the typing.The authors also wish to thank Nancy Gogniat and Ilse Putman of the Electronic Typesetting Group for typesetting the final draft.

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The NIST Building Life-Cycle Cost computer program (BLCC 3.0) provides economic analysis of proposed capital investments that are expected to reduce long-term operating costs of buildings or building systems.It is especially useful for evaluating the costs and benefits of energy conservation projects in buildings.Two or more alternative designs can be evaluated to determine which has the lowest life-cycle cost. Economic measures, including net savings, savings-to-investment ratio, and adjusted internal rate of