Tools Boxer Uses to Measure a Property’s BEST Score – Cost-Benefit Analysis

Welcome to our fourth Energy & Sustainability (E&S) blog post! Now that we know how to evaluate a property using the Boxer Energy & Sustainability Tracking (BEST) scorecard, what can be done about improving a property’s score? It’s time to start talking about interventions and their Cost/Benefit Analyses (CBA).

An intervention is any change to a building to improve its quality such as system retrofits, new – more efficient equipment, and operational changes; BEST interventions are specifically aimed at improving a building's efficiency. One of the tools that support a proposed intervention is a CBA.  A CBA is a calculation to predict the total savings a proposed intervention will generate and estimate how long it will take for the savings to pay back the project costs. An intervention must have a favorable CBA to justify its implementation – remember efficiency is our strategy even when it comes to executing interventions. After an intervention is completed, we collect data for a business case study. The conclusion of the case study will report the actual results of an intervention which we can use to validate the CBA's predicted results. Feedback into the process leads to a more efficient model, and a more realistic estimation of future costs and savings.

 We need a few inputs to generate a CBA. First, we need the ‘before’ and ‘after’ commodity use metrics; we have defined these as the current consumption per property square footage (SF) per month (such as kilowatt-hours (KWH)/SF-month) vs. the estimated new consumption after the implementation. Second, we need the all-in commodity cost which the intervention will affect – for example, a lighting retrofit will reduce the building's electricity consumption so we need to know the total  cost we pay for electricity (¢/KWH). Finally, we need to know the total SF for the property. We predict our savings by multiplying the difference in the two energy use metrics by the commodity cost, the building square footage, and additional conversion factors. Of course, we take other factors into account: rebates, disposal costs, changes in maintenance behavior, and the like. We then calculate the simple payback period of the intervention by dividing the one time project cost by the project savings.

The CBA is our predictive tool… actual usage is monitored to check the model against reality. How we do that and account for real-world impacts is a story for future blogs.

In summary, a CBA is a simple analysis that determines if the benefits outweigh the costs of a proposed project!

via:http://www.boxerproperty.com/blogs/tools-checklists/tools-boxer-uses-to-measure-a-property-s-best-score-cost-benefit-analysis