The consultant stated that the analytical approach would be best applied across a portfolio of projects at the earliest stages, for budgeting and planning, rather than on individual projects at the authorization stage. The consultant proposed that the approach could also be effectively applied during design development and implementation in the choice of specific building characteristics (p. 154), although existing DOD processes may need to be refined. Such refinements would include the following elements in the earliest stages of project planning and scope development through detailed design and implementation:

  • Recognition of uncertainty with respect to future conditions, costs, and opportunities;
  • Clear specification of inputs and outcomes to provide a basis to measure actual performance and to revise assumptions;
  • Clear delineation of exogenous factors (e.g., market trends, potential disruptions) and analysis of potential impacts to provide a basis for robust risk mitigation; and
  • Flexibility to evaluate new conditions, opportunities, inputs, and outcomes to provide a means to rapidly and effectively improve performance and cost-efficiency (p. 154).

Data Collection and Baseline Development

The DOD consultant stated that the proposed analytical approach requires credible and verifiable data related to incremental construction costs; major repair/replacement costs; and operations, maintenance, and repair costs over the life of a facility. It may also require additional data collection and an explicit process to assess the performance of building systems, components, equipment, and materials relative to the actual capture of expected benefits to inform design, procurement, and implementation processes. The consultant stated that those data would need to be grounded in the local market, incorporating local construction costs (and available skill levels) and local factor unit prices (e.g., energy, water, municipal and hazardous waste, and costs for operations and maintenance, cleaning, and landscaping), as well as potential future price escalation. Those types of data could provide critical information related to uncertainty in future conditions needed for strategic decision-making and risk mitigation at the installation level and for specific facilities (p. 154).

The consultant also stated that the analytical approach would require the definition of appropriate baselines if useful and empirically verifiable results are to be obtained from the economic efficiency analysis. This is because the calculation of NPV benefits requires a specific base case against which to compare the relative incremental costs and benefits among alternatives (p. 155).

Use of the Analytical Approach to Track Actual Performance of Buildings Relative to the Expected Benefits

The DOD consultant stated that the economic efficiency analysis and the related data collection could be used to track actual performance of buildings relative to their expected benefits. As DOD meters its facilities, data on energy and water use and related costs could be used to evaluate specific buildings, systems, or building types for additional real-time operational refinement and commissioning to meet the expected high-performance levels. Those data could also be used for annual reporting requirements, monitoring the cost savings for given investments, and measuring progress in achieving legislative mandates (p. 155).

Industry and Market Factors

The DOD consultant stated that further research is needed to determine the extent to which industry development as a whole may reduce initial investment costs and improve the capture of expected



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