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Cost/Benefit Analysis

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Make design decisions that deliver the best value to the building owner and future tenants. • Cost benefit analysis normally clarifies the trade-offs between first costs and operating costs. Unless the owner or designer can assign a monetary value for incremental benefits such as improved comfort, productivity, or well-being, they are not normally considered. • Examine economic consequences at all stages, starting with planning, and continuing through occupancy, maintenance, and demolition.
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Cost/Benefit Analysis
SECTION 11
Tips for Daylighting with Windows
OBJECTIVE
Make design decisions that deliver the best value to the building
owner and future tenants.
• Cost benefit analysis normally clarifies the trade-offs between first costs and operating costs.
Unless the owner or designer can assign a monetary value for incremental benefits such as
improved comfort, productivity, or well-being, they are not normally considered.
• Examine economic consequences at all stages, starting with planning, and continuing through
occupancy, maintenance, and demolition.
KEY IDEAS
Treat the building as a form of investment, where the best investment scenario is probably not intuitively
obvious. There will be complex trade-offs between many factors. As with any investment, cost/benefit
analysis is appropriate.
Use cost/benefit analysis as a sales tool for energy efficiency. Encourage the building owner, if
necessary, to examine building costs over time. Energy-efficient buildings sometimes have higher first
costs than more traditional designs; however, they generally have a much lower life-cycle cost.
Understand the owner’s economic objectives before starting design. Clarify the owner’s economic
horizon and financial requirements for this investment. This will set the criteria for how well your energy
efficiency design strategies need to perform and to what degree these strategies may increase the
building’s first cost.
Treat amenity and comfort as a value. Try to develop, with assistance from the owner, a value system
for occupant comfort, productivity, increased building amenity due to daylighting, and other factors that
are difficult to quantify. These are potential benefits from daylighting which can far outweigh energy
savings in financial value. A reasonable assumption for these benefits, expressed in a dollars-per-square-
foot value, can be directly included in cost/benefit analysis.
Gather your data. What you generally need for energy efficiency cost/benefit analysis:
Characterization of the owner’s investment criteria (available funds, discount rate, desired payback
period, length of ownership)
Energy cost and escalation rates
Building energy performance
Construction costs
Maintenance and repair costs
Replacement schedule and costs
A more complex analysis may include more factors, such as financing costs, taxes, salvage costs,
and more.

Cost/Benefit Analysis
Get benefit information. The judicious use of the proper window
area, glazing type, and shading systems in conjunction with
efficient lighting and controls will yield:
Decreased window solar heat gains
Decreased lighting energy
Decreased lighting heat gains
Improved visual and thermal comfort
Determine analysis objective. The depth of cost information
required depends on which of two typical objectives your cost/
benefit analysis will target:
Assess consequences of a given decision.
Choose among alternatives.
In the first, comprehensive cost data will be required. In the
second, only differential cost data are required.
INTEGRATION ISSUES
ARCHITECTURE
Using good performance simulation data with a cost/benefit analysis is the only way to review HVAC/
lighting/envelope trade-offs. Added envelope and lighting features for daylighting and shading may be
compensated for in first and operating cost savings.
INTERIOR
Cost/benefit analysis for daylighting design has relatively little impact on interior decisions.
HVAC
Use cost/benefit analysis to accurately examine how reductions in heat gains from the lighting and envelope
system affect HVAC first costs and operating costs.
LIGHTING
Many energy-efficient lighting technologies and controls pay back quickly.
Savings prediction of daylighting technologies and envelope/lighting design strategies for daylight integra-
tion are not so clear-cut. Life-cycle cost analysis is recommended.
COST-EFFECTIVENESS
Cost effectiveness of energy-efficient design is best derived from a life-cycle analysis. Inclusion of hard-to-
quantify factors such as comfort, productivity, tenant retention, and building amenity is recommended.
OCCUPANT COMFORT
An emphasis on low first cost is often at the price of future occupant comfort. Discomfort is typically a long-
term expense.
Uncomfortable occupants may lead to long-term increases in operating costs due to thermostat adjustments
by occupants or portable heaters and fans adding to plug loads. Complaints often lead to a high rate of tenant
11 - 2
Tips for Daylighting with Windows

Cost/Benefit Analysis
turnover and costly mechanical or envelope retrofits. Uncomfortable occupants are less productive.
There are real economic benefits to occupant comfort, although they are hard to quantify. Nonetheless,
some recognition of comfort should be included in cost/benefit analysis.
! PROVISOS
• The ability to predict cost effectiveness is limited without actual
building performance calculations, which are best done with
advanced computer modeling software that includes daylighting
analysis.
• True savings are impossible to predict exactly, due to major
variables such as user behavior, future modifications to the build-
ing or site, important changes during construction, changes in
utility rates, and lack of proper operation and maintenance.
TOOLS & RESOURCES
Nomographs A quick and simplified tool for cost/benefit analysis is included here, in the pages that
follow. Use this tool in the early design stages to help determine the relative impact daylighting might
have for your project. If the nomographs indicate a potentially high investment benefit from daylighting,
then further design refinement and more extensive cost/benefit analysis would be worthwhile.
Simple Payback Analysis This is commonly performed when the building owner is interested in
technologies that pay for themselves in as short a time period as possible. Payback Period equals Initial
Cost of the Technology (or differential cost over its equivalent) divided by Annual Energy Savings due to
this Technology. If you have access to the savings and cost information, you can easily perform this
calculation yourself. A mechanical engineer’s standard load calculation can provide energy information,
while manufacturers can give you cost estimates. In other cases, you may not need computer analysis
of performance. For example, simple payback analysis can be used to choose between two different
pieces of lighting equipment, simply by using the power rating of the equipment, an estimate of how many
hours per year the equipment will run, the typical electricity charge (ask local utility), and the product
cost (ask a manufacturer’s representative).
Life-Cycle Cost Analysis This is a preferred method of cost analysis, because it takes into account the time
value of money. However, it is too complex to be explained here. Check with an appropriate expert or
your local utility, or consult the large array of literature available on this subject, such as the documents
noted below.
Consultant A detailed cost/benefit study requires specialized knowledge in both energy modeling and
economic analysis. A consultant with experience in these areas is recommended for projects where the
building owner’s financial concerns are paramount.
Utility Company Your local utility may provide design assistance or financial incentives. Many utilities
have customer service educational centers equipped with rotating displays, seminars, and staff available
to answer questions on specific projects.
NTIS Many documents and guidelines are available from the National Technical Information Service.
Write to NTIS, Springfield, Virginia 22161 for a publications list.
Tips for Daylighting with Windows
11 - 3

Cost/Benefit Analysis
AIA “Life Cycle Cost Analysis - A Guide for Architects” (American Institute of Architects, Washington
D.C. 1977) is a useful handbook. Contact your local AIA chapter for this and any other relevant AIA
publications. Or ask for a publications list from the national office: (800) 365-ARCH.
BOMA The Building Owners and Managers Association offers publications on a variety of topics,
including a large selection of economic materials. Request a publications list from BOMA, PO Box
79330, Baltimore, MD, 21279-0330, (800) 426-6292.
Computer Tools “Building Life-Cycle Cost” program (BLCC) is available from NTIS at the above address.
Books There are many titles available on cost/benefit analysis, covering the general topic as well as
specific applications. Consult an architectural bookstore.
Building Control Systems by V. Bradshaw (Wiley and Sons 1985) includes a thorough treatment of
economics.
Energy Management Handbook by W. Turner (Fairmont Press 1993) has an economics chapter.
CHECKLIST
If you have...
1. Begin thinking about cost-
effectiveness in early design.
no time
Once you have an idea of
1. Use the nomographs here, using default values
building shape and size,
given. Discuss results with building owner.
intended usage, floor-to-ceiling
height, and possible window
configuration, you are ready to
a little time
do a preliminary analysis.
1. Use the nomographs here with better values for
2. Gather necessary economic
design details, energy costs, and owner’s invest-
data as discussed above.
ment criteria. Discuss results with building owner.
3. Use the Nomograph Tool here
2. If mechanical engineer’s load software can in-
for a preliminary check on
clude daylighting, calculate energy performance
daylighting savings and cost-
at an early stage (make assumptions about design
effectiveness. Use the tool to
details not yet resolved). Use that computed
compare design alternatives
value of annual energy savings in Nomograph 4,
under consideration.
in place of the annual savings found in the other
4. Contact local utility for informa-
nomographs. Discuss results with building owner.
tion on possible incentives.
5. If owner desires more exact
more time
cost/benefit analysis, contact
1. Perform a more exact cost benefit analysis. Lo-
utility for possible assistance.
cate either a source of consulting assistance or
6. Discuss further analysis with
learn to do it yourself. See the list of resources on
mechanical engineer.
page 11-3.
7. Or, explore possibility of hiring
a consultant.
11 - 4
Tips for Daylighting with Windows

Cost/Benefit Analysis
NOMOGRAPH TOOL
The Nomograph Cost/Benefit Tool for Daylighting
A nomograph is a graphic way to present a formula that has several variables. Rather than doing the
calculation mathematically, a nomograph user can “walk” through a diagram. This is an easy alternative to
working out an equation, plus the graphic presentation nicely illustrates the relative importance of various
parameters to the overall solution.
These nomographs are a preliminary tool for roughly assessing the potential impact of daylighting on the
energy use of non-residential buildings. Use these nomographs to help decide whether or not daylighting
makes much sense to pursue further. Or use them to make a decision between early design alternatives.
Cost/benefit analysis for energy-efficient design typically requires complex computer modeling to predict the
building’s energy performance. These nomographs offer a simplified and easier alternative, because they have
the computer analysis already built into them. The nomographs were developed after extensive computer
modeling of a generic non-residential building. Many design assumptions had to be made for this model. Even
though your project may differ significantly from this model, the results of a nomograph analysis should be
reasonable, as long as your project is not a major departure from standard practice design. The computer
analysis used Seattle (high latitude, predominately overcast) as the location for the generic building. Most
other U.S. locations would achieve better daylighting performance, therefore many projects would find these
nomograph results to be conservative.
Limitations to the Nomograph Tool
This tool will not deliver a guaranteed answer about cost-effectiveness.
This tool only takes into account the electric lighting energy reductions due to daylighting. It does not account
for the beneficial reductions in HVAC cooling energy use (i.e., chiller and fan use) due to heat gain reductions
from the electric lighting and window system. This will lead to a conservative estimate of cost-effectiveness.
If the nomographs indicate good potential savings with daylight, then a more detailed analysis that includes
the impact on HVAC first and operating costs due to daylighting should be performed.
This tool becomes less useful as design progresses. As the building develops further, greater accuracy is
expected. A more detailed analysis tool, modeling the specifics of the building and including important factors
left out by the nomographs, will deliver the level of information necessary to make late design decisions.
How to Use the Nomograph Tool
This is a seven step process. Your first time through may take an hour. Once you are familiar with the
nomographs, you will be able to compare different design options and investment scenarios in just minutes.
Each step is thoroughly explained in the pages that follow.
Use a photocopy of the worksheet provided to record values as you go. The first three nomographs are in
preparation for the last four. The values from Nomographs 1-3 will be needed for the more complicated
Nomographs 4-7.
Nomographs 4-6 determine savings associated with the energy use reduction due to daylighting. You can stop
there if you simply want to find these numbers to compare different design strategies, for example.
Use Nomograph 7 to complete the cost/benefit calculation. This nomograph provides a range of economic
information, including justifiable investment. In order to complete your study, you will need to obtain (from
another source) the differential construction costs for the proposed daylighting scheme over a non-daylighted
equivalent.
Tips for Daylighting with Windows
11 - 5

Cost/Benefit Analysis
Nomograph Worksheet
YOUR
ITEM
PROJECT DEFAULT VALUE
1
Latitude
See list in Step 1
2
Daily Occupancy Schedule
8 am - 6 pm
3
Gross Area per Floor (ft2)
4
Typical Floor Shape (Width-to-Length Ratio)
1:1.5 (see Step 3)
5
Daylight Zone Depth
15 feet (see Step 3)
6
Lighting Control Type
One Step (see Step 2)
7
Illumination Level (fc)
50 (see Step 2)
8
Useful Window Ratio
0.65 (see Step 2)
9
Glazing Visible Transmittance (VT)
0.60 (see Step 2)
10 Useful Window Ratio x VT
0.39 (see Step 2)
11 Annual Hours of Occupancy
2500
12 Installed Lighting Load (W/ft2)
1.5 (see Step 5)
13 Electricity Cost ($/kWh)
0.09 (Ask local utility)
14 Gross Total Building Area (ft2)
15 Non-Lighting Electric Loads (W/ft2)
3.5 (see Step 6)
(HVAC, plug loads, etc)
16 Peak Demand Rate($/kwh-month)
(Ask local utility) (See Step 6)
17 Daylit Hours (%)
Find in Step 1
18 Control Effectiveness (%)
Find in Step 2
19 Dimming Factor (%)
80 (see Step 4)
20 Daylit Area (%)
Find in Step 3
21 Annual Energy Savings due to Daylight (%)
Find in Step 4
22 Daylight Peak Load Savings (%)
Find in Step 4
23 Non-Daylit Lighting Energy Consumption (kWh/ft2- year)
Find in Step 5
24 Non-Daylit Lighting Energy Cost ($/ft2- year)
Find in Step 5
25 Daylighting Energy Consumption Savings (kWh/ft2- year)
Find in Step 5
26 Daylighting Energy Cost Savings ($/ft2- year)
Find in Step 5
27 Annual Daylighting Energy Savings ($)
Find in Step 5
28 Non-Daylit Peak Demand (kW)
Find in Step 6
29 Non-Daylit Monthly Demand Charge ($/ft2- month)
Find in Step 6
30 Non-Daylit Annual Demand Charge ($/ft2- year)
Find in Step 6
31 Daylit Peak Demand Savings (kW)
Find in Step 6
32 Daylit Monthly Demand Savings ($/ft2- month)
Find in Step 6
33 Daylit Annual Demand Savings ($/ft2- year)
Find in Step 6
34 Total Annual Savings ($/ft2- year)
Find in Step 6
35 Justifiable Investment ($/ft2 or $/project)
Find in Step 7
36 First Year Savings ($/ft2 or $/project)
Find in Step 7 (or same as line 34)
37 Payback Period (years)
10 (ask building owner) (Step 7)
38 Rate of Return or Discount Rate (%)
8 (ask building owner) (Step 7)
39 Energy Escalation Rate (%)
8 (ask local utility)
11 - 6
Tips for Daylighting with Windows

Cost/Benefit Analysis
STEP 1
Determine what percentage of occupied hours will find daylight available.
FIRST
Find the latitude of your site, or choose closest California city:
San Diego:
32˚
Fresno:
36˚
Chico:
39˚
Santa Ana:
33˚
Modesto:
37˚
Redding: 40˚
Los Angeles:
34˚
San Francisco: 37˚
Eureka:
41˚
Bakersfield:
35˚
Stockton:
38˚
San Luis Obispo: 35˚
Sacramento:
38˚
—> Record latitude in Line 1 of the worksheet.
SECOND
Estimate the typical daily schedule of occupancy (default 8 a.m. to 6 p.m.).
—> Record schedule in Line 2 of the worksheet.
THIRD
If you see your daily schedule on one of the curves (e.g., 9 a.m. - 7 p.m.) in Nomograph 1A, then:
• Find your latitude at the bottom and move up vertically until you intersect your schedule curve.
• Then move left and read your Annual Daylight Hours %.
—> Record Annual Daylight Hours % in Line 17 of the worksheet.
OR
If you do not see your daily schedule in Nomograph 1A, use Nomograph 1B.
• Find your latitude at the bottom and move up vertically until you intersect your morning schedule
curve.
• Then move left and read your Daylight Hours Annual Average.
• Repeat for afternoon schedule.
• Add both daylight hours together.
• Divide by total number of daily occupancy hours.
• Multiply by 100 to get Annual Daylight Hours %.
—> Record Annual Daylight Hours % in Line 17 of the worksheet.
Note: Daylight Savings Time has already been accounted for in these nomographs.
Tips for Daylighting with Windows
11 - 7

Cost/Benefit Analysis
1.00
8-4
9-5
0.95
8-5
7-4
7-3
8-6
9-6
0.90
9-7
0.85
8-8
0.80
9-9
0.75
ANNUAL DAYLIGHT HOURS DURING OCCUPANCY PERIOD (%)
0.70
20
24
28
32
36
40
44
48
52
56
60
64
DEGREES LATITUDE
Nomograph 1A
11 - 8
Tips for Daylighting with Windows

Cost/Benefit Analysis
6.5
12 NOON-9 PM
12 NOON-8 PM
6.0
5.5
12 NOON-7 PM
12 NOON-6 PM
6 AM-12 NOON
5.0
12 NOON
-5 PM
4.5
7 AM-12 NOON
12-4 PM
4.0
3.5
8-12 NOON
9-12 NOON
12-3 PM
DAYLIGHT HOURS DURING OCCUPANCY PERIOD (ANNUAL AVERAGE)
3.0
2.5
20
24
28
32
36
40
44
48
52
56
60
64
DEGREES LATITUDE
Nomograph 1B
Tips for Daylighting with Windows
11 - 9

Cost/Benefit Analysis
STEP 2
Find the percentage savings due to daylighting controls.
FIRST
Make an assumption for Lighting Control Type:
• One-Step control is least expensive, but it causes abrupt light changes and can be distracting. It is
often an acceptable choice for areas with plenty of expected daylight constantly through the day.
• Continuous dimming is most expensive, but is less disturbing to occupants and tends to deliver
higher energy savings.
—> Record Lighting Control Type in Line 6 of the worksheet.
SECOND
Make an Illumination Level assumption.
• 30 footcandles (fc) is a good ambient light level. Choose this for spaces with lower lighting needs,
such as computer VDT environments.
• 50 fc is appropriate for typical desk work.
• 70 fc is a higher light level appropriate for close, detailed tasks.
—> Record Illumination Level in Line 7 of the worksheet.
THIRD
Calculate Useful Window Ratio for a typical office or bay:
Net glazed window area above the workplane (e.g. above 30" from floor)
Useful Window Ratio =
Total interior window wall area from floor to ceiling
—> Record Useful Window Ratio in Line 8 of the worksheet.
FOURTH
Choose a Glazing Visible Transmittance (VT)
• If unknown, see the list in Section 2 (Daylight Feasibility) of these Guidelines.
—> Record Glazing Visible Transmittance in Line 9 of the worksheet.
FIFTH
Multiply Useful Window Ratio x Glazing Visible Transmittance (VT)
—> Record in Line 10 of the worksheet.
SIXTH
Use one of the nomographs to find Control Effectiveness %.
• Use Nomograph 2A if you assume One-Step controls.
• Use Nomograph 2B if you assume Continuous Dimming controls.
• Begin at the bottom with your value for Useful Window Ratio x Glazing Visible Transmittance
(worksheet Line 10).
• Move up to intersect your Illumination Level curve (worksheet Line 7).
• Move left to read your Control Effectiveness %.
—> Record Control Effectiveness % in Line 18 of the worksheet.
11 - 10
Tips for Daylighting with Windows

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