Life cycle costing manual for the Federal Energy Management Program

Abstract

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 high-performance facility projects, including energy efficiency, water conservation, and renewable energy projects in all federal facilities. 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, is also published by NIST to provide the current discount rate, discount factors, and energy escalation factors used for conducting an LCC analysis in accordance with the FEMP rules. This annual supplement is required when using Handbook 135 and is used in updating NIST LCC-related software. The 2020 edition of Handbook 135 superseded the 1995 version and included extensive revisions and reorganization around the key steps in an LCC analysis. Although the underlying LCC methodology has not changed, the content of the handbook has been updated to include the most relevant information. Given the technological developments since its 1995 release, the manual worksheets previously provided for completing LCC analysis have been removed. The examples have been updated and expanded to provide explicit use cases for projects with a broader scope than energy efficiency and water conservation to include all considerations of high-performance facilities, including sustainability and resilience. Additionally, the handbook provides additional information resources (e.g., data sources, requirements, codes and standards, and guidance by project goal). This 2022 edition of Handbook 135 supersedes the 2020 edition and includes minimal changes focused on addressing language in new executive orders and their implications on federal cost-effectiveness analysis. The handbook will be updated on an ad hoc basis dependent on future changes in federal statutes and regulations, agency goals and guidance, LCCA support resource development, and available funding.