An Evaluation Methodology for Facility Energy Conservation Projects.
LOGISTICS MANAGEMENT INST WASHINGTON DC
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The report presents an improved financial analysis method--IFAM-- for use in ECIP which fulfills all the FEMP requirements. IFAM employs a microcomputer with user-friendly software to analyze and rank projects. Inputs to IFAM are both general--GNP deflators, DOE energy cost escalation rates, OMB-authorized federal discount rate, etc., and project-specific-estimated capital and operational cash flow, schedules, local utility energy costs, etc. Only the project-specific inputs are required from the proposing installation. Analysis takes place at a central analysis takes place at a central analysis center where general and project-specific inputs are entered on an electronic ledger spread sheet. Using IFAM, the analysis center produces a most likely value for financial parameters of interest--LCC, SIR, EC, etc.--and ranks competing projects by the desired parameters. A sensitivity analysis and an uncertainty analysis capability are embedded in the IFAM software. The reports recommends that the Deputy Assistant Secretary of Defense Installations encourage IFAMs use in the next available ECIP cycle on a pilots basis by one major command or facilities engineering division of each Military Department. If that test proves IFAM to be an effective, efficient ECIP analysis tool, the report further recommends that it be used for all ECIP analyses and that it be considered for financial analysis in other DOD energy-and construction-related programs.
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