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ECONOMIC MODELING OF VAV AND VDV SYSTEMS IN RDF II. The economic evaluations of the systems are based on the life cycle cost (LCC) analysis. This approach takes into account costs over the life of the system as opposed to initial (first) costs only. Typically, relevant costs over the life of a system include costs of acquisition, maintenance, operation, and where applicable, disposal. The steep rise in energy prices in the 1970s has encouraged consideration of future operating costs during the design process resulting in selection of higher-priced, energy efficient systems on the basis of their future energy cost savings. Conventional life cycle cost analyses for buildings assume that all alternatives under consideration offer an acceptable level of overall building performance over the stipulated period. The alternatives are judged only on the basis of cost effectiveness. A project is cost effective when its costs are lower than competing projects - the difference In benefits above the minimum acceptable level are ignored. Productivity is one such benefit that is typically Ignored, but has far reaching economic implications (Woods, 1989) since employees salaries account for the largest pie in building use costs. The model being developed here expands LCC analysis to allow comparison of alternatives that differ in benefits as well. It is based on the method proposed by Lippiatt and Weber (1992) which uses the Net Benefits (NB) method. The NB measure is computed by evaluating each alternative relative to the base case alternative. It is required that the base case alternative meet the minimum performance criteria. For comparative evaluation of the VAV and VDV systems at the RDF, the VAV system is considered as the base case and the variable configurations of the VDV system (by- pass or using electronic filter) are the alternatives to be evaluated. Various operating modes (e.g. percent outdoor air, percent return air) in each configuration are also candidate alternatives for economic evaluation. When improvements to either the VAV or the VDV system are undertaken, the new configurations will be re-evaluated for economic efficiency. Both the systems will be evaluated over a fixed time period of 15 years. Costs and benefits over the life cycle will be discounted to an equivalent time basis (present worth). Net benefit will be the present value benefits less the present value costs:

Eoonomic Modeling / Page 2 N et Ct NB,+zai=4 "(1 +o)r where: NB„2.,~, = C, d N e e e benefits less costs, in present value dollars, of alternative A2 relative to base case alternative Al, benefits (productivity gains) for alternative A2 less benefits for base case in time period t costs for alternative A2 less costs for alternative Al in time period t discount rate reflecting investor's minimum acceptable rate of return, and number of years in study period. To determine productivity gains in the VAV configuration, noise, temperature and air quality are the three primary parameters. Productivity gains and losses resulting from improvements and declines in these parameters are monetized using the BOSTI (1981) recommended procedure. Separate estimates can be derived for three broad job types: managerial, professional/technical and derical. Eventually, reliable and valid productivity benefits will be determined through studies with long-term occupants in the RDF II. In the interim period, data from other studies will be used, to determine the values of Bt, for computing NB. A breakeven analysis for key input values will also be undertaken to determine the minimum or maximum values they can reach before becoming counter- productive. During the next period, the LCC of the two systems in RDF II (operating in various configurations) will be computed when detailed cost break-up become available from the mechanical contractors of the building. To include the impact of energy consumption in computing the LCC, the model developed by Montag (1979) will be used. C, will be the difference in costs of the two systems operating in comparable configurations. N ~ N A positive NB in the above equation will implies that the alternative A2 is economic. CA *41 ~ ~ W N

Economic Modebng / Page 3 References Woods JE (1989). "Cost Avoidance and Productivity in Owning and Operating Buildings." Occupational Medicine: State of the Art Reviews, vol 4, no. 4, pp. 753-770. Lippiatt BC and SF Weber (1992). "Productivity Impacts in Building Life-Cycie Cost Analysis." National Institute of Standards and Technology. Document no. NISTIR 4762. BOSTI (1981). "The Impact of Office Environment on Productivity and Quality of Working Life." Montag GM (1979). "Economic Analysis" in JE Woods ed. Manual of Procedures for Authorized Class A Energy Auditors in IOWA. Iowa State University. Document no. ISU-ERI- AMES-79076.