Payback period
The New Rules of Measurement (NRM) are published by the Royal Institute of Chartered Surveyors (RICS). They provide a standard set of measurement rules for estimating, cost planning, procurement and whole-life costing for construction projects.
NRM3: Order of cost estimating and cost planning for building maintenance works, suggests that the ‘payback period’ (PB) is:
|
…the measure of how long it takes to recover initial investment costs and is a useful basis for evaluating alternative investment options. It may be calculated using either real (non-discounted) values for future costs, that is ‘Simple PB’, or present (discounted) values, that is ‘Discounted PB’. PB in general ignores all costs and savings after the payback point has been reached and it is possible that an investment with a short PB is a poorer option than one with a longer payback over the entire period of analysis. PB is a useful technique for assessing whether additional investment in, for example, lower energy plant, is worthwhile. It enables users to weigh the additional capital costs against the time it takes for these costs to be recouped through savings or income during the operational period. This may be a useful means of judging whether an investment represents good value for money, although the subjective nature of the value for money assessment may make it in appropriate for some public sector investment decisions. |
See also: Economically feasible.
[edit] Related articles on Designing Buildings
Featured articles and news
A briefing on fall protection systems for designers
A legal requirement and an ethical must.
CIOB Ireland launches manifesto for 2024 General Election
A vision for a sustainable, high-quality built environment that benefits all members of society.
Local leaders gain new powers to support local high streets
High Street Rental Auctions to be introduced from December.
Infrastructure sector posts second gain for October
With a boost for housebuilder and commercial developer contract awards.
Sustainable construction design teams survey
Shaping the Future of Sustainable Design: Your Voice Matters.
COP29; impacts of construction and updates
Amid criticism, open letters and calls for reform.
The properties of conservation rooflights
Things to consider when choosing the right product.
Adapting to meet changing needs.
London Build: A festival of construction
Co-located with the London Build Fire & Security Expo.
Tasked with locating groups of 10,000 homes with opportunity.
Delivering radical reform in the UK energy market
What are the benefits, barriers and underlying principles.
Information Management Initiative IMI
Building sector-transforming capabilities in emerging technologies.
Recent study of UK households reveals chilling home truths
Poor insulation, EPC knowledge and lack of understanding as to what retrofit might offer.
Embodied Carbon in the Built Environment
Overview, regulations, detail calculations and much more.
Why the construction sector must embrace workplace mental health support
Let’s talk; more importantly now, than ever.
Ensuring the trustworthiness of AI systems
A key growth area, including impacts for construction.