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A14.4. Military Construction Design
A14.4.1. Purpose. This guidance establishes criteria and standards for performing
comparative analyses and life cycle cost studies used in support of design decisions for
MILCON program projects, i.e., to support the selection from various alternatives of
components/systems being considered as elements in facilities design. These criteria and
standards apply to all design decisions regardless of when they are made in the planning,
programming, design or procurement process. This guidance does not apply to economic
analyses and life cycle studies used to make project justification decisions during the planning
and programming process.
A14.4.2. General. Comparative analyses shall be conducted as part of the design process to
ensure the selection/rejection of design alternatives is not based solely on construction costs,
but also on the lowest life cycle costs (LCC), that is, lowest total cost of ownership. (T-2). The
depth and degree of formality of these analyses shall be determined on a case- by-case basis to
ensure that the potential benefit from information accruing from the analysis is commensurate
with the effort for the analysis. Results of generic studies or results of previous analyses of
alternatives similar to those currently under consideration may be used in lieu of performing a
new study provided the previous study was based on similar design conditions, criteria, and
methods. Previous studies should be updated as required to reflect changes of conditions
significant enough to impact the design decision. All comparative analyses and other
justification for the selection of a design alternative, whether a previous study or a new one,
shall be clearly documented in the appropriate section of the project design analysis. (T-2).
A14.4.3. Methods. All analyses shall consider the total LCC for design alternatives, where
the LCC includes all costs and revenue associated with an alternative over its expected life,
including but not limited to construction/acquisition, energy, maintenance, operation, repair,
replacement, alteration, disposal costs, and retention values. (T-2). The present value
discounting approach shall be used to adjust for the differences in timing of cost and benefits
unless otherwise specified by other directives or by public law. (T-2). Discounting should be
applied to all cost and benefits over the appropriate analysis period. Specific criteria are as
follows:
A14.4.3.1. Energy Related Studies. All energy related economic studies (in which
energy costs are relevant, regardless of their magnitude relative to other costs) shall use the
current discount rate published by the National Institute of Standards and Technology
(NIST) in their annual supplement to NIST Handbook 135, and disseminated by the
appropriate Service Headquarters Office. (T-2).
A14.4.3.2. Non-energy Related Studies. All economic studies other than energy related
economic studies shall use the current discount rates published annually by the OMB as
Appendix C to OMB Circular A-94, and disseminated by the SAF/FMC. (T-2).
A14.4.3.3. Analysis Period. When using Terminal Value, the analysis period shall be
the life expectancy of the alternative with the shortest life. (T-2). When using Uniform
Annual Cost, the period of analysis will match the life expectancy of the facility in each
alternative. (T-2). Note: An adequate cost analysis of a utility system should be over a
term greater than 25 years. Generally, design lives of Electrical, Natural Gas, Water, and
Wastewater systems are a minimum of 50 years. LCCs over a shorter term tend to be very
inaccurate