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
One of the most impressive Victorian architects. Book review.
RTPI leader to become new CIOB Chief Executive Officer
Dr Victoria Hills MRTPI, FICE to take over after Caroline Gumble’s departure.
Social and affordable housing, a long term plan for delivery
The “Delivering a Decade of Renewal for Social and Affordable Housing” strategy sets out future path.
A change to adoptive architecture
Effects of global weather warming on architectural detailing, material choice and human interaction.
The proposed publicly owned and backed subsidiary of Homes England, to facilitate new homes.
How big is the problem and what can we do to mitigate the effects?
Overheating guidance and tools for building designers
A number of cool guides to help with the heat.
The UK's Modern Industrial Strategy: A 10 year plan
Previous consultation criticism, current key elements and general support with some persisting reservations.
Building Safety Regulator reforms
New roles, new staff and a new fast track service pave the way for a single construction regulator.
Architectural Technologist CPDs and Communications
CIAT CPD… and how you can do it!
Cooling centres and cool spaces
Managing extreme heat in cities by directing the public to places for heat stress relief and water sources.
Winter gardens: A brief history and warm variations
Extending the season with glass in different forms and terms.
Restoring Great Yarmouth's Winter Gardens
Transforming one of the least sustainable constructions imaginable.
Construction Skills Mission Board launch sector drive
Newly formed government and industry collaboration set strategy for recruiting an additional 100,000 construction workers a year.
New Architects Code comes into effect in September 2025
ARB Architects Code of Conduct and Practice available with ongoing consultation regarding guidance.
Welsh Skills Body (Medr) launches ambitious plan
The new skills body brings together funding and regulation of tertiary education and research for the devolved nation.
Paul Gandy FCIOB announced as next CIOB President
Former Tilbury Douglas CEO takes helm.