Economic Analysis. The economic analysis for all new or modified plant
construction projects shall consider all suitable alternative methods to determine the
most cost-effective method of accomplishment. All economic analyses shall follow the
policy and procedures as outlined in SECNAVINST 7000.14, Economic Analysis and Program
performing a detailed cost analyses refer to NAVFAC P-442, Economic Analysis Handbook or
National Bureau of Standards Handbook 135, Life-Cycle Cost Manual for the Federal Energy
Present Value Analysis. All cost analyses for power plant investments shall
be computed by using the present value (discounting) technique. In this method all
benefits and costs accruing throughout the life of the facility are compared on a
present value basis. The cost investments for each year of the economic life of the
facility are converted to present values by applying a discount factor.
Cost Elements. The cost elements of an economic analysis will
include non-recurring (capital cost of construction) and recurring operational and
maintenance costs. The recurring costs which are tabulated for each year of the
facility useful life will include the sum of the following items:
Operating and maintenance material costs (other than fuel).
Operating and maintenance labor.
Any other costs related to the facility.
Insurance is not charged because the Government is self-insured.
not charged because the Government does not pay taxes.
Analysis Format. The cost elements described above shall be summarized and
tabulated for each year of the economic life of the facility and should be prepared for
each alternative proposal under consideration. The annual costs shall then be
summarized to determine the total project cost for each alternative proposal.