ASTM E1057 - 06(2010)

    Standard Practice for Measuring Internal Rate of Return and Adjusted Internal Rate of Return for Investments in Buildings and Building Systems

    Active Standard ASTM E1057 | Developed by Subcommittee: E06.81

    Book of Standards Volume: 04.11


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    Significance and Use

    The IRR method has been used traditionally in finance and economics to measure the percentage yield on investment.

    The IRR method is appropriate in most cases for evaluating whether a given building or building system will be economically efficient, that is, whether its time-adjusted benefits will exceed its time-adjusted costs over the period of concern to the decision maker. However, it has deficiencies that limit its usefulness in choosing among projects competing for a limited budget.

    The AIRR method is a measure of the overall rate of return that an investor can expect from an investment over a designated study period. It is appropriate both for evaluating whether a given building or building system will be economically efficient and for choosing among alternatives competing for a limited budget.

    The AIRR method overcomes some, but not all, of the deficiencies of the IRR. The AIRR is particularly recommended over the IRR for allocating limited funding among competing projects.

    1. Scope

    1.1 This practice covers a procedure for calculating and interpreting the internal rate of return (IRR) and adjusted internal rate of return (AIRR) measures in the evaluation of building designs, systems, and equipment.


    2. Referenced Documents (purchase separately) The documents listed below are referenced within the subject standard but are not provided as part of the standard.

    ASTM Standards

    E631 Terminology of Building Constructions

    E833 Terminology of Building Economics

    E917 Practice for Measuring Life-Cycle Costs of Buildings and Building Systems

    E964 Practice for Measuring Benefit-to-Cost and Savings-to-Investment Ratios for Buildings and Building Systems

    E1074 Practice for Measuring Net Benefits and Net Savings for Investments in Buildings and Building Systems

    E1121 Practice for Measuring Payback for Investments in Buildings and Building Systems

    E1185 Guide for Selecting Economic Methods for Evaluating Investments in Buildings and Building Systems

    E1369 Guide for Selecting Techniques for Treating Uncertainty and Risk in the Economic Evaluation of Buildings and Building Systems

    E1765 Practice for Applying Analytical Hierarchy Process (AHP) to Multiattribute Decision Analysis of Investments Related to Buildings and Building Systems

    E1946 Practice for Measuring Cost Risk of Buildings and Building Systems and Other Constructed Projects

    E2204 Guide for Summarizing the Economic Impacts of Building-Related Projects


    ICS Code

    ICS Number Code 91.010.20 (Contractual aspects)

    UNSPSC Code

    UNSPSC Code 81120000(Economics); 30000000(Structures and Building and Construction and Manufacturing Components and Supplies)


    Referencing This Standard

    DOI: 10.1520/E1057-06R10

    ASTM International is a member of CrossRef.

    Citation Format

    ASTM E1057-06(2010), Standard Practice for Measuring Internal Rate of Return and Adjusted Internal Rate of Return for Investments in Buildings and Building Systems, ASTM International, West Conshohocken, PA, 2010, www.astm.org

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