[Annualized Cost of
Lump Sum Alterations]
=
[Lump Sum Cost of Alterations]/[Total USF]/[Holding
Period]
=
[Line 8, Worksheet 1]/[Line 5, Worksheet 1]/
[Line 3, Worksheet 1]
Line 15 - Total Annual Cost to VA - Line 11 plus Line 13 plus Line 14.
Second Column - Present Value - For each row in the worksheet, with the exception of
Line 14, the annual costs are discounted at the discount rate to determine the present
value of the future costs. This calculation is easily completed on a financial calculator or
in a personal computer spreadsheet software program. COs may also consult with the
Fiscal Officer to complete this calculation. For Line 14, Annualized Cost of Lump Sum
Alterations, do not discount the annual costs, as these annual costs are the average of
the Lump Sum Cost of Alterations over the Holding Period. The present value of the
Annualized Cost of Lump Sum Alterations will be a meaningless number. Rather than
discounting, simple use formula listed above for Line 14.
The Purchase Alternative - To analyze this alternative, the CO completes form entitled
Worksheet 2 - Purchase Analysis. Listed below are detailed explanations of the
assumptions and inputs for Worksheet 2:
Line 1 - Firm Term - from Line 1 from Worksheet 1;
Line 2 - Renewal Term - Line 2 from Worksheet 1;
Line 3 - Line 1 plus Line 2;
Line 4 - Discount rate - Line 4 from Worksheet 1;
Line 5 - Total USF - Line 5 from Worksheet 1;
Line 6 - Add-on Factor to Obtain Gross Square Feet - This is unique to each building and
represents the percentage by which the USF must be increased to include not only the
building's common areas such as elevator lobbies and public corridors but also the
building's structural elements. When thinking of gross square feet of a floor, think of the
area of a concrete slab at grade level extending out to the farthest edges of the building.
The CO obtains this percentage by consulting with Engineering Service and surveying
knowledgeable sources in the marketplace, such as developers, architects, and landlords.
An Add-on Factor of 30%-50% may be typical of a modern, high-rise office building with a
full-height atrium and underground parking. Ten to fifteen percent may be typical for
single-story, single-tenant occupied buildings;
Line 7 - Gross Square Feet - Multiply Line 5 by the sum of 1 plus Line 6;
BENEFIT COST ANALYSIS -- 3 of 11
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