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Application of Life-Cycle Cost Analysis to Homeland Security Issues in Constructed Facilities: A Case Study.

pdf icon Application of Life-Cycle Cost Analysis to Homeland Security Issues in Constructed Facilities: A Case Study. (1072 K)
Chapman, R. E.

NISTIR 7025; 87 p. October 2003.

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costs; economics; commercial buildings; construction; economic analysis; hazard mitigation; homeland security; life-cycle costing


The Office of Applied Economics, a unit of the Building and Fire Research Laboratory at the National Institute of Standards and Technology, is developing economic tools - evaluation methods and software for implementing these methods - for evaluating the management of terrorist risks. This report is one in a series focused on these economic tools. It illustrates how to apply a series of standardized methods to evaluate and compare the cost-effectiveness of security-related investments in constructed facilities. This report describes a renovation project for a prototypical data center. The renovation has been planned for some time to upgrade the data center's HVAC, telecommunications and data processing systems and to address a number of generic security concerns. The building owners employ two different renovation strategies. The first, referred to as the Base Case, employs upgrades which are consistent with pre-9/11 levels of security. The second, referred to as the proposed Alternative, recognizes that in the post-9/11 environment the data center faces heightened risks in two areas. These risks are associated with the vulnerability of information technology resources and the potential for damage to the facility and its contents from chemical, biological, radiological, and explosive hazards. Two scenarios-the potential for a cyber attack and the potential for a terrorist attack-are used to capture these risks. The results of this study demonstrate that the Proposed Alternative results in lower life-cycle costs and is hence the more cost-effective choice. Additional economic measures are reported that underscore the superior performance of the Proposed Alternative. Finally, this study demonstrates how a detailed cost-accounting framework promotes better decision making by identifying unambiguously who bears which costs, how costsx are allocated among several widely-accepted budget categories, and how costs are allocated among key building components.