How would you perform a cost-benefit analysis for a retrofit program?

• A. Estimate total installed costs, energy/water savings, maintenance costs, and compare to net present value or ROI.
• B. Only compare upfront costs
• C. Just estimate energy savings
• D. Only consider maintenance costs

Answer: (D)

Performing a cost-benefit analysis for a retrofit program requires weighing all relevant cash flows over the project's life and putting them into a common financial measure. Start by estimating the total installed costs, then quantify the expected energy and water savings as tangible benefits. Don’t forget to include maintenance costs or savings over the same period, since operating expenses can significantly affect overall value. Bringing these cash flows together and evaluating them with metrics like net present value or ROI shows whether the retrofit delivers value over time. Sensitivity analysis helps you see how results change with different energy prices or discount rates. The reason this approach is best is that considering only upfront costs, or only energy savings, or only maintenance costs, gives an incomplete and potentially misleading picture of the true economic impact.