DA Form 5605-1-R: SIR & Discounted Payback (LCCA Guide)

DA Form 5605-1-R: SIR & Discounted Payback (LCCA Guide) – DA Form 5605-1-R (December 1986) is a U.S. Army form used for Life Cycle Cost Analysis (LCCA). It specifically supports calculations of the Savings-to-Investment Ratio (SIR) and Discounted Payback Period. It is part of a suite of related forms (including DA Form 5605-2-R, 5605-3-R, etc.) for economic analysis in military construction (MILCON) and facilities projects.

This form helps decision-makers compare project alternatives by quantifying long-term economic performance, ensuring investments deliver the best value over the full life of a facility or system. It is prescribed for use per TM 5-802-1, Economic Studies for Military Construction.

Download the Official DA Form 5605-1-R PDF Here:
https://armypubs.army.mil/pub/eforms/DR_a/NOCASE-DA_FORM_5605-1-R-000-EFILE-0.pdf

Why Life Cycle Cost Analysis (LCCA) Matters in U.S. Army and Federal Projects?

LCCA evaluates the total cost of ownership—including initial investment, operations, maintenance, repair, replacement, and disposal—over a defined study period, rather than focusing only on upfront costs.

In federal and military contexts, LCCA ensures compliance with requirements for cost-effective decisions, especially for energy efficiency, water conservation, and sustainable building projects. It aligns with broader federal guidelines like those from the Federal Energy Management Program (FEMP) and NIST Handbook 135.

Key benefits include:

  • Identifying projects with the lowest long-term costs.
  • Supporting funding justifications for MILCON and Energy Conservation Investment Program (ECIP) projects.
  • Meeting regulatory expectations for economic analysis in government facilities.

Understanding Key Metrics on DA Form 5605-1-R

1. Savings-to-Investment Ratio (SIR)
SIR is the ratio of the present value of operational savings to the present value of additional investment costs.

  • SIR > 1 indicates the project is economically attractive (savings exceed costs on a discounted basis).
  • Higher SIR values rank projects better when funding is limited.

2. Discounted Payback (DPB) Period
This measures the time required for cumulative discounted savings to recover the initial incremental investment. Unlike simple payback, it accounts for the time value of money using a discount rate.

These metrics complement full Life Cycle Cost (LCC) comparisons and are often required for ranking independent projects or screening investments.

How to Use DA Form 5605-1-R? Step-by-Step Overview

  1. Gather Inputs (often from DA Form 5605-3-R): Base case vs. alternative costs, savings, study period, discount rate, escalation rates.
  2. Enter Trial Values for post-Beginning-of-Design (BOD) analysis.
  3. Calculate Present Worth of savings and investments using appropriate discount factors.
  4. Compute SIR and Discounted Payback.
  5. Document Results for decision packages or value engineering studies.

Important Notes on Discounting:
Analyses typically use constant dollars and real discount rates (e.g., FEMP or OMB rates published annually). For energy-related projects, use modified uniform present value (UPV*) factors that incorporate energy price escalation.

Current rates and factors are available in the latest NISTIR 85-3273 annual supplement.

  • DA Form 5605-2-R: Life Cycle Cost Analysis Summary.
  • DA Form 5605-3-R: Basic Input Data Summary.
  • DA Form 5605-4-R: Present Worth – Conventional Approach.
  • ENG Form 5605-5-R: Present Worth – One-Step Approach.

Best Practices and Federal Alignment (USA Focus)

U.S. Army projects align with:

  • TM 5-802-1 for MILCON economic studies.
  • NIST Handbook 135 (Life Cycle Costing Manual for FEMP).
  • 10 CFR Part 436, Subpart A for energy and water projects.
  • OMB Circular A-94 for general federal analyses.

Use tools like the NIST Building Life Cycle Cost (BLCC) software for automated calculations that comply with these standards.

Pro Tips for Success:

  • Perform LCCA early in design for maximum impact.
  • Use consistent assumptions across alternatives.
  • Document sensitivity analysis for key variables (discount rate, study period, energy prices).
  • Consult installation Directorate of Public Works or USACE for project-specific guidance.

Optimize Your Military Construction Projects

DA Form 5605-1-R is an essential tool for rigorous, defensible economic analysis in U.S. Army facilities planning. By focusing on SIR and Discounted Payback alongside full LCC, project teams can demonstrate strong return on investment and stewardship of taxpayer dollars.

Download the latest official form directly from Army Publishing Directorate:
DA Form 5605-1-R PDF

For training or complex analyses, refer to TM 5-802-1, NIST resources, or contact your local engineering support activity. Proper use of this form supports smarter, more sustainable infrastructure decisions for the Army and Department of Defense.