Headquarters
Department of the Army
Washington, DC
28 September 2018
*Department of the Army

Pamphlet 415-3

Construction

Economic Analysis: Description and Methods

By Order of the Secretary of the Army:

MARK A. MILLEY
General, United States Army
Chief of Staff

MARK F. AVERILL
Acting Administrative Assistant to the Secretary of the Army

History. This publication is a major revision.

Summary. This pamphlet presents guidance for performing economic analyses as part of the resource allocation process for Military Construction, Army; Base Realignment and Closure, Army; Commercially Financed Facilities; Army Family Housing Construction; Army Reserve; and Army National Guard projects. This information clarifies the Army policy on economic analysis by DODIDODIDepartment of the Defense Instruction 7041.3 and OMBOMBOffice of Management and Budget Circular A-94. Results of an economic analysis provide valuable input in deciding which projects to fund for the most cost-effective use of tax dollars. In addition to providing instructions for conducting an economic analysis, this pamphlet contains guidance for reporting.

Applicability. This pamphlet applies to the Regular Army, the Army National Guard/Army National Guard of the United States, and the U.S. Army Reserve, unless otherwise stated. Also, it applies to sub installations and assigned activities.

Proponent and exception authority. The proponent for this pamphlet is the Chief of Engineers. The proponent has the authority to approve exceptions or waivers to this pamphlet that are consistent with controlling law and regulations. The proponent may delegate this approval authority, in writing, to a division chief within the proponent agency or its direct reporting unit or field operating agency, in the grade of colonel or the civilian equivalent. Activities may request a waiver to this pamphlet by providing justification that includes a full analysis of the expected benefits and must include formal review by the activity's senior legal officer. All waiver requests will be endorsed by the commander or senior leader of the requesting activity and forwarded through their higher headquarters to the policy proponent. Refer to AR 25-30 for specific guidance.

Suggested improvements. Users are invited to send comments and suggested improvements on DA FormDA FormDepartment of the Army form 2028 (Recommended Changes to Publications and Blank Forms) directly to the Chief of Engineers, (CECW-EC), 441 G St. NW, Washington, DC 20314-1000.

Distribution. This regulation is available in electronic media only and is intended for the Regular Army, the Army National Guard/Army National Guard of the United States, and the U.S. Army Reserve.

The nine steps which comprise the full (multiple viable alternatives) EA process are shown in figure 3–1 and discussed in detail below. If chapter 3, step 2 produces a partial (single viable alternative), it is necessary to document only chapter 3, steps 1, 2, and 9 according to the instructions in this chapter. If an economic analysis is precluded by direction of Congress, according to the criteria as stipulated below in paragraph 3–3 a, state that an economic analysis is not required, cite the actual language of the law and Public Law number, which precludes an analysis and document any additional pertinent information accordingly.

Viable alternative methods of meeting the project objective are compared and ranked using the present values of a series of costs and benefits over time. If the results of paragraph 3–3, result in the presence of multiple viable alternatives, present value methods will be utilized to identify the least cost alternative within ECONPACK. However, there are other methods to rank alternatives; the various methods of comparing two or more alternatives are discussed in this chapter.