OMB Circular No. A-94

1. OMB Circular No. A-94

2. OMBCircular No. A-94 What it is all about!

3. A-94 Spreadsheet This PowerPoint demo is a quick overview of how to: Answer common questions about the spreadsheet model

4. A-94 Now onto the Spread Sheet Remember… Sheets can be changed. . . on purpose or accidentally. Please be aware you can change the formulas

5. To determine the time period to use in an analysis, choose Lease Period + Lease Renewal Option Period if it is of shorter duration than the economic life of the other alternatives (Remember, the analysis must be for 10 years or longer). In this example, the time period is 20 years. These numbers should be available from your engineer or architect. Any costs associated with preparing the lease property that WASN'T included in the lease. Typically, these costs are a one-time occurrence. This Alternative is not allowed at this time, but could be a feasible option in the future. Rather than eliminate it from the spreadsheet, just plug in rates high enough to assure that it wouldn't be chosen. Local GSA rates or private sector rates. OMB Circular A-94 has Appendices attached with current nominal interest rates to be used for analyses of this type; (Note: For a 20-year nominal Treasury rate, take an average of the 10-year and 30-year rates).

6. Use OMB Circular No. A-94, Section 13.c.(6), for guidance in determining appropriate costs for each of these Purchase Alternative figures. It is important to include imputed costs for buildings and/or land that is already government-owned for the purpose of this analysis.

7. Even if you build on gov't land there is a land cost. This would be an "imputed" cost as described in OMB A-94, Section 13. Your Forest Engineer or Architect should be able to provide estimates of these percentages. Typically, design costs are 6—10% of construction costs, while COR and contract supervision costs are 4—8% of construction, depending generally on the size of the project. If the project is relatively small (several hundred thousand dollars), use a percentage at the higher end of the range. If the project is larger (millions of dollars), use a lower percentage. In this example, each was estimated to be 6% of construction costs, but any percentage can be easily used. The formula used in cells C44 and C45 is "=0.06*$C$43", so editing the percentage can be accomplished by changing the "0.06" to the desired decimal. However, if the actual costs are known, those figures should be used (Simply delete the formulas in cells C44 and C45, then enter the actual figures). These yearly totals can be thought of as the "opportunity cost" of using Federal funds. For the purpose of this analysis, these costs are factored into the Net Present Value formula used in the Summary below in Table 5.

8. These may be "imputed" costs. Refer to OMB A-94, Section 13.c.(6) for further clarification. These are included in the Lease payment, so they must be considered when calculating the costs associated with construction or purchase alternatives. If they aren't included, they must be added to the yearly cost of the lease. Bldg Maintenance is typically 1-3% of Construction or Purchase cost. 2% was used for these costs. OMB A-94, Section 13.c.(7) provides several options for determining Residual Value. Important: The Residual Value can greatly influence the net present value, so give it careful consideration. By listing items that are included in the Lease and Lease/Purchase alternatives, the user can ensure that comparable ancillary services are addressed for the Build and Purchase alternatives. Remember, the validity of this analysis rests on the user's ability to compare "apples to apples" and "oranges to oranges".

9. Option years' rate change is reflected here. The accompanying "User's Guide" explains how these summary net present values were calculated. Totals From Table 4 Net Usable X Lease Rate

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