Wong, K C; So, A T P and Yu, N H W (2001) The financial viablity of intelligent buildings: A Faustmann approach of assessment. Journal of Financial Management of Property and Construction, 6(1), pp. 41-50. ISSN 1366-4387
Abstract
Intelligent Building (IB) is a new approach to building design. It is high-tech, flexible and highly adaptable to rapid changes of the modern world. Unlike what many engineers would have expected, intelligent buildings have not been widely built, particularly in Asia. Apart from the fundamental problem of ’defining’ an intelligent building in the first place, owners often question its financial viability (Choi 1995), even before asking what it is. This paper does not intend to argue that an IB must, or must not, be financially viable. Instead, a systematic method of assessment is laid down for discussion. It is based on the standard economic principle of wealth maximization: the highest present value of net gains. The Faustmann Condition is also brought in, allowing considerations of successive renovation cycles. The optimal duration of a renovation cycle would differ, with and without IB specifications. A specific site in the central business district of Hong Kong is chosen for analysis. The construction cost for a conventional design is compared to an IB alternative, using a new Asian IB definition. The method is also generalized to test the sensitivities of viability to changes in cost and rent, and presented as a ’viability curve’.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | financial viability, Asian intelligent building definition, net present value, Faustmann Condition, renovation cycles, Hong Kong |
| Index terms: | construction cost, maximization, financial viability, owner, net present value, specification, Asia, duration, engineer, renovation, Hong Kong, intelligent building, building design |
| Subjects: | sociology, business management, financial and cost management, renovation and retrofit, architectural design, economic analysis, contractual condition, Geography, project controls, algorithms, design practice, regions and continents, profession |
| Topics: | Time Control, Stakeholder Management, Cost Management, Digital Applications, Business Strategy, Contract Administration, Roles and Professions, Geographical Context, Engineering Principles, Design Practice |
| Descriptive scope: | 2 PC |
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