Valuation of the historic environment: The scope for using economic valuation evidence in the appraisal of heritage-related projects

In this paper we consider the question, ‘What is the the scope for using results of economic valuation studies in the appraisal and assessment of heritage-related projects and programmes?’ This entails assessing the potential role and scope of ‘value transfer’, which is an approach to economic valuation that uses results of previous valuation studies (for example, travel cost or stated preference studies) in the appraisal of projects and programmes. A distinct appeal of value transfer is its expediency and value for money properties in relation to commissioning original valuation studies, which can enable greater use of economic values within decision making. Its potential role in the appraisal of heritage assets depends on whether it is deemed a reliable approach to economic valuation, and whether there is a sufficient body of economic valuation literature concerning the heritage sector. Correspondingly, we examine: (i) the applicability of economic valuation to the historic environment; (ii) the basis for value transfer; and (iii) the literature pertaining to the valuation of the historic environment. We also develop a case study, which demonstrates the use of value transfer in a heritage context. Overall there currently appears to be limited scope for value transfer applications in heritage-related appraisal and evaluation exercises. This is in part due to the heterogeneity and complexity of heritage assets. However, a more fundamental constraining factor is the current extent of heritage valuation literature; only 30 valuation studies were identified relating to the historic environment. We recommend that future work focuses on developing a database of valuation studies relating to the heritage sector, and on establishing a broader base of high-quality original heritage-related economic valuation studies. Moreover, where value transfer is applied in an appraisal and evaluation context to heritage assets, much emphasis should be placed on satisfying the criteria for identifying suitable valuation evidence from existing studies.     

Defining complementary tools to the IVI. The Infrastructure Degradation Index (IDI) and the Infrastructure Histogram (HI)

ABSTRACT

The Infrastructure Value Index (IVI) is quickly becoming a standard as a valuable tool to quickly assess the state of urban water infrastructure. However, its simple nature (as a single metric) can mask some valuable information and lead to erroneous conclusions. This paper introduces two complementary tools to IVI: The Infrastructure Degradation Index (IDI) and the Infrastructure Histogram (H_I). The IDI is focused on time (compared to the IVI, focused on value), represents an intuitive concept and behaves in a linear way. The joint analysis of IVI and IDI provides results in a more complete understanding of the state of the assets, while maintaining the simplicity of the tools. The Infrastructure Histogram allows for a full evaluation of the infrastructure state and provides a detailed picture of network age compared to its expected life, as well as an order of magnitude of the required investments in the following years.     

Estimating capital costs of wastewater treatment plants at the strategical level

ABSTRACT

The present paper aims at the establishment and testing of construction cost functions for wastewater treatment plants (WWTP) based on their hydraulic and physical characteristics. A five-step methodology is followed: (1) database construction and asset characterization; (2) present cost value calculation; (3) key parameters and cost functions establishment; (4) cost modelling; and (5) model testing. A large set of construction costs and infrastructure data from several Portuguese wastewater utilities is analysed including 147 WWTP. Simple linear regression analysis is carried out to obtain cost functions for five types of WWTP. The cost modelling also includes the estimation of 90% prediction bands. Each developed cost function is tested for checking their statistical significance. Results allow the estimation of capital costs of new WWTP and the assessment of the current value of existing assets at the strategical and tactical planning levels without the knowledge of the specific components of the facilities.     

Optimal FRP-strengthening strategy for corrosion-affected reinforced concrete columns

Abstract

Deterioration of reinforced concrete (RC) structures is unavoidable after their long time in service, with corrosion being the major mechanism of deterioration. In order to ensure safety of deteriorated structures, an effective rehabilitation plan is essential. Although considerable research on strengthening of RC structures using fibre-reinforced polymers (FRPs) composites has been undertaken, more is on the methods of strengthening and effects of corrosion on strength of RC columns than that on the prediction of optimum strengthening time. This paper presents a methodology for determining the optimal strengthening time and the required number of FRP layers for corrosion-affected RC structures with application to columns. The methodology is based on the time-dependent reliability method and the renewal theory. An example is provided to illustrate the application of the proposed methodology. It is found in this study that an optimum point for the formulated objective function exists, and that outcomes of optimisation problem, i.e. strengthening time and number of required FRP layers, are sensitive to corrosion rate. The significance of the proposed methodology is that it provides guidance for practitioners and asset managers to decide when and how to strengthen deteriorated structural members.     

Sewer asset management – state of the art and research needs

ABSTRACT

Sewer asset management gained momentum and importance in recent years due to economic considerations, since infrastructure maintenance and rehabilitation directly represent major investments. Because physical urban water infrastructure has life expectancies of up to 100 years or more, contemporary urban drainage systems are strongly influenced by historical decisions and implementations. The current decisions taken in sewer asset management will, therefore, have a long-lasting impact on the functionality and quality of future services provided by these networks. These decisions can be supported by different approaches ranging from various inspection techniques, deterioration models to assess the probability of failure or the technical service life, to sophisticated decision support systems crossing boundaries to other urban infrastructure. This paper presents the state of the art in sewer asset management in its manifold facets spanning a wide field of research and highlights existing research gaps while giving an outlook on future developments and research areas.     

A framework for assessing the consequences of deferred or hastened highway asset interventions

Application of a treatment at appropriate time is indeed a critical issue in highway asset management. A treatment that is applied too early (hastened) or too late (deferred) has consequences in terms of the agency cost, facility performance and cost-effectiveness. This research uses basic concepts in costing and effectiveness analysis to develop a methodology for quantifying the consequences of mistimed highway preservation interventions. Through a case study on pavement preservation, demonstrating the practical application of the methodology, it is observed that the consequences of hastened or deferred interventions can differ across asset classes as well as across intervention types: the consequent life-cycle cost increases and performance losses are more severe for non-interstate highways compared with interstate highways, and are more severe for maintenance compared with light rehabilitation. Recognising that in the practical world, the timing of interventions need not be at the optimal levels, the paper goes on to show how an agency could use the developed methodology to establish acceptable ranges of intervention timing and introduce flexibility in its preservation schedules by establishing the earliest and the latest times for applying an intervention in order to avoid undue penalties in terms of cost and effectiveness.     

Vernacular Culture and Urban Economic Development: Thinking Outside the (Big) Box

Problem: This article addresses the increasing homogeneity of urban commercial areas and the loss of local culture associated with this trend. It seeks to identify strategies that build effectively on vernacular culture as an asset in neighborhood development.

Purpose: We aim to identify tools that advance the cultural preservation approach to urban economic development and to describe instances in which planners and neighborhood groups have applied these tools successfully.

Methods: We completed a wide-ranging literature review to identify the characteristics of places that have employed cultural preservation approaches and conducted six case studies involving 43 interviews in five cities.

Results and conclusions: Our interviews and case studies showed us that there are at least three types of anchors in neighborhoods with strong vernacular culture: 1) markets; 2) ethnic areas and heritage sites; 3) and arts-and-culture venues and districts. Although the balance between preservation and development will be different in each place, we did cull some widely applicable lessons learned while conducting our fieldwork: a) involve residents; b) find assets in local needs; c) transfer lessons rather than replicating others' work; d) create opportunities for ownership; e) if it doesn't exist, invent it; and f) balance culture and commerce. Our analysis also suggests that a neighborhood wishing to pursue a neighborhood development strategy based on vernacular culture should have at least one of the anchors listed above and strong, community-based organizations.

Takeaway for practice: We argue that it is both possible and preferable to advance an urban economic development strategy based on the local cultural assets that exist in urban neighborhoods. Our research illustrates different paths that places have taken to advance this kind of strategy and provides several ways for local planners and policymakers to integrate the maintenance of vernacular culture into their larger economic development plans.

Research support: Our research was supported by the Fannie Mae Foundation.     

Sustainability assessment in strategic management of wastewater transport system: a case study in Trondheim,Norway

Sewer networks represent high value in water infrastructure assets and it is important to develop and operate them by specified sustainable management. This paper presents the results of a sustainability analysis on the wastewater transport system of Trondheim, Norway, for future planning (2014–2040) from a metabolism-based performance analysis by the Dynamic Metabolism Model (DMM). The aim of this work is to demonstrate a methodology for comparing different pathways toward a sustainable management of wastewater systems. For this purpose, four intervention strategies ‘infiltration and inflow reduction’, ‘increasing rehabilitation rate’, ‘extension of system regarding population growth’, ‘energy management’ along with different combinations of them have been analysed. The results of this study may give some support to decision-makers in wastewater departments. In practice, to achieve strategic level planning of sustainable sewer asset management, it is vital to assess different aspects of sustainability and manage them in a comprehensive system.     

Functional and residual capital values as criteria for water pipe renewal

Water pipes are considered as tangible assets designed to provide a level of service throughout an expected lifetime. The asset can be characterised by two types of values: capital or accounting value and functional value. The capital value of assets depreciates according to a specific rate per time period. The depreciation is assessed by the annual amortisation of the capital asset, which constitutes a potential self-budgeting for future renewal. The development in the last 20 years of public sector accounting standards boards dedicated to tangible capital assets management has encouraged water and wastewater utilities to consider capital depreciation as a decision-making criterion for asset prioritisation. At the same time, when the capital depreciates the asset function deteriorates, but this deterioration is more difficult to assess. In fact, each asset can be evaluated according to a functional value that indicates the capacity of the asset to deliver the designated service at the required level. This value declines during the service life because of the occurrence of unexpected events (failures, breaks, leaks and degradation). The functional deterioration, also referred to as ‘obsolescence’ or ‘reliability’, is still misunderstood for water pipe assets. This study addresses the following questions: How can the functional value be estimated for water systems both at the pipe and at the network scale? How can the decision-making process for pipe renewal be improved by incorporating specific indicators based on both functional and accounting values? The current research focuses on the definition of an appropriate time-dependent functional value, based on the following hypothesis: the functional value depends on both structural and hydraulic deterioration of the pipe asset, but is partially restored by curative maintenance actions. The calibration of the functional value is mainly based on historical incident data, roughness data and managers' opinions. In order to carry out the decision-making process, the evolution of the functional value is simultaneously analysed with the depreciation of the capital asset value. The implementation of the approach at the pipe and the network level leads to an assessment of innovative criteria for the purpose of assessing possible renewal policies.     

Theory of valuing building life-cycle investments

The physical adaptability of buildings is very important in today's fast-changing business environment. The actors who invest in long-term adaptability are positioned better to the changes during the life cycle of a building. This conceptual paper argues that the current dominating real estate (property) investment analysis theories do not accommodate enough building design-related information (i.e. physical asset characteristics), which results in long-term loss of competitiveness and unsustainable use of built environment resources. It is demonstrated that physical asset characteristics can create valuable real options that should be acknowledged in real estate investment analysis and management. The real estate investment literature has not so far been able to produce a widely accepted financial model for justifying life-cycle investments. A theory is proposed here that can be used to value life-cycle investments in buildings. This new theory combines of real options valuation, investment analysis and building component life-cycle design. These themes are used to formulate a conceptual framework for valuing life-cycle investments. The framework is intuitive and transparent, and it can be easily added to current spreadsheet investment analysis tools.     

Life cycle costing—Theory, information acquisition and application

Especially in the last two decades of an increasingly-competitive business environment, dwindling resources and an ever-increasing need to obtain value for money in all areas of corporate activity, it has become essential that all available resources be used optimally (Griffith, J. W. and Keely, B. J., Cost Engineering, 1978, September/October, 165–168). Physical assets form the basic infrastructure of all businesses and their effective management is essential to overall success. It has thus become essential to plan and monitor assets throughout their entire life cycle, from the development/procurement stage through to eventual disposal. Life cycle costing^∗ is concerned with optimising value for money in the ownership of physical assets by taking into consideration all the cost factors relating to the asset during its operational life. Optimising the trade-off between those cost factors will give the minimum life cycle cost of the asset. This process involves estimation of costs on a whole life basis before making a choice to purchase an asset from the various alternatives available. Life cycle cost of an asset can, very often, be many times the initial purchase or investment cost (Hart, J. M. S., Tetrotechnology Handbook, p. 22, HMSO, London, 1978; Hysom, J. L., Journal of Property Management, 1979, 44, 332–337). It is important that management should realise the source and magnitude of lifetime costs so that effective action can subsequently be taken to control them. This approach to decision making encourages a long-term outlook to the investment decision-making process rather than attempting to save money in the short term by buying assets simply with lower initial acquisition cost. It is suggested project managers should familiarise themselves with what the approach involves, to better appreciate how they might then contribute to the enhanced quality decision making which it makes possible.     

风物长宜放眼量——周期视角下矿业资产估值问题研究

文章以全球矿业及资本市场为视角,以实证研究为主要方法,探讨了矿业投资估价若干指标及技术经济参数问题,提出了周期视角下矿业估值参数选取若干建议,对我国矿业估值及投资决策具有一定借鉴意义。     

Aqueduct Management Planning: Thirlmere, Haweswater and Vyrnwy Aqueducts

Between 1988 and 1992, an asset study of North West Water Limited's three largest aqueducts was carried out to assess their condition and rehabilitation needs. About 360 km of the aqueduct system, including approximately 1700 structures, 160 km of tunnel and conduit, 700 km of pipeline and 4000 valves, were covered by the study. A wide range of survey techniques was used, some being specially developed as part of the study, and a unified system of condition assessment and prioritization of rehabilitation needs was devised.
The paper (a) describes the overall approach and survey techniques, (b) discusses the methods of assessment used, (c) summarizes the conditions of the assets whose ages vary from 20–100 years, and (d) reviews some of the rehabilitation works proposed and executed.     

Evolution of research on water leakage control strategies: where are we now?

ABSTRACT

This study provides an overview of the 21st century research trends for water leakage control strategies that focus on pressure management, active leakage control, pipe rehabilitation, asset management and District Metered Area (DMA) design. The biggest contribution comes from the research team in Italy, whilst the most active researcher is based in Greece. Research in this field has gained momentum from 2008 although a couple of studies have been conducted since 2000. Control strategies are receiving attention not only from academia but also from industrial players who are looking for technological advances by collaborating with academic institutions in research and development. The main strategy to reduce water leakage is the pressure management of water distribution systems using optimal settings of a pressure reducing valve installation. Despite available technologies, the commitment from the government, the water operators and the local consumers are the most important criterion for the effective implementation of water-leakage control strategies.     

Use of gaming technology to bring bridge inspection to the office

Abstract

This paper proposes a novel method for bridge inspection that essentially digitises bridges using Light Detection and Ranging (LIDAR) so that they can be later inspected in a virtual reality (VR) environment. The work uses conventional terrestrial LIDAR together with affordable VR hardware and freely available software development kits originally intended for authoring computer games. The resulting VR app is evaluated for a case study involving a typical masonry bridge, comparing the proposed technique with traditional inspection methods. The new approach promises to be highly effective in terms of interpretation of results, accessibility to critical areas and safety of inspectors. The work represents an important step towards the creation of digital twins of important assets in the built environment. Recent bridge collapse incidents have affected local economies, traffic congestion, and in some extreme cases led to a loss of life. The work is timely as law making agencies are paying greater attention to structural rehabilitation. This paper will be of particular interest to bridge engineers, construction professionals and law makers and could lead to future revisions of bridge inspection processes and standards.     

Untangling decision tree and real options analyses: a public infrastructure case study dealing with political decisions,structural integrity and price uncertainty

Managerial flexibility in infrastructure investment and replacement decisions adds value. Real options analysis (ROA) captures this value under uncertain market prices. The concept of ROA is that future unfavourable payoffs can be deferred as soon as more information about market prices becomes available. The popularity of ROA is seen in a growing number of case studies on real assets. Despite its increasing popularity, ROA has not gained a foothold in public infrastructure decision making. One of the difficulties in the application of ROA is the required estimation of market variables. To avoid this, a simplified but not correct version of ROA is easily applied, referred to as a Decision Tree Approach (DTA) to ROA. Another difficulty is that infrastructure assets are subject to other types of uncertainties, defined here as asset uncertainties. This study investigates the value of managerial flexibility in a public infrastructure replacement decision. The uncertainty drivers are the strength of a bridge, political decisions regarding traffic flow and the price development of construction costs. Three valuation approaches are compared: DTA, ROA and the DT approach to ROA. Although it is complex, ROA certainly adds value in public infrastructure decision making when market price uncertainty is prevalent. However, in the absence of reasonable estimates of market variables, the DT approach to ROA is the best alternative. In the absence of market price uncertainties, ROA should be avoided DTA is to be preferred.     

500kV线路IVI型双回路直线铁塔的规划设计

为科学规划500kV IVI型双回路直线塔,该文从挂线布置形式、经济档距规划等方面,采用基于数学期望的最优化理论进行最优设计,最终得出该塔型在技术和经济有较大的优势,具有广泛的应用价值。     

Economically valuing nature resources to promote conservation: An empirical application to Chile's national system of protected areas

Starting from the framework proposed by the Millennium Ecosystem Assessment (MEA) ? which conceptually links nature's services with human wellbeing ? we design and also apply empirically what we have called the total economic value calculating matrix (TEVCM) to estimate the monetary value of the annual flow of benefits provided by Chile's national system of protected areas (NSPA). The calculated economic value of this flow amounts to US$2.55 billion per year. We also analyse the relevance and usefulness of the methodology we propose and use the valuation exercise presented to extract some normative lessons regarding nature conservation in Chile as well as in developing countries rich in natural resource endowments.     

Practice world

ABSTRACT

Heritage buildings are valuable assets to the community. Thus, they require continuous monitoring to preserve their values. But, in many cases, these values are influenced negatively due to improper interventions. Cultural heritage significance is a core value that should be preserved. Therefore, this study focuses on examining the impact of physical alterations on this value to detect the failures in conservation practice in Khartoum. Through this research, three selected cases of the colonial era are evaluated according to the cultural heritage criteria. Conservation experts of architectural, archaeological, and civil engineering backgrounds are interviewed for this evaluation. Then, the outcomes are analysed to diagnose intervention problems. They reveal that the most negatively impacted values are architectural, aesthetic, and technical. Failures are the results of legislative problems, the lack of awareness, end users’ interference, the unqualified workmanship, political interests, and community exclusion. Hence, this paper provides suggestions to enhance future practice.