Convenience in Funding Upgrading Works

With reference to upgrading actions on existing building stock, Construction Procurement Guidance, No.7 Whole Life Costs (Office of Government Commerce) states: ‘All procurement must be made solely on the basis of value for money in terms of the optimum combination of global costs and quality to meet the user’s requirements’. Cash-flow analyses allow showing the economic value of investments for alternative technological upgrading works extended all along their service lives. Optimisation of choices is not only a matter of cash-flow analyses—choices should not be made only according to the lowest costs but also considering several aspects that can be brought back to the concept of ‘technical-sustainable value’, which mainly derives from competent functional and environmental assessments of the reference analysis system. The mentioned interrelation should theoretically be adequately considered but this is seldom the case in the common building practice. Cost estimate for an engineered system has to entail much more detailed analyses on costs, energy, sustainability and technologies. Possible technological solutions would be convenient in terms of technological/technical utility, but less convenient in monetary terms for the funding subject. Under the economic point of view, cash outflow means less economic convenience in funding a given technology. All that stated above, nowadays effective data-display global cost-quality indicators are rarely available in literature. The present manuscript introduces to the reader fundamentals of an economic tool proposal designed by the author with the use of synthetically displaying interrelations between cash-flow scenarios and quality-sustainability in upgrading processes on existing buildings. Fundamentals have been tested on a reference case study. Then, fundamentals have been contextualized to the Italian Legislative framework: in Italy, in multi-owner existing residential buildings, expenditure allocation is carried out based on thousandths. The thousandth type to be considered is due to the configuration of the case under review and to balance-sheet expenditure to be allocated to owners. Property thousandths allocated to housing units have been used to allocate expenses for technological/energy upgrading works. The author has tried to find out the amount of a possible bank investment that a user might start at building Time ‘0’ to theoretically clear possible economic losses, trying to highlight technical utility of the technological solution that would be disadvantaged in economic terms. ‘Neutral’ mathematical finance formulas have been used to calculate the theoretical capital to be invested by an owner based on the reference cash-flow scenario. Conclusion will be drawn at the end of the manuscript.