Keywords: damage evaluation, depreciation cost approach, component analysis

Transcription

1 Advanced Materials Research Vols (2014) pp Submitted: Online available since 2014/Sep/22 at Accepted: (2014) Trans Tech Publications, Switzerland doi: / The assessment of damages to scientific building: the case of the Science Centre museum in Naples, Italy V. Del Giudice 1, a, F. Torrieri 2, b and P. De Paola 3,c Department of Industrial Engeneering, University of Naples Federico II, Italy a ingdelgiudice@libero.it, b frtorrie@unina.it, c pfdepaola@libero.it Keywords: damage evaluation, depreciation cost approach, component analysis Abstract. The present paper presents the results of a study on the assessment of the damages caused by the arson that in March 2013 severely damaged the building of the "Science Centre" museum located in the western part of the city of Naples. The case is contextualized in the broader thematic of the evaluation of damages caused by intentional events to real estate assets. The peculiarity of the case under analysis appears particularly interesting both for the extend of damages caused by the fire and the methodological approach to be adopted for the quantum determination. The model implemented is based on the cost approach criterion, considering the physical and technological depreciation in the status quo ante the event. In particular, we will test a functional component approach to determine the depreciation function for each component due to the specificity of the scientific building under analysis. The results of the study confirmed that the proposed approach appears to be adequate to estimate the damage to the real estate assets, managing to capture the different components that contribute to determining the market value of the property at hand. Introduction As it is known, within the wider theme of the evaluation of damages, the amount of damages undergone by real estate assets is estimated based on the reduction of net income or the decrease in capital value occurred as a result of the event [1,2,3,4,5]. As a consequence one needs to estimate and contrast the income or the value of a certain asset before and after the damaging event. In the case under analysis, the Science Museum is considered as an industrial asset because all the components of the museum are instrumental to the various scientific activities that used to be carried out in the building. The building is therefore a complex assets, articulated of a large number of different items or component, each contributing to the museum functionalities in an holistic manner. For these components, the damaging effects from fire can vary extremely in relation to the nature of the materials involved and the relevant fire resistance. Moreover, as the museum is a public building with social purpose, the net income is not representative of its intrinsic value, that is a social use value. For this reason, an income approach, will be not appropriates for representing the effective value of the property, while a reproduction cost approach seems to be more suitable. As a consequence, a functional component cost approach [3], has been considered, referred to comparable buildings having a similar purpose to the one under analysis. Actually, in the scientific literature, the cost approach is referred to a substitute value. In case of damages to a real estate asset without a specific income, the value is estimated considering the recostruction cost of a new building having the same characteristics and purpose of the damaged building, but adjusted to consider depreciation and technical obsolescence. The above mentioned approach should be tailor made to consider the speficic features of the asset in scope of our analyis, in order to estimate the damaged effectivley suffered by the owner. In a formal way, the quantum will be evaluated considering the costs for the re-construction of the damaged components and the requalifications of the affected parts of the building, depreciated on the bases of obsolescence coefficient, excluding the value of residual materials. All rights reserved. No part of contents of this paper may be reproduced or transmitted in any form or by any means without the written permission of TTP, (ID: /09/14,13:02:04)

2 890 Materials, Transportation and Environmental Engineering II The formula is here reported: d = Kr x v Mr (1) Where: Kr are the re-construction costs; v is the depreciation coefficient; Mr is the value of residual materials. In particular the study is focused on the evaluation of the depreciation coefficient, considering not appropriate for our scope, apply the depreciation coefficient introduced by the accounting regulation1. This coefficient are referred to different classes of activities not really consistent with the function and purpose of the museum under analysis. In the next paragraph the methodology for estimate the depreciation coefficient will be describe and then wiil be apply to the case study under analysis. The Science Centre building The scientific and technological museum Science Centre is part of the wider urban complex of Città della Scienza in Naples. The urban complex, built in 1998 in the western part of the city of Naples, represents a cultural, scientific and technological pole. The complex occupies an area of 7 hectare, located near the dismissed area of the I.L.V.A. factory in Bagnoli. The Science Centre building that was the first interactive museum built in Italy, used to attract visitors per year. The exposition area has a rectangular shape (180 ml x 150 ml), divided in three main span of sqm. each. The outer shell of the building is made of stone wall made with blocks of tuff stone, whereas the internal structural elements are made of steel pillars IPE (available in regular meshes of the plan dimensions of about 9.50 ml x 4.00 ml) and mixed type decks made of concrete and steel. The roofing is made of laminated wood. The internal lay out of the museum is shown in figure 1. Figure 1 General lay out of the museum The main sections of permanent exhibitions are: - The Science Gymnasium, where you can touch natural laws; - Gnam, interactive exhibition dedicated to the agriculture awareness; - the adventure of the evolution; - space, last frontier, tools of the past; - the nanoworld; - path of art. The fire destroyed an area of about twelve thousand museum. As can be seen from Figure 3 the damage 1 Table of depreciation coefficient (D.M. 31/12/1988). and play with the physical principles and nutritional education issues, health and of square metres of the Science Centre was enormous. The timber roofing was

3 Advanced Materials Research Vols completely destroyed, as well as all the exhibits of the Museum. Only part of the perimeter structures have been preserved. The state of the museum before and after the event is shown in Figures 2 and 3. In the next section the methodology described will be applied to the evaluation of damage for the Science Museum of Città della Scienza in Naples. Before After Figure 2 and 3 Science Centre before and after the fire The evaluation of damages to the scientific building: the depreciation cost approach The depreciated reproduction cost method, as procedure for assessing the substitute value, is widely used in practice to estimate the market value of old property, obsolete industrial buildings or in general economic or business assets for which a direct market appreciation doesn t exists. As described in the introduction, the depreciated reproduction cost is equal to the costs of a new building with the same characteristics of the building to be estimated, minus all the costs necessary to bring the asset in scope (in the "ex ante" status) to a quality and functional standard status equal to new one. Therefore the market value of the building is estimate using the following formula: Vm = Vs = C x ( 1 D ) (2) Where: Vs are the depreciated reproduction costs; C are the production costs of a new building; D is the depreciation coefficient. Once estimated the reproduction cost of the asset, it will need to be adjusted to consider the depreciation at the point in the time in which the damaging event occurred. In the scientific evaluation literature different methodology was introduced for calculating the depreciation of real estate asset, with multiple indications of depreciation coefficients (percentage of deduction) to be applied on the value of recostruction of new building or of industrial system and equipment [1,3,6,7,8,9]. Actually, many variables contribute to define the depreciation coefficients, as the age of the building, the materials used, the functional and techological solutions adoped, the manteinance condition and the economic context. The literature [3, 10, 11,12] indicates that the depreciation represents the decrease in time of the building purpose and therefore the equivalent loss of value, measurable in the course of its useful life starting from the date of construction. Forte and De Rossi (1978), argued that the physical depreciation is not only related with the effective age of the building, but also with the constructive system used. Different depreciation functions apply to different buildings depending on the construction system adopted and their ageing. For example properties built with reinforced concrete from the middle of the past century to date have a depreciation function which is steeper than older buildings constructed with bearing walls.

4 892 Materials, Transportation and Environmental Engineering II This led to affirm (3) that in cases of complex building construction types, as in the case examined, due to the specific tipology and materials used, the analytical calculation of the depreciation must necessarily take place breaking down the compendium in its main functional elements (structures, plants, etc.), since each element is subject to specific processes of aging and loss of value. According to this approach, the depreciated reconstruction cost is therefore developed by functional elements, on the basis of the following scheme, divided into phases logically consequential: - definition of the functional elements of the Science Center museum on the basis of the technical regulation (UNI8 290); - evaluation of a new costs for each functional element using a parametric cost approach (the parametric costs has been estimate on the base of market price); - calculation of the pro rata percentage of the cost of each functional item over the total cost total construction costs; - definition of a depreciation function for each functional elements and evaluation of the depreciation percentage (3); - evaluation of the total depreciation value of the building aggregating all specific values (4); - evaluation of the total depreciated reconstruction cost (2). In the next paragraph the methodology applied for the evaluation of depreciation function will be defined. Evaluation of the depreciation function The depreciation function has been defined for each functional element of the Museum. The functional elements are reported in table 1 where are also indicate the parameters to estimate the depreciation function. The formal relation to assess the depreciation coefficient related to the age of the building is here reported: n ( 1+ i) 1) (3) ( ) C d log = C0 Vr) v 1+ i 1 Where: C d log is the physical depreciation; C 0 is the start value; Vr is the residual value at the end of the useful life of the functional component; i is the discount rate; v is the number of useful life year of the functional component; n is the number of life years passed of the functional element in respect to the moment of the evaluation. As is shown in table 1 the total costs of construction of a new the Science Museum is equal to euros. On the basis of the parameters reported in table 1 the relative depreciation value for each functional component has been calculated in the period The total depreciation value is obtained using the formula 4: D = n d i i= 1 Where: D is the total depreciation value of the Museum; d i is single depreciation value of each functional component. The results are reported in table 2. As is shown in table 2 the total amount of depreciation for the museum is equal to that compared to the total cost ( ,78) represents a percentage of 13.28%. This value (13.28%) is coherent with the empirical research conducted in the literature where different authors indicate a percentage of depreciation related to the age of the property s variable in a range from 11% to 14.5%). The depreciated cost is then calculated as: Vs = (Vc - D) (4)

5 Advanced Materials Research Vols Where: Vs is the depreciation cost; Vc is the cost of a new museum; D is the total depreciation of the museum. In conclusion the depreciated cost is equal to ,73: Vs = ( , ,05) In tables 1 and 2 a summary of the estimated cost is reported. Table 1 Depreciation function for each functional element (costs and values are expressed in Euro) Residual New cost Useful life Number of Component Functional element value (Co) (v) year (n) (Vr) Reinforced concrete columns ,40 120, Structures External wall made of tuff stone and foundation ,69 300, Air space under the round floor ,19 120, Reinforced concrete floor slab ,29 120, the planetarium structures ,02 120, Stone made Pyramidal staircase ,92 120, Road ramp ,90 120, Structures of wooden roof ,09 120, Shingle and lantern ,40 90, Brick floor ,81 40, Mezzanine floor fixtures ,34 40, Planetarium fixture ,92 40, Pyramidal scale fixture ,05 40, Fixtures See terrace ,68 80, Perimetral wall and gate ,44 80, Guardhouse ,76 80, Green area ,44 15, External floor ,29 60, Installations others fixture ,53 40, Smokestack and fountain ,42 40, Main plant ,09 40, Water and sanitari system ,29 40, Electrical system ,01 35, Heating system ,68 40, Transformer room ,00 40, Elevator ,15 60, Total cost ,78 Table 2 Depreciation for functional elements Component Functional element Depreciation ( ) Depreciation (%) Structures Reinforced concrete column 5.477,98 0,37% External wall made of tuff stone and foundation 6,53 0,00% Air space under the round floor 3.622,95 0,37% Reinforced concrete floor slab 1.654,71 0,37%

6 894 Materials, Transportation and Environmental Engineering II Fixtures Installations The planetarium structures 391,91 0,37% Stone made Pyramidal staircase 200,31 0,37% Road ramp 348,36 0,37% Structures of wooden roof 9.910,87 0,37% Shingle and lantern ,00 2,42% Brick floor ,11 21,07% Mezzanine floor fixtures ,98 21,07% Planetarium fixture ,19 21,07% Pyramidal scale fixture 5.527,78 21,07% See terrace 2.598,81 3,63% Perimetral wall and gate 8.576,07 3,63% Guardhouse 606,39 3,63% Green area ,44 100,00% External floor ,27 8,41% others fixture ,19 21,07% Smokestack and fountain ,91 21,07% Main plant ,02 23,18% Water and sanitari system ,81 30,06% Electrical system ,99 37,57% Heating system ,12 31,17% Transformer room ,85 31,78% Elevator 7.965,51 10,12% Total depreciation ,05 Conclusion The estimate of the damages of real estate property is widely addressed in literature. The approaches generally adopted to estimate the quantum to indemnify are based on the income methods, on financial methods and on methods based on depreciated value. In the case at hand, given the specifics of the building in scope, reference has been made to the depreciated reconstruction cost, experimenting a model, articulated over the functional elements in which the building has been broken down. This approach takes into account the various features of the different items composing the building and allows to estimate a depreciation function for each of them, considering their different useful lives. The results obtained, consistent with prevailing literature [1;3,6,7,8,9].confirms that the proposed approach seem appropriate to consider the peculiarities and the specific features of a scientific building. References [1] Forte C. De Rossi B., Principi di economia ed estimo, Etas Kompass, Milano [2] Del Giudice V., Estimo e Valutazione Economica dei Progetti, Loffredo, Napoli, [3] Manganelli B., Il deprezzamento degli immobili urbani, Franco Angeli Editore, [4] Maffei P.L., Il contributo all analisi del valore nella valutazione del deprezzamento degli edifici a seguito di un evento sismico, [5] Realfonso A., Teoria e metodo dell estimo urbano, NIS, Roma, [6] Ficai P., Estimo rurale e civile, Hoepli, Milano, 1968.

7 Advanced Materials Research Vols [7] Orefice M., Orefice L., Estimo civile, Utet Libreria, Torino, [8] Scoto S., Stima e liquidazione dei danni da incendio, Hoepli, Milano, [9] Budinis M., Estimo edilizio, Hoepli, Milano, [10] Malpezzi S., Ozanne L., Thibodeau T.G., Microeconomic estimates of housing depreciation, Land Economics, Vol. 63, No. 4, [11] Smith B., Economic Depreciation of Residential Real Estate: Microlevel Space and Time analysis, Real Estate Economics, No 32, [12] Wilhelmsson M., House price Depreciation rate and level of Maintenance, Journal of Housing Economics, Vol. 17(1), Elsevier, [13] Manganelli B., Morano P., Tajani F., Risk assessment in estimating the capitalization rate, WSEAS Transactions on Business and Economics, Vol. 11, [14] Manganelli B., Morano P., Tajani F., House Prices and Rents. The Italian Experience, WSEAS Transactions on Business and Economics, Vol. 11,2014. [15] Manganelli B., Maintenance, building depreciation and land rent, Applied Mechanics and Materials, Volume , [16] Morano P., Tajani F., Break Even Analysis for the financial verification of urban regeneration projects, Applied Mechanics and Materials, Trans Tech Publications, vols , 2013.

8 Materials, Transportation and Environmental Engineering II / The Assessment of Damages to Scientific Building: The Case of the Science Centre Museum in Naples, Italy /