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Bottom of Form Journal home > Archive > Original Articles > Full text Original Article Journal of Building Appraisal (2009) 4, 215–223. doi:10.1057/jba.2008.39 The key issues when choosing adaptation of an existing building over new build Paul Watson1 Correspondence: Paul Watson, Faculty of Development & Society, Sheffield Hallam University, Owen Building, Howard Street, Sheffield S1 1WB, UK. Tel: +44 114 225 5555; Fax: +44 114 225 3179 is Professor of Building Engineering and Head of Construction, Cost and Surveying at Sheffield Hallam University. Paul's experience is varied, having spent some years in the construction industry as a project manager where he gained practical knowledge before entering the world of academia. Paul has not lost his industrial roots and he has written numerous publications on construction and surveying related topics including authoring and co-authoring eight textbooks that have practical application. He has also designed degree courses that specifically address the requirements of building engineers and surveyors.
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Received 20 October 2008; Revised 20 October 2008. Top of page Abstract The current restrictions on the flow of credit facilities for house purchases and investment funds for new commercial developments caused by the ‘credit crunch’ have severely impacted upon the UK housing and commercial building markets. House starts and completions have more or less come to a full stop and very few new commercial projects have commenced. The demand for houses/homes, however, has not diminished; people still require accommodation at a price that they can afford, also there is still a demand for some commercial infrastructure facilities. This paper explores a viable alternative for combating the decline in new house and commercial completions by builders. The rationale for a trend move towards an increased use of adaptations along with the associated advocated advantages is provided. Further the identification of the key issues to be addressed when considering and engaging in the adaptation of buildings are presented and explained. Keywords: adaptation, conversion, decision making, extension, refurbishment

Top of page INTRODUCTION The problematic issues facing the United Kingdom with regard to construction are numerous; many of them are direct consequences of previous decisions made by construction industry professionals, their clients and financial institutions. These problems include the following:


– House purchase credit facilities: Gaining entry onto the housing ownership ladder is becoming increasingly difficult for many sectors of society. – A lack of investment funds for commercial development projects. – Population size and demographics — increasing population size and changing demographics: The population is increasing and it is also growing older. In addition the expected number of households are increasing at a disproportionate rate to population growth. – Density of population: The United Kingdom has one of the highest densities of population in Europe that puts unsustainable pressure on the countryside and limited natural resources. – Brownfield development: There is a restriction on ‘Greenfield’ construction with a government target of 60 per cent of new work to be on Brownfield sites. – Environmental impact of buildings: There is an unsustainable environmental footprint emanating from the millions of existing buildings as well as the vast majority of new buildings built each year, although this has decreased considerably in relation to housing.

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The construction industry and the buildings it produces, maintains, repairs, converts and demolishes have both an immediate and long-term impact upon our environment. This paper will consider the use of adaptations as a means of addressing some, if not all of the problematic issues facing the UK population and construction industry. The rationale for advocating this approach is to try and ensure that clients are provided with viable alternatives to new build projects, it is part of the surveyor's role to provide such alternatives and in today's economic climate new build is not always the optimum solution. Top of page BROWNFIELD DEVELOPMENT In 2000, the UK Government introduced Planning Policy Guidance 3: Housing (PPG3) and in this document the government set out a target for the increased use of Brownfield sites. This was done to promote the ‘greening’ of the government and to address public fears about the growth in urban sprawl. There were, and are, many hectares of derelict land left empty as a result of the loss of major heavy and manufacturing industries, along with many inner city areas that are in desperate need of regeneration. Development of such sites was seen as an obvious way forward, but it could only provide part of the solution to the demands of the UK housing and commercial market sectors. The target set by the government was to achieve 60 per cent of new housing development on Brownfield sites by 2008. The definition of Brownfield sites was subsequently altered to include refurbishment work and the new Planning Policy Statement 3: Housing (PPS3) that replaces the PPG3 and does not use the term ‘Brownfield’ but instead uses the term ‘previously used’. The term used in PPS3 (2000) ‘includes land and buildings that are vacant or derelict as well as land that is currently in use but which has potential for re-development’. Annex B of the PPS3 (2000) adds the following definition; ‘Previously-developed land is that which is or was occupied by a permanent structure, including the curtilage of the developed land and any associated fixed surface infrastructure’. The rate of new homes built on Brownfield sites varied from 53 per cent in 1991 to 59 per cent in 1999 and the average for the ten years up to the target being set was 56 per cent. The inclusion of refurbishment works in PPG3 added approximately 3 percentage points, so the target set was not particularly difficult to achieve. Some commentators, such as Lord Rogers, have called for the Brownfield target to be raised considerably and regionally targeted for example 100 per cent Brownfield development in the North and Midlands. The reutilisation of existing land and buildings is sometimes a viable alternative to new more expensive building projects, especially considering the shortage of finance in these areas, which is very likely to get worse over the next few years? Top of page DENSITY POPULATION This is obviously a factor of both size of population as well as area of land. The United Kingdom, with a density of 246 people per square kilometre, is third in a comparison of densities across European countries — this, however,

in 2003.hides the fact that the density across the various countries that make up the United Kingdom vary considerably. France. 142 people in Wales and 383 people in England’. which can be horizontal or vertical expansion. or conversely the introduction of partition walls to subdivide a space into smaller units. Density of population for sample of European countries (data obtained from National Statistics Online. however. such as converting an office block and making it suitable for residential use. There are three main forms of adaptation namely: • • • – Conversion: work including a change in function or change in use. respectively (see Figure 1). extensions. The problem here for a country that prides itself on its ‘green and pleasant land’ is that according to the Department for Environment and Rural Affairs (2000). If the density of the population of England is considered alone against other European countries. ‘In general terms adaptation means the process of adjustment and alteration of a structure or building and/or its environment to fit or suit new conditions’. There are. it comes a very close second to the Netherlands that has a density of 392 people per square kilometre. 85 and 12 people per square kilometre. 2005) Full figure and legend (69K) Such a high level of density puts a heavy demand on our countryside and its limited natural resources. many other terms that would come under the general umbrella description of adaptation. Making better use of existing buildings could assist in alleviating this situation. – Extension: work that includes an increase in size. Spain and Norway have by comparison densities of 193. In comparison the population density was 125 people per square kilometre in Northern Ireland. There were 65 people resident per square kilometre …. to an older property. Figure 1. to current standard(s). – Conservation (restoration): Preservation of the existing building and its fabric and fittings. and other works modifying it in some way’. Restoration implies a degree of repair to bring fabric. Italy. According to the National Statistics Online (2005) ‘Scotland is the least densely populated of the four countries of the UK. improvements. for the future. 110. components or fittings back to an acceptable standard. . Top of page ADAPTATION There are various definitions of the term adaptation and one of the best is provided by Chudley as cited by Douglas (2002). The result of this when coupled with a shortage in the supply of houses. means there is increasing pressure to release green belt and other ‘open’ spaces for development to ease the strain on the housing and commercial market. – Modernisation (rehabilitation): An upgrade in an element or elements of a building. A suitable example here would be the installation of a new central heating system with appropriate controls and zoning. in addition to the three listed above. To this Douglas (2002) added ‘it is also considered as work accommodating change in use or size or performance of a building which may include alterations. in their current state. – Refurbishment: work that is related to a change in performance. – Maintenance: Repair and/or replacement work to keep or restore any/every part of a building. between 1990 and 1998 there was an increase of 5 per cent in built-up rural areas and urban sprawl. These terms include: • • • • – Alteration (remodelling): A change in formation. that is removal of partition walls to enlarge a space within the fabric of a building.

the work required may also include some elements covered by other terms. loss of investment. Another key benefit of adaptation over demolition and new build is that the costs are usually lower. high cost of borrowing. early enough in the project. The report also emphasises that this ‘discovery’ phase (feasibility study) has to be given sufficient time. planning constraints. These included the following: • • – Social factors: energy and/or resource conservation. One of the reasons for the lack of clarity and overlapping of the various terms highlighted above is that the terms are often used by construction professionals to describe the main adaptation work being carried out on a building. cost of providing safety. need to upgrade a building. so that the design. identified by the sampled managers above. If instead of a refurbishment the existing building is demolished. there are likely to be fewer holdups with material deliveries as much of the required materials will already be present. Having addressed the constraints set by time and finance. namely variations and cost control. insufficient funds. as they will be discovered only as the project proceeds. uncertain long-term value. but may not be fully considered by the surveyor and/or client. Many of these limiting factors were explored in more detail in subsequent research and a further CIOB paper identified 33 characteristics of refurbishment work. While it is accepted that by the very nature of adaptation work. less materials having to be put into landfill. outdated facilities. 1996). expectation of high land values. it should be mentioned that there are other increasingly important issues to be considered. some alterations to internal walls. Many of these are produced by the Chartered Institute of Building (CIOB) in their Construction Papers series. The reasons for this are many fold and include the fact that adaptation projects are generally less susceptible to delays from inclement weather on site as the external envelope and the roof covering will usually be in place when work commences. – Economic factors: shorter construction periods. It should be made clear that for any significant adaptation work a feasibility study is essential to avoid many of the problems. easier to forecast and control. and apart from the reduction in cost from landfill alone. 1994). These include a smaller environmental impact of the adaptation due to: less vehicle movements. The results established that cost control was the main problematic issue and this was closely followed by variations and pricing of tenders. Many studies illustrate the acknowledged benefits of adaptation. A Construction Industry Research and Information Association (CIRIA) Report entitled A Guide to the Management of Building Refurbishment (1994) makes it clear that there is a need to research the existing building and that this is a major task. clearing the site and then constructing a new building on that site. condition of building. life expectancy. management of refurbishment. preservation of historic buildings and social resistance to change. with the resulting waste removed from site and new materials having to be delivered.The above are sometimes valid alternatives to new build. and the preservation of our built heritage. possibly a horizontal extension and probably a modernisation of the external envelope to bring it into line with current regulations. There are many reports on the benefits of adapting an existing building compared to demolishing it. Owing to the nature of a project. a desire to keep a business running. These benefits include an increased speed of construction and even when time is used to carry out a feasibility study the total project duration can be up to 50 per cent less for refurbishment/adaptation projects compared with new build. One such paper titled ‘Built Asset Management: Refurbishment and Optimum Land Use’ developed a series of ‘factors favouring refurbishment’. procurement and construction can be properly based on the feasibility study's findings. There are usually savings to be made on site security and other associated site establishment and running costs. it can be appreciated that there will be less disruption to neighbouring buildings and neighbours from the refurbishment option. the paper also contained factors that may make refurbishment less desirable. To give the subject matter a balanced view. In addition control of dust and noise were ranked highly on the list of issues (Egbu. It is assumed that if the building . Thus an office building being changed into residential use will obviously be a conversion but the work undertaken within the contract will undoubtedly include. however. occupancy cost. suitability for reuse. reduced utilisation of new materials and their associated embodied energy use/costs. unwillingness of neighbours to develop and constraints on development. whether it is a conversion and/or refurbishment. marketable features. As the project duration will usually be shorter any borrowing or loss of earnings on capital employed by the client will also be less. These were called ‘Limiting Factors’ and contained the following: diminishing returns. assuming a thorough feasibility study has been carried out. security etc (Kwayke. which were ranked by managers of such projects. ‘surprises’ are more likely to occur than on Greenfield work.

cost of management. – Evaluate options: This phase of the decision-making process involves determining the extent that the generated options meet the clients’ requirements in the most efficient and effective manner. Therefore. cost of financing the project (this principally represents interest etc. Figure 2 depicts a suitable decision-making model and within the model the following stages can be identified: 9. The main focus is to think outside the box and try and produce viable. Some form of ‘Thought Shower’ could be utilised to generate a range of alternatives and/or group discussions. some formal evaluation and decision-making process has to be deployed by the surveyor. the consequences of each option need to be spelt out in some considerable detail. the surveyor should be prepared to consider any viable alternatives and present such alternatives to the client. 8. – Determine the options: This is a critical phase when related to the building decision-making process and may be partly a creative one. It is about generating alternatives that at least on the face of it can satisfy the client's requirements. made himself responsible for some or all of these costs. • • • • . are important visually and some people would argue that they have far better architectural merit than some new buildings erected today. costs in connection with disposal (sale. and yet the resultant option(s) may not be a new build project. The scope of the decision is defined. more suitable options. This would put some quantitative data into the decision-making process. 2. cost parameters and specification. to prove most satisfactory to the client. letting etc) where the building is to be disposed of at completion. The surveyor's task should be to provide the client with a building that will meet their needs and keep to a minimum the total cost package. Therefore. 4. fittings. 6. professional fees in connection with last. and the decision maker's attention should be focused on what are regarded as the major aspects of the decision. – Selecting the option: This is the point in the decision-making process towards which the other stages have been working. 7. as they may have originally considered.was listed then demolition and rebuild would not be an option. This aspect of the decision-making process is very much concerned with turning the clients’ brief into specific objectives of what has to be achieved and within the allocated time frame. some form of costing model would prove useful at this stage. running and maintenance where the building is to let to a tenant but the owner has • – Defining the problem: This stage is concerned with clarifying the specific details of the problem by drawing the boundaries of the decision. The true mix of the costs associated with a structure will of course depend upon the type of structure and its location. this activity will require and should be allocated an adequate amount of time. and. The total cost associated with a building project will be a combination of the following (Ferry and Brandon. building costs. but many older buildings. 1984): 1. machinery etc. but one must not forget the value of qualitative data in such a process. demolition or other physical preparation of the site. – Setting objectives: Having clearly defined the clients’ requirements. if implemented. Top of page ESTABLISHING CLIENT REQUIREMENTS When considering a client's requirements. on the money expended before any return is obtained either by way of income or of use). cost of land. although not listed. legal etc … costs of acquiring and preparing the site. it is necessary to consider what it is hoped the decision will achieve or what aims it should work towards. 3. furnishings. It is here that one of the viable decision options is selected as being most likely. In building terms this stage is concerned with clearly establishing the clients’ brief and obtaining as much information as possible relating to the client's financial circumstances. and this requires the surveyor and client to have an open mind. 5. which may commence with a request for a new structure.

cost and suitability are examined to ensure that there is a common understanding between what the client is expecting and what can be delivered within the set parameters. Control is governed by cycle time (how long does it take to compare and contrast what was planned with what actually transpired) and the quality of information circulating (an appropriate level of detail is essential for tight control) within a control feedback loop. – Project brief: It is critical that the client's requirements and expectations of time. be the result of the decision-making process then there are still critical issues to be addressed and these are noted in the next section. however. the exact type in conjunction with the materials used has to be ascertained. – Aesthetics: It is unlikely for example that a 1960s office building would have an appearance of any particular architectural merit. – Condition of building: Once the structure of the building has been considered. 1984). Control is exercised by the feedback of information upon actual performance when compared with a predetermined plan. the surveyor working with other professionals must develop an appropriate deployment strategy/plan. for example were the decision-making phases adhered to and conducted appropriately. Examples of this would be an appraisal of the condition of the . – Control phase: During the deployment phase it is vital that activities are controlled. whether they are structural or surface defects. It involves a critical analysis of the entire decision-making activity. however.• – Deployment phase: If the correct decision has been taken and therefore the best option selected (and the implementational ability should be part of the decision-making criteria in option selection). • • Figure 2. This phase is all about taking the experience forward and learning from previous projects so that performance is improved each time and on each new project (Cook and Slack. Did the process lead to client satisfaction and what could have been done differently and improved the process and client's experience. this may not concern the client. time and specifications. if both of these factors are to be maximised then due consideration needs to be given to a number of sustainable practices at a very early stage. Decision-making model Full figure and legend (32K) Should an adaptation option. There also needs to be an element of flexibility (contingency planning) after all strategy is not always incremental and can be emergent. – Feed forward phase: This final stage is concerned with feeding forward the results of the project and learning from the process. the next stage is to examine the building for defects. however. – Sustainability: The traditional driving forces of time and cost are usually the most influential. Top of page BUILDING ADAPTATIONS: KEY ISSUES TO BE ADDESSED In order that the right decisions can be taken when considering adapting a building certain issues have to be carefully considered and evaluated and these are: • • • • • • – Building suitability: This relates to the size and shape of the building and requires careful examination to ensure it will meet the client's requirements. however. This strategy/plan will of course be set within the parameters of the clients’ previously established criteria of cost. – Building structure: This is often quite apparent from an early stage.

ISBN 0-632-02403-8. – Change of use: Where a building undergoes a change of use. CIOB.J.gov. Main navigation • • • • • Journal home Archive Home For authors For institutions Palgrave Macmillan Journals . is it in a suitable condition so that it can all be reused or will other materials have to be found to match? • • – Legal issues: It is quite likely that the adaptation of a building will involve work that requires a party wall notification. (2002) Building Adaptation.defra. Cook. These can add significant costs to the project. Construction Papers No.uk/wildlifecountryside/cs2000/02/01. When considering a building for adaptation.statistics. due consideration needs to be given to the initial costs and the future running costs as well as the contribution to global environmental concerns. however. Ascot. available at: http://www. Butterworth Heineman.existing materials that is roof covering.asp?id=760 Accessed February 2007. London.htm Accessed February 2007.gov.uk/cci/nugget. 66. CIRIA. 29. (1996) Characteristics and Difficulties Associated with Refurbishment. Papers No. (2005) Population — UK Population Grows to 59. A benefit of a building adaptation is that there should be no change to the right to light of neighbours. means of escape.6 million [online]. A. Construction Industry Research and Information Association (CIRIA). N. and Slack. fire protection and accessibility. indicated by construction professionals (which included construction managers and building control officers). the resulting building must comply with the current building regulations. D. J. 5. Prentice-Hall International Inc. (1984) Cost Planning of Buildings. thermal insulation. CIOB. National Statistics Online. 7. 4. London. To do this a feasibility study must be carried out to ensure that not only does the proposed project proceed with limited problems but also to allow a full assessment of how the building can be best upgraded. sound insulation. A trend move towards an increased use of adaptation work would be positively correlated to a change in the professional role/workload of surveyors in the future and this may require some re-training or continuing professional development activities for surveyors. (1994) Built Asset Management: Refurbishment and Optimum Land Use. ISBN 0-13-547837-5. Top of page CONCLUSIONS This paper has highlighted the role that the adaptation of buildings could have in addressing the UK's housing and commercial building problems. Construction 8. 6. ISBN 0-7506-5085-0. The adaptation process must. (2000) Countryside Survey — Accounting for Nature: Assessing Habitats in the UK Countryside [online]. Department for Environment and Rural Affairs. P.A. This can cause significant problems and a study carried out by ‘Building Magazine’ found that the main areas. unless an extension is planned as part of the refurbishment. C. Top of page References 1. Kwayke. S. These factors can all be incorporated into the advocated decision-making process model. UK. available at: http://www. BSP Professional Books. to take full advantage of both energy efficiency and other environmental improvements.S. Ferry. (1994) Report R133 — A Guide to the Management of Building Refurbishment by J G Perry. and Brandon. London. were: exclusion of moisture. 2. Oxford. Egbu. Douglas. Ascot. (1984) Making Management Decisions. UK. 3. take full account of the size and depth of the environmental footprint the built environment generates.

Journal of Building Appraisal ISSN: 1742-8262 EISSN: 1744-9545 • • • • • About Palgrave Macmillan Contact Us Legal Notice Privacy Policy Accessibility Statement .FULL TEXT Previous | Next • • • • • • • • • • • • • • • • • Top Table of contents Download PDF Send to a friend Scopus lists 3 articles citing this article Request Permission Abstract INTRODUCTION BROWNFIELD DEVELOPMENT DENSITY POPULATION ADAPTATION ESTABLISHING CLIENT REQUIREMENTS BUILDING ADAPTATIONS: KEY ISSUES TO BE ADDESSED CONCLUSIONS References Figures and Tables Export citation Export references This journal is a member of and subscribes to the principles of the Committee on Publication Ethics.• • • • For librarians For personal users For advertisers Home Palgrave Macmillan Books Extra navigation ARTICLE NAVIGATION .

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April 1998 134 TABLE 1(continued) 123456789101112OverheadArchitectureAge/LifeBaseandand EngineeringConstructionReproductionSuperReplacementEffectiveTotal%DepreciationValue222.099%(1 .in DollarsRemaining1*7.947square feetCostProfitCostsInterestsCostadequaciesCostLife UsedLifeDepr./ 14 Top of Form Download this Document for Free Bottom of Form The Appraisal Journal.

092$237.645$2.443.350$844. 429$94.184$268.168$955.187$0$1.473.466$430.212.931204050% ($215.470)$839.187255843%($633.977$14.854)$499.248$0$45.422$76.931$0$430.535$14.101$97.465(b) Ceiling finishes$198.793(b) Equipment$0$0$0$0$0$0$0305060%$0$08Services(a) Electrical$1.024)$7.756.427.148203067% ($161.427.983$0$611.467$0$1.371$211.471$31.891.5%(1 + 2 + 3)*Int.221$83.190)$244.801$1.094$15.058.7789Site developme nt(a) General$387$27$31$13$458$0$4582510025% ($115)$343Totals$11.186$28.435)$1.6247Fittingsand equipment(a) Fittingsand fixtures$503.947$12.213$0$4.058.866.768$40.600$14.341.399$74.252$2.473. 983305060%($367.863$8 6.498$22.840$35.+ 2)*7.1 + 2 + 3 + 45–67*107 + 116InteriorFinishes(a) Floorfinishes$354.191.5N/A50% ($22.213254654%($2.163$752.374.613(c) Heating.148$0$241.579(c) Wallfinishes$37.992$2.418$1.781$25.466)$215.175.2480.566$4.658$69.058($6.467304665%($927.359$45.ventilation andairconditionin g$3.904$611.569)$79.618.034 .572$241.624)$22.717(b) Plumbing and drains$1.

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636 44. 2 5 ) ( $ 7 . 1997. 0 0 % ) ( $ 1 . 4 8 % R e p l a c e m e n t c o s t ( s a m e f o o t p r i n t ) $ 6 5 . 1 1 0 4 5 . 8 7 8 .636 Notes: Appraisal date. 1 0 $ 1 4 .0 . 5 3 4 . 4 7 4 ) 0 . 4 3 ) ( $ 7 6 4 . . 8 0 % O v e r a l l o b s o l e s c e n c e ( 1 0 . 0 0 % L e s s : S u p e r a d e q u a t e c o n s t r u c t i o n ( $ 0 .000 Total market value $7.2 . 7 7 % C u r a b l e f u n c t i o n a l o b s o l e s c e n c e ( $ 0 . and Manufacturing Building C o s t P e r R e p r o d u c t i o n A s a P e r c e n t a g e o f S q u a r e F o o t C o s t R e p r o d u c t i o n C o s t T o t a l r e p r o d u c t i o n c o s t $ 6 4 . 4 4 3 . 7 9 $ 1 4 . 7 5 6 . 4 8 % Accrued depreciationB a s e l i n e d e p r e c i a t i o n ( $ 3 0 .500.947 square feet.0 . 0 0 % ) ( $ 3 . 2 4 7 ) 5 2 .398. 222. 2 4 % Less: G e n e r a l p h y s i c a l c u r a b l e s ( $ 0 . 3 0 ) ( $ 6 . 6 3 5 . 3 8 % M a r k e t v a l u e i f c u r e d $ 2 9 . 6 5 8 1 0 0 . Building area. 2 2 3 ) 5 . January 1. 8 6 % S u b t o t a l v a l u e $ 3 0 . Research. 7 0 $6.135 TABLE 2The Cost Approach Applied to an Office.898. 0 0 0 ) . 6 0 0 ) . 0 1 1 4 7 . 0 0 0 ) 0 . 5 2 ) ( $ 1 1 5 .94%M a r k e t v a l u e i n d i c a t e d $ 2 8 . 5 0 ) ( $ 1 1 1 . 2 5 8 1 0 0 . 1 7 % T o t a l c u r a b l e s ( $ 0 .474) -0. 1 1 ) ( $ 2 4 . 7 8 % S p e c i a l i n c u r a b l e f u n c t i o n a l o b s o l e s c e n c e ( $ 0 . 6 1 ) ($135. 5 1 3 . 3 1 $ 6 .30%M a r k e t v a l u e o f a s s e s s a b l e f i x t u r e s $1. 0 2 4 ) 4 6 . 8 5 $ 6 . 3 1 ) ( $ 6 9 . 2 9 % S u b t o t a l d e p r e c i a t i o n ( $ 3 4 . 9 0 1 ) . 6 2 % L e s s : E x t e r n a l o b s o l e s c e n c e ( 5 . 5 4 ) ( $ 3 4 3 .

The “bottom-line” deduction for cur-a b l e i t e m s m e a n s t h a t t h e s e d e d u c t i o n s 3. Jr. A s w i l l b e e x p l a i n e d l a t e r . Baseline depreciation: 3 Baseline deprecia-tion includes both incurable physical dete-r i o r a t i o n a n d o r d i n a r y i n c u r a b l e f u n c t i o n a l obsolescence. design. in older properties.chaser preference or utility. CURABLES TAKEN ON ABOTTOM-LINE BASIS The reordering of the deductions adopts thebreakdown method of e s t i m a t i n g a c c r u e d depreciation. m a y a l s o cause amarket-oriented diminution. External obsolescence: This factor as usedh e r e r e p r e s e n t s t h e net d i m i n u t i o n i n v a l u e from external influences. For example.) Special functional obsolescence: This calcu-lation represents identifiable and measurablei t e m s o f d i m i n u t i o n i n value due to inutilityor style changes not included in baseline depreciation.Max J. i t i s n e c e s s a r y t o a s s u m e t h a t t h e physical and functional curables are theoreti-c a l l y c u r e d .lowance for superadequacies of the existingc o n s t r u c t i o n . d e ductions for the cure are then taken last inthe order of deductions after arriving at the“market value if cured” (see table 2.. Examples a r e o f f i c e k i t c h e n s . I n d i v i d u a l p u r . Before calculating baseline de-p r e c i a t i o n .rather than estimating the value impact o f isolated factors. a n d l i g h t .r a t i o n o n l y . “Market Value for Special-Purpose Industrial Properties: Using the Cost Approach. social. and politi-c a l f a c t o r s t h a t a f f e c t t h e u s e a n d e n j o y m e n t o f t h e p r o p e r t y n e e d to be analyzed in total. t h i s i s t h e r e . or functional utility rather thanfrom physical deterioration. taking into accountall of t h e p o s i t i v e a n d n e g a t i v e i n f l u e n c e s o n value.” Journal of Multistate Taxa-tion (August 1997): 122–130. there maybe factors of either condition or utility thatm a y h a v e g o n e u n d e t e c t e d . Physical. m u l t i b u i l d i n g c o m p l e x e s c a n c r e a t e overall obsolescence as well. Derbes: Accrued Depreciation Redefined and Reordered . A s u s e d h e r e . The layout of large. Baseline depreciation i s g e n .ing fixtures. M o s t classical cost approach applications to incur-a b l e p h y s i c a l d e t e r i o r a t i o n a d d r e s s d e t e r i o . F o r example. even with rela-t i v e l y n e w c o n s t r u c t i o n . but such applications ignore thereality that the total lives of many elementso f b u i l d i n g s d e p r e c i a t e f r o m c h a n g e s i n style. Overall obsolescence: This is a special allow-a n c e f o r i t e m s n o t p r o v i d e d f o r p r e v i o u s l y .l i f e b a s i s . Derbes. p l u m b i n g f i x t u r e s .placement cost of the existing structure andis not a radically different substitute replace-m e n t m o d e l . but there are changes in howsome of these items are perceived and de-fined. financial. there may be exces-sive heat loss due to excess ceiling heights.e r a l l y c a l c u l a t e d o n a n a g e .

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tion that the curables are cured.. it is necessary to elimi-n a t e t h e e l e m e n t ( o r a part of it) from the costfrom which incurable physical deteriorationis t a k e n . A n o t h e r $ 2 5 0 i s b o t t o m . a s s u m e t h a t a n i t e m has a cost new of $1. thisrequires that the appraiser calculate baselined e p r e c i a t i o n u n d e r t h e t h e o r e t i c a l a s s u m p . One inher-ent benefit of the order presented is that by“bottomlining” the curables. T h e a p .e.praiser is forced to ascertain. April 1998 136 s h o u l d b e t a k e n a f t e r a l l o t h e r a c c r u e d d e .000 less 60% baseline depreciation (net40% remaining useful life after the cure or$ 4 0 0 ) .The Appraisal Journal.W h e n c u r a b l e i t e m s are deducted last. in many cases. a n d specifically estimate the various costs to cure. t h e n t h a t p a r t o f t h e $ 2 5 0 i n t h e c o s t n e w h a s no depreciation.l i n e d a s t h e c o s t t o c u r e . Since thec u r a b l e s a r e i t e m s t h a t w o u l d b e a d d r e s s e d by the purchaser immediately.000 and is 60% used (i. the methodol-o g y p r o v i d e s a n e s t i m a t e o f v a l u e beforedeductions for curable deterioration andcurable f u n c t i o n a l o b s o l e s c e n c e . m e a s u r e .. last).preciation deductions (i. F o r e x a m p l e .e. the reader isp r o v i d e d a n important estimate of the mar-ket value after t h e c u r a b l e s a r e c u r e d a n d which. The orders u g g e s t e d w o u l d p r o v i d e f o r c o s t n e w o f $1. If an itemof cure of $250 is taken first before incurabled e t e r i o r a t i o n .If the curable physical deterioration ist a k e n a s a d e d u c t i o n b e f o r e t h e i n c u r a b l e baseline depreciation. . is quite useful. then this can be taken intoaccount by estimating a remaining useful lifeof more than 40% when the baseline depre-ciation is measured. I f t h e e l e m e n t i s w o r t h m o r e t h a n $400 after the cure.there is 40% remaining useful life).

even when the structureis not new. assume that the amount of superadequacy of materials and constructionmethods for a stone e x t e r i o r o f a b a n k b u i l d . 5 0 0 ($300.5% baseline deprecia-t i o n i s l i k e l y w o r t h m o r e t h a n t h e s u b s t i t u t e materials with 37. This estimate is probably e r r o n e o u s . has long been accepted as the firstd e d u c t i o n f r o m r e p r o d u c t i o n c o s t s i n c e i t measures the difference between reproduc-tion cost new and replacement cost new. i t w a s u s e d a s a m e a s u r e o f theamount to deduct (from the total cost) forbuildings or portions of b u i l d i n g s t h a t w e r e no longer useful.000 × 62. T h e r e f o r e . The appraiser must ascertain if using reproduction cost new of the existinga n d o f t h e s u b s t i t u t e materials is the appro-priate criterion for the deduction in o l d e r b u i l d i n g s . the replacementcost is the same as the reproduction cost of the structures. If t h e t o t a l s u p e r a d e q u a c y o f $ 1 0 0 .ing is $100. If the ap-praiser wishes to address semi-curable itemst h a t w o u l d n e e d a t t e n t i o n i n t h e n e a r t e r m .termcurables under a separate depreciation category.000 of reproduc. a form of incurable functional obso-lescence. C u r a b l e p h y s i c a l d e t e r i o r a t i o n a n d c u r .000 of the $400.are to be corrected immediately. Luxury indus-trial complexes often include very expensivematerials and construction methods withouta n y m a r k e t p e r c e p t i o n o f s u p e r a d e q u a c y .5%).S u p e r a d e q u a c y c a l c u l a t i o n s a r e n o r . If buildings are included inthe total cost estimate. 5 % o r $ 2 5 0 . assume that the estimatedm a r k e t v a l u e a f t e r a g e . In rarei n s t a n c e s . a t l e a s t i n t e r m s o f t h e d e d u c t i o n o f $100.For example.5% age-life depreciation).5% baseline depreciation. If n e w .Originally. This is the nature of such markets in demandareas. a r e m o r e costly than those in vogue today. s u b s t i t u t e m a t e r i a l s of the same quality. 0 0 0 i s d e . they must be depreci-a t e d i f t h e y a r e n o l o n g e r u s e f u l f o r a n y p u r pose. S t a t e l y i n s t i t u t i o n a l .ished because of the cost of demolition.egory for near-term curables (both physicaland functional) could be established.It is important alwayst o m e a s u r e b a s e l i n e d e p r e c i a t i o n a s i f t h e c u r e h a s b e e n c u r e d . SUPERADEQUACY: A FORM OFINCURABLE FUNCTIONAL OBSOLESCENCE O n e i t e m o f a c c r u e d d e p r e c i a t i o n . s u p e r a d e q u a c y i s a f u n c t i o n of market forces. t h e m a t e r i a l m i g h t b e s u p e r a d e q u a t e t o the full . existing buildings or portionsconsidered no longer useful are n o t d e m o l . F u r t h e r . s u c h a s t h e added cost of excess ceiling heights. 0 0 0 ( r e p r o d u c t i o n c o s t o f $400.000 of superadequate cost because thestone exterior with 37. How-e v e r . s u p e r a d .ings are often built of construction materialsa n d m e t h o d s t h a t . i t would probably be p r e f e r a b l e t o m a k e a p .l i f e d e p r e c i a t i o n i s 137 6 2 .t i o n c o s t . at the time of appraisal. Only when there are e x c e s s m a t e r i a l s o r c o n s t r u c t i o n m e t h o d s t h a t p u r . s a y w i t h i n f i v e y e a r s .chasers will not accept at full measure is theres u p e r a d e q u a c y . t h e n a s e p a r a t e c a t .equacy.d u c t e d f i r s t .mally based on the difference between costnew of the excess materials or constructionm e t h o d s a n d a d e q u a t e .I n r e l a t i v e l y n e w b u i l d i n g s w i t h n o superadequate construction.000 less 37.t y p e b u i l d . a d m i t t e d l y . superadequacy r e p r e s e n t e d the excess cost of materials and constructionm e t h o d s t h a t w o u l d n o t a d d t o t h e v a l u e o f the existing building at the time of appraisal. t o p r e v e n t d o u b l e d e p r e c i a t i o n . Itw a s a l s o u s e d t o m e a s u r e i t e m s .able functional obsolescence should be re-stricted to items that.propriate adjustments and depreciate a component high when estimating baseline depre-c i a t i o n r a t h e r t h a n measuring near. Often. t h e v a l u e w o u l d b e $ 1 8 7 .

o r maintenance efficiency. and using a radi-cally different replacement model (i. the appraiser es-s e n t i a l l y a l w a y s b e g i n s t h e c o s t a p p r o a c h with the model’s replacement cost. the use of re-p r o d u c t i o n cost permits the analysis of thosea s p e c t s o f t h e i m p r o v e m e n t s t h a t a r e s u p e r a d e q u a t e f r o m t h e m a r k e t ’ s p e r s p e c . U s . there might bedouble depreciation for incurable functionalobsolescence on top of the superadequacyd e d u c t i o n . the amount cal-culated for i t i s n o t . H o w e v e r . A RADICALLY DIFFERENTREPLACEMENT MODEL TO MEASURESUPERADEQUACY There are two different methods of measur-i n g s u p e r a d e q u a c y : measuring the super. BASELINE DEPRECIATION Perhaps the most frequently misapplied termin appraisal theory is incurable physical de-terioration.p l i e s n e a t l y . thes u p e r a d e q u a t e materials may have marketappeal and contribute on a marginal b a s i s t o value.The total useful lives of these short-life itemsare based on a useful life that likewise con-siders .p l o y e d b y t h e a p p r a i s e r i n t h e f i r s t p l a c e . Since it is always possible to construct abuilding with cheaper materials and construc-t i o n methods. Deterioration is the basic causeo f diminution in value of improvement ele-ment s or co mp on en ts w i t h t i m e a n d u s e .. d u r a b i l i t y . The principle of ther e p l a c e m e n t m o d e l i s p r i m a r i l y u s e d i n t h e a p p r a i s a l o f o l d e r . s u p e r a d e q u a c y m u s t b e c o n sidered in light of the other forms of depre-ciation that affect value and not as a totallyindependent variable. The difference between the reproduction costo f t h e e x i s t i n g f a c i l i t y a n d t h a t o f t h e m o d e l w i l l l e a d t o t h e m a g n i t u d e o f t h e e x i s t i n g facility’s superadequacy. for many short-lifeitems and all long-life items. the appraiser seeks to identify thee l e m e n t s o f s u p e r a d e q u a c y t h a t a f f e c t t h e market value of the existing construction andworks to establish the true market value im-p a c t t h a t r e s u l t s f r o m t h e e x i s t e n c e o f superadequate materials and constructionmethods.larly in litigation circumstances.adequate materials and construction methods of the existing facility. In the first place. i n f a c t . i n c u r a b l e p h y s i c a l d e t e r i o r a t i o n a p . C h a n g e s i n t h e s t y l e rather than deterioration dictate replacement. Further. Otherwise. it is advisable to use r e p r o d u c t i o n c o s t i n a p p l y i n g t h e c o s t a p p r o a c h .T h e r e f o r e .t e r i o r a t i o n .ers must compare the new facility’s addedcost of capital with the depreciated cost of the old facility.Appraisers calculate the total useful life of t h e p a i n t a n d u s u a l l y d e p r e c i a t e i t o n a straight-line age-life basis. whatw o u l d b e c o n s t r u c t e d c u r r e n t l y t o p e r f o r m the same f u n c t i o n a s t h e e x i s t i n g b u i l d i n g ) . it follows that every buildingh a s t h e p o t e n t i a l o f b e i n g s u p e r a d e q u a t e . Regardless of the r e p r o d u c t i o n cost of the existing facility. For an item likep a i n t . However. p a r t i c u . the substitute materials mayn o t h a v e t h e s a m e q u a l i t y .25% difference in cost. it follows that there can be nos u p e r a d e q u a c y i f t h e r e p l a c e m e n t c o s t i s e m . It is difficult to make the substitutem o d e l o f e q u a l q u a l i t y a n d s o m e t h i n g t h a t will perform the same functions as the exist-ing facility. although thes a m e m i g h t n o t b e t r u e o f t h e s t o n e exteriorof the older structure.Since the difference between reproduc-t i o n c o s t n e w a n d r e p l a c e m e n t c o s t n e w i s superadequacy. Most office kitchens and plumbing fix-t u r e s i n i n d u s t r i a l b u i l d i n g s d o n o t d e t e r i o .e. d u e s o l e l y t o d e . or otherwise deteriorates.i n g t h e r e p l a c e m e n t m o d e l m e a n s a p p r a i s . Even with-out the probability of litigation. t h e p a i n t o n w a l l s b e c o m e s discolored. A n y a t t e m p t t o m e a s u r e s u p e r a d e q u a c y through the use of a radically different replacement model presents a number of prob-lems. Ast i m e g o e s o n . peels. However. using ar a d i c a l l y d i f f e r e n t r e p l a c e m e n t m o d e l .r a t e d u r i n g t h e i r u s e f u l l i f e t o t h e p o i n t o f n e e d i n g r e p l a c e m e n t . Consider the simple case of wall paint.tives. It is imp o s s i b l e t o i d e n t i f y a n d i t e m i z e t h e a c c r u e d depreciation of the existing facility. specially designed indus-t r i a l m a n u f a c t u r i n g p l a n t s .

This factor is true of many items that have short lives. ex-t e r n a l o b s o l e s c e n c e .750would be $146. It is difficult.tures and lighting fixtures generally have sig-n i f i c a n t r e m a i n i n g p h y s i c a l l i v e s w h e n t h e y are replaced for reasons of style.35 = $78.ordinary incurablefunctionalobsolescence. April 1998 138 changes in style.emental calculations. 5 0 0 i n c u r a b l e s i n t h i s i l l u s t r a t i o n . they should recognize the dualf o r c e s a t w o r k . Therefore. The over-a l l d e p r e c i a t i o n ( f r o m c o m p a r a b l e s a l e s ) would be 45% (60:27) or $101. Costing may bed o n e b y i n d e x i n g o r i g i n a l c o s t o r b y t h e square-foot method using a cost service.tional obsolescence.250. in-cluding special functional obsolescence.lescence. Baseline depreciation can be cal-c u l a t e d o n e i t h e r a n o v e r a l l o r a n e l e m e n t a l age-life basis. P l u m b i n g f i x . r e p r o d u c t i o n c o s t c a n b e e s t i m a t e d o n a less articulated basis than costing each itema n d c o m b i n i n g l i k e items into subelementsand elements.250 less $22. Periodically. A s s u m e t h e curables have been cured in this illustration. Therefore.a n d w h a t p a r t i s d u e t o s t y l e a n d a g e o b s o . Comparable sales of vary-i n g a g e s o f o w n e r / o c c u p i e d p r o p e r t i e s o r sales of investment properties can give evi-dence of these age-life .then the result would be $225. a b u i l d i n g w i t h a c o s t b a .000 × 0. 7 5 0 . F o r e x a m p l e .If the market sales i n d i c a t e t h a t b a s e l i n e depreciation (including only incurable physi-c a l d e t e r i o r a t i o n a n d o r d i n a r y i n c u r a b l e functional obsolescence) is 21/60 or 35%. $225.i n c l u d i n g i n c u r a b l e p h y s i c a l d e t e r i o r a t i o n and ordinary incurable functional obsoles-cence. t o a n a l y z e w h a t p a r t o f t h i s a c c r u e d d e p r e c i a t i o n is due to physical wear and tear. not as a totallyindependent variable. Rather.solescence. A s s u m e t h a t t h e r e is no special f u n c t i o n a l o b s o l e s c e n c e a n d n o external obsolescence.500 = $123.these will be replaced with new state-of-the-a r t c o m p o n e n t s . personal preference. e s p e c i a l l y w h e n d o i n g e l . appraisers should ceasea p p l y i n g t h e m i s n o m e r “ i n c u r a b l e p h y s i c a l deterioration” to this element of deprecia-tion. overall age-life baseline depre-ciation can comprise a l l f o r m s o f a c c r u e d depreciation or merely baseline depreciation. OVERALL BASELINE DEPRECIATION In less significant or complex appraisal prob-l e m s . The Appraisal Journal.Many of the short-life and all the long-life items have a total life that takes into con-sideration not only the incurable physical det e r i o r a t i o n .750. Either system can be measured for thet o t a l s t r u c t u r e r a t h e r t h a n b y e l e m e n t s . however. as in table 1. andeven changes in technology. $146. Thus the term “baselined e p r e c i a t i o n ” m o r e accurately reflects thecombination of incurable physical deterio-r a t i o n a n d o r d i n a r y i n c u r a b l e f u n c t i o n a l o b . Inthese cases.T h e t w o m e t h o d s u s e c o m p a r a b l e s a l e s t o i d e n t i f y a n d a n a l y z e either the total over-all age-life depreciation or the baseline de-preciation only.750. a n d c u r a b l e p h y s i c a l a n d f u n c t i o n a l a m o u n t . b u t a l s o o r d i n a r y i n c u r a b l e f u n c .but become obsolete.sis at $225. resultingi n a n e t v a l u e o f $ 1 2 3 .000 less $78. T h e y d o n o t t o t a l l y w e a r out. if not im-p o s s i b l e . Therefore .000 is 27 years old and has an es-timated total useful life of 60 years. the b u i l d i n g n e e d s $ 2 2 .250. The appraiser then mustestimate all other forms of depreciation. Ordinary incurable functional obsolescence ist h a t d i m i n u t i o n i n v a l u e t h a t results from Derbes: Accrued Depreciation Redefined and Reordered Superadequacym u s t b e considered inlight of theother forms of depreciation that affect value.

When particular circum-s t a n c e s w a r r a n t . the reproduction cost of theelements must be developed. In 1993. t h e i m p o r t a n c e o f t h e c o s t a p .c e s s p i p i n g . underground p i p e s .Cost engineers may use this format or acosting system of their own to develop thecost of the elements. s o m e i t e m s i n t h e s u b e l e m e n t a l c a t e g o r y m a y b e c o n s i d e r e d separately. the costof dozens of individual items such as fix-tures. theC a n a d i a n I n s t i t u t e o f Quantity Surveyors Since elementsvary asa percentageof the totalconstruction cost and varyingelements havevarying degreesof life used. “When several similar or commensuratecommodities. the signifi-cance of the cost approach also diminishes if there is sufficient income data. I t i s g e n e r a l l y agreed that if there are sufficient similar com-p a r a b l e s a l e s .The appraisal principle of substitutionstates. external obso-lescence. the age-life of eachmajor subelement category may reasonablybe used. a n d s o f o r t h a r e i n c l u d e d . t h e a g e . a n d t h e American Standard for Testing of Materialsof the United States has it under consideration. If the subjectis an investment-type property. it is possible to identify thea g e l i f e r e l a t i o n s h i p o f e a c h i t e m i n t h e subelement. goods.p r o a c h d i m i n i s h e s .l i f e o f e a c h m a j o r s u b e l e m e n t c a t e g o r y m a y b e u s e d r e a s o n .ably to measure baseline depreciation oncet h e w e i g h t e d t o t a l l i v e s o f t h e i n d i v i d u a l items in the subelemental category are takeninto consideration. there prob-ably will be a standard form available for thecalculation of elemental baseline age-life de-preciation. t h e a g e . and curables. If a detailed.ket sales is that the exercise essentially re-sults in the cost approach’s duplicating thesales c o m p a r i s o n a p p r o a c h . Table 1 showsa recent elemental cost format.measuringbaselinedepreciation onan elementalbasis is preferableto the overallage-lifemethod.The criticism of the overall system of m e a s u r i n g a c c r u e d d e p r e c i a t i o n f r o m m a r .it is difficult to make a comparison of over-all age-life depreciation from either comparable sales or investment properties. However.T h e c o n c l u s i o n s a b o u t t h e c o s t o f t h e v a r i o u s subelements of table 1 have numer-ous supporting schedules. appliances. A studyof comparable sales reveals the approximatea m o u n t of age-life depreciation occurringannually on either basis. Baseline depreciation canbe reasonably estimated by calculating theage-life ratios of the various subelements intable 1.i t e m b a s i s . For example.To calculate the baseline depreciation on anelemental basis. p r o . When there are many different types of spe-cial incurable functional obsolescence anddifferent degrees of economic obsolescence. 139 a d o p t e d t h i s e l e m e n t a l f o r m a t . un-der plumbing and drains. ELEMENTAL BASELINEDEPRECIATION T h e s e c o n d m e t h o d o f m e a s u r i n g b a s e l i n e depreciation is the building elemental basis. T h e same is true of age-l i f e d e p r e c i a t i o n d e r i v e d f r o m t h e s a l e o f similar investment properties. a d i f f i c u l t y arises in projecting total useful life of thesubelements. While less articulate than the item-b y .relationships. In the u s e o f t h e b a s e l i n e s y s t e m . theone with the lowest price will attract the greatest demand and widest distribution. item 8(b). Eventually. segregated cost estimate isaccomplished. such as special incurable functional obsolescence. Since many of the life-used es-t i m a t e s a r e a c t u a l l y e s t a b l i s h e d u p o n weighted chronological ages.” 4 . The estimated total useful life andlife-used for the total subelement are basedo n s t u d i e s o f t h e i t e m s t h a t c o m p r i s e t h e subelement. or services are available. These other forms of d e p r e c i a t i o n m u s t b e t r e a t e d s e p a r a t e l y . but would be very time consum-ing and expensive.l i f e d e p r e c i a t i o n indicated might intentionally exclude otherforms of depreciation.

If a plumbing fixture is estimated tohave a functional life of 40 years. n o r c a n i t b e b a s e d solely on estimated t o t a l p h y s i c a l l i f e . 3d ed. theprinciple of substitution takes on increasedsignificance in the cost approach.These items are treated on a functional lifebasis.Appraisal Institute. or a roof installed 10 years ago. A 30-year-o l d b u i l d i n g m a y h a v e a r o o f c o v e r a t t h e end of its useful life or a roof n e a r t h e e n d o f its life. The appraiser compares the relativevalue of the items of the subelements of theconstruction with the cost of new construc-tion. the total useful life m u s t b e t h e c r i t e r i o n f o r e s t i m a t i n g t h e b a s e l i n e d e p r e c i a t i o n o f t h e long-life elements. especiallywith specially designed and single-use prop-erties. The appraiser seeks that incentive pricea t w h i c h a w i l l i n g p u r c h a s e r a n d a w i l l i n g seller will come to terms. Derbes: Accrued Depreciation Redefined and Reordered 11_Derbes . Illinois: Appraisal Institute. R a t h e r . if both take intoaccount the relative merits of the existingcomponents in contrast to new construction. (Chicago. On the other hand. 356. s l a b .W h e n t h e r e are no sales of truly similar properties. the chro-n o l o g i c a l a g e a s a p e r c e n t a g e o f t h e t o t a l functional life of 40 years is the measure of baseline depreciation on a functional life ba-sis. LONG-LIFE ELEMENTS T h e a d a g e . B y gauging the life-usedportion of the total physical life of the roof covering and employing the age-life meth-odology. ore v e n a n e w r o o f . item 3(a). some short-life itemsa r e r e p l a c e d e v e n t h o u g h t h e y h a v e n o t physically worn out.Since elements vary as a percentage of the total construction cost and varying ele-ments have varying degrees of life used. They are general ly changed due to style changes in the market. the contributory value of the roof covering subelement is estimated. Because of this. a n d b a s i c s t r u c t u r a l components may last for centuries if not de-molished. thesystem of measuring baseline d e p r e c i a t i o n o n a n e l e m e n t a l b a s i s i s p r e f e r a b l e t o t h e overall age-life method.T h e t e r m “ e c o n o m i c l i f e ” o r i g i n a l l y d e . 1993).s c r i b e d t h e p e r i o d o f time over which the 4. The Dictionary of Real Estate Appraisal. “ m o r e b u i l d i n g s a r e t o r n d o w n than fall down. The sameprocess is used for all the short-life elementssubject to a predictable physical life. taking into account ordinary incurablefunctional obsolescence. T h e f o u n d a t i o n .Accrued Depreciation Download this Document for FreePrintMobileCollectionsReport Document Info and Rating Follow marco1981ita . the total life of thelong-life elements cannot be based on inves-tor economic life expectations that t y p i c a l l y r a n g e f r o m 4 0 t o 7 5 y e a r s . Take for example theroof covering in table 1.” means that m o s t p r e d i c t i o n s of the total life of the long-life items cannotb e m e a s u r e d s o l e l y by physical considerations.

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