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Al-Jibouri, S and Mawdesley, M J (2001) Development and application of a stochastic based cost prediction model for construction. Journal of Financial Management of Property and Construction, 6(01), 61–9.

Chan, A P C, Lai, M K, Tam, C M and Akintoye, A (2001) Analysis of construction cost variation factors. Journal of Financial Management of Property and Construction, 6(01), 51–60.

Nicholas, J, Holt, G D and Edwards, D J (2001) Towards a risk assessment model for evaluating construction contractors' creditworthiness. Journal of Financial Management of Property and Construction, 6(01), 31–40.

Pasquire, C and Maruo, K (2001) A comparison of value management methodology in the UK, USA and Japan. Journal of Financial Management of Property and Construction, 6(01), 19–29.

Sing, T F (2001) Is property stock market efficient in the weak form? Singapore's evidence. Journal of Financial Management of Property and Construction, 6(01), 3–18.

Wong, K C, So, A T P and Yu, N H W (2001) The financial viablility of intelligent buildings: a Faustmann approach of assessment. Journal of Financial Management of Property and Construction, 6(01), 41–50.

  • Type: Journal Article
  • Keywords: financial viability; Asian intelligent building definition; net present value; Faustmann Condition; renovation cycles; Hong Kong
  • ISBN/ISSN: 1366-4387
  • URL: http://www.emeraldinsight.com/journals.htm?issn=1366-4387
  • Abstract:
    Intelligent Building (IB) is a new approach to building design. It is high-tech, flexible and highly adaptable to rapid changes of the modern world. Unlike what many engineers would have expected, intelligent buildings have not been widely built, particularly in Asia. Apart from the fundamental problem of 'defining' an intelligent building in the first place, owners often question its financial viability (Choi 1995), even before asking what it is. This paper does not intend to argue that an IB must, or must not, be financially viable. Instead, a systematic method of assessment is laid down for discussion. It is based on the standard economic principle of wealth maximization: the highest present value of net gains. The Faustmann Condition is also brought in, allowing considerations of successive renovation cycles. The optimal duration of a renovation cycle would differ, with and without IB specifications. A specific site in the central business district of Hong Kong is chosen for analysis. The construction cost for a conventional design is compared to an IB alternative, using a new Asian IB definition. The method is also generalized to test the sensitivities of viability to changes in cost and rent, and presented as a 'viability curve'.