Evaluating the development and construction of an energy-efficient office block : a feasibility study

Abstract

Purpose: The purpose of this feasibility study is to evaluate the financial feasibility of developing an energy efficient office block in Zebbug, Malta. A comprehensive legal, marketing, technical and financial study was performed to determine the soundness of the investment. The study devoted particular attention in evaluating the most viable construction method to be used in this project, evaluating the various costs and benefits of two different construction systems, namely, the conventional construction system and the EVG 3D construction system. Design: The objectives of the study were attained through a feasibility study, addressing the various legal, market, technical and financial aspects of the investment. The marketing aspect involved constructing a sound business case backing the investment, making reference to market data available from various national statistics. Furthermore, a market questionnaire was sent to companies holding commercial offices in Malta. The technical aspect evaluated the various technical implications of the project together with the advantages and disadvantages of the two construction systems under study. Finally, investment appraisal techniques were used to evaluate the financial soundness of each alternative. The study concluded with a sensitivity analysis to account for uncertainties in the predictions made. Findings: The marketing research conducted indicates a growing demand for commercial office space in Malta and that companies are not particularly aware of the savings that can be achieved through the use of energy-efficient building materials. The technical aspect highlighted the various benefits of constructing the office block using the EVG 3D construction system when compared with the conventional construction method and that future tenants would ultimately enjoy 44% savings in air-conditioning costs. Finally, the financial evaluation revealed the return on investments attained under each alternative and their sensitivity under different scenarios. Conclusions: After considering all the relevant findings it was concluded that the EVG 3D construction system provided the highest return on investment. However, it was recommended that the overall project should not be pursued due to the high risks associated with the future performance of the property market and the future occupancy rates attainable for this project. Value: Although energy-efficiency is becoming a popular feature in local construction methods, developers still find it difficult to invest more funds in energy-efficient materials since these will ultimately be enjoyed by future tenants.