Evaluating urban regeneration programmes: an integrated ... · Marta Bottero, Giulio Mondini Politecnico di Torino Department of Regional and Urban Studies and Planning International

Evaluating urban regeneration programmes:

an integrated approach

Marta Bottero, Giulio Mondini

Politecnico di Torino Department of Regional and Urban Studies and Planning

International conference on “Smart and Sustainable Planning for Cities and Regions 2015”

Institute for Renewable Energy of the European Academy (EURAC) Bolzano, 19-20 November 2015

Outline Objective of the research

The integrated evaluation framework

Cost Benefit Analysis Multicriteria Analysis Socio-economic rating

Study case

The requalification project for a social housing district in Northern Italy Alternative strategies for the project

Development of the evaluation

Estimation of the economic performance Evaluation of the social benefits Questionnaire for the stakeholders and experts panel

Discussion of the results

Definition of the socio-economic rating

Conclusions

Introduction

Integrated evaluation


Objectives of the research

Case study Conclusions Results

Urban regeneration & Smart City

(not only buildings restoration operations, but also programmes aiming at eliminating social decline, increasing the quality of life of the inhabitants, supporting the valorisation of cultural resources, protecting the environmental system, bringing economic development and so on)

Necessity of supporting Decision Makers

with integrated evaluation approaches based on participation processes

(financial performance indicators, evaluation of social benefits, assessment of environmental impacts …)

The paper explores the use of an hybrid approach based on the combination of economic analysis and Multicriteria Analysis for supporting decision-making processes in the context of urban regeneration processes

Source: elaboration from Coen, 2013

Assessment techniques Financial analysis Costs-Benefits Analysis Multicriteria Analysis

Description

Analysis of the costs and the

benefits over the life of the

investment

Analysis of the variation of

social well being that the

project will determine

Analysis of the full range of

aspects that are related to the

project

Input Prices of productive factors

and products, discount rate

Monetary values of social well-

being variations

Positive and negative impacts,

weights, utility functions, …

Output Financial performance

indicators (NPV and IRR)

Social-economic

performance indicators (NPV

and IRR)

Ranking, compatibility

assessment, …

Pros The results of the analysis are

easy to interpret

The results of the analysis are

easy to interpret

The analysis takes into account

the complexity of the decision-

making process (stakeholders,

conflicts, political and

technical judgments, …)

Contros The analysis does not

consider the externalities

The monetary evaluations of

social and environmental

effects may be difficult and

imprecise

No-conventional procedures,

analysis difficult to be

conducted and implemented

Use Private investments Public investments Feasibility studies, analysis of

alternative options, …

(Source: elaboration from Rosato, 2009)





The integrated evaluation framework





The methodology proposed in the present study combines two evaluation approaches: the Discounted Cash Flow Analysis and the Multicriteria Analysis in order to support decision problems in the context of urban regeneration processes.

Discounted Cash-Flow Analysis





1_Identify the costs of the project

2_Identify the benefits of the project

3_Distribute costs and benefits over the life of the investment

4_Calculate the net cash-flow

5_Discount the net cash-flow

6_Calculate the project performance criteria (NPV -Net Present Value and IRR - Internal Rate of Return)

7_Conduct sensitivity and risk analysis

If .. It means … Then …

NPV = 0 The discounted benefits are equal to the discounted costs

We should be indifferent in the decision whether to accept or reject the project

NPV > 0 The discounted benefits are larger than the discounted costs

We should accept the project

NPV < 0

The discounted benefits are smaller than the discounted costs

We should reject the project

Ne

t P

rese

nt

Va

lue

Discount rate

Internal Rate of Return

Multicriteria Analysis





Alternatives

x1 x2 x3

x4 x5

x6 x7

1. x2

2. x1

3. x6

4. x5

5. x4

6. x7

7. x3

x2

Features of the

alternatives

Group 1

x1, x2, x6

Group 2

x3, x4, x5, x7

Ranking

Choice

Description

Classification/ Sorting

Mostpreferred

alternatives

Leastpreferred

alternatives

Multicriteria Analysis (MCA) consists of a group of approaches which allow to account explicitly for multiple criteria, in order to support individuals or groups to rank, select and/or compare different alternatives (Roy & Bouyssou 1993; Figueira et al. 2005) MCA provides a suitable set of methods to perform sustainability evaluation as a result of its flexibility and the possibility of facilitating the dialogue between stakeholders, analysts and scientists.

(Source: Roy, 1995)

Socio-economic rating





Projects to be accepted

High IRR and high social benefits

Projects to be improvedw.r.t. economicperformance

Low IRR and high social benefits

Projects to be rejected

Low IRR and low social benefits

Projects to be improvedw.r.t. social benefits

High IRR and low social benefits

The composite modelling assessment proposes to use in tandem the results of the cash flow analysis and the multicriteria analysis in order to produce a more comprehensive type of appraisal as often demanded by Decision Makers.

(source: elaboration from SINLOC, 2014)

Soci

al b

enef

its

Financial performance

MU

LTIC

RIT

ERIA

AN

ALY

SIS

DISCOUNTED CASH-FLOW ANALYSIS

Source: Saraniti Pettinato, G., Suria, A., Tron, G. & Vasciaveo, S. Smart Building & Living Roofs. Graduation thesis, Master Programme in Architecture Construction City, Politecnico di Torino, supervisors: professors Ambrosini G., Callegari G., Bottero M., December 2014. .





Case study





Alternatives of intervention

Four alternative strategies have been considered for the requalification operation, that have been evaluated by means of the proposed evaluation framework in order to analyze their performance both from the point of view of the financial-economic aspects and from the point of view of the social benefits generation

(source: Saraniti Pettinato et al., 2014)





Estimation of the economic-financial performance

Strategies IRR

Strategy 1 2,84%

Strategy 2 3,15%

Strategy 3 4,47%

Strategy 4 3,11%

A Discounted Cash Flow Analysis has been developed for the evaluation of the alternative projects. In the performed evaluation, the costs are represented by the investment cost of the transformation while the incomes are related to the rents produced by the project.

(source: Saraniti Pettinato et al., 2014)





Evaluation of the social benefits Definition of the set of criteria

Aged people

Families with children

Students

Most sustainable project

Energy consumptions

Indoor comfort

CO2 emission

Scaffolding

Duration of the building yard

Disturbance Requalification

Soil occupation

Workers

Availability of parking

Connections with the buildings

Green areas

Accessibility

Level of common spaces

External areas

Meetings

Organization of the flats

Typologies Mixité

Internal areas

Diversification of the activities

Closeness to work

Market value





Alternatives performance

mix

i-tè

accessibility meeting typology requalification invasivity p

arki

ng

con

nec

tio

ns

gree

n a

reas

exte

rnal

sp

aces

inte

rnal

sp

aces

div

ers

ific

atio

n

qu

alit

y

on

e ro

om

two

ro

om

s

thre

e ro

om

s

fou

r ro

om

s

clo

sen

ess

ener

gy c

on

sum

pti

on

s

ther

mal

co

mfo

rt

mar

ket

valu

e

CO

2 e

mis

sio

ns

du

rati

on

soil

occ

up

atio

n

scaf

fold

ing

1 0,75 1 1 1 1 1 0,5 0,5 0 1 1 1 0,47 0,75 1 1 1 0,33 1 1

2 0,79 1 1 1 1 1 1 1 1 0,95 0,72 1 0,64 0,75 1 1 1 0,33 1 1

3 0,46 0 0 0 0 0 0 0 0 0,95 1 1 0 0 0 0,33 0,25 1 0 0

4 0,49 0 1 1 0,5 0,5 0,25 0,25 1 0,95 0,72 1 1 0,75 1 1 1 0,67 0,5 0

The raw values of each indicator for the four alternative projects have been translated into the 0- 1 scale, awarding 0 to the minimum value and 1 to the maximum value, in order to aggregate non-commensurable items.





Assessing weights of criteria

HousingAgency

Inhabitants

LocalAssociations

Experts panel

With reference to the criteria level, a number of experts has been interviewed with expertise in the field of architecture and planning. As far as the sub-criteria are considered, a specific questionnaire has been developed and submitted to different real stakeholders, including the inhabitants of the housing district, the housing agency which is in charge of the management of the district and local associations that are active in the territory.





Aggregation and final scores

final score = normalized performance of the alternative w.r.t. the sub-criteria * weight of the sub-criterion * weight of criterion

Strategies Social evaluation

Strategy 1 0,82

Strategy 2 0,90

Strategy 3 0,31

Strategy 4 0,68





Socio-economic rating Strategy 1 results to be good from a social point of view and in fact it considers lots of spaces for

aggregation; on the contrary, strategy 1 does not perform very well from an economic point of view as it considers the presence of many

social housing apartments

Strategy 2 is good both from a social and an economic point of view; in fact, this project considers an higher percentage of ordinary apartment in the operation

with respect to strategy 1.

Strategy 3 performs very well from an economic point of view as the project does not consider the

requalification of the external areas and of the common spaces and the energy retrofitting

operations. Conversely, the strategy is very bad from the social point of view.

Strategy 4 is well both from the point of view of the creation of positive social impacts and from the point of view of

the economic convenience of the operation

Conclusions

✕ It would be useful to test the model by means of specific robustness analysis in order to validate the results of the evaluation (acceptability thresholds).

✕ Further investigation can be related to the analysis of more sophisticated MCA models and to the integration of the MCA tool with Cost Benefits Analysis.

✕ Extra work could be related to investigate the repetibility of the method with the aim of providing a specific evaluation procedure for the definition of the socio-economic rating of urban regeneration programmes

The study represents one of the first experimentations of hybrid methods in the context of urban regeneration programmes

The proposed model proved to be effective in informing in a transparent way the Decision Makers about the economic performance of the operation and the achievement of the initial social goals.

Future developments





Documents

Evaluating urban regeneration programmes: an integrated ... · Marta Bottero, Giulio Mondini Politecnico di Torino Department of Regional and Urban Studies and Planning International