REFURBISHMENT WORKS IN A REGION - stuba.sk · activities of construction companies, while repairs, reconstructions and modernisations of construction structures presently offer more

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B. PÚCHOVSKÝ

USE OF QUANTITATIVE METHODS IN DETERMINING THE MARKET POTENTIAL OF REFURBISHMENT WORKS IN A REGION

Branislav PÚCHOVSKÝ, Ing.Lecturer, Department of Economics and Building Industry ManagementResearch fields: cost estimation, real estate evaluation, economic simulation

Slovak University of TechnologyFaculty of Civil Engineering, Department of Economics and Building Industry ManagementRadlinského 11, 813 68 Bratislava, Slovak [email protected]

1 INTRODUCTION

A precondition for a successful business in today’s highly competitive market is not only to satisfy the client’s needs, but also to anticipate them and differentiate one’s own bid from that of the competition. This is true not only for a construction company, but also for each business, too. The specific position of the customer on the construction market as an investor in construction works who determines the properties of the product, the location of the construction, and the starting and completion dates of the construction, means that a construction company is not able to define its product in advance. In the construction sector, the definition of the product is transferred to the client or the architect, whose task it is to “materialise” the client’s request into a graphic model of the product – the construction project. In this way the supplier – the construction company – reacts to a specifically designated product represented by the construction project. This moves the construction

company into the maybe comprehensible, but for its prosperity dangerous, role of a “candidate” for the demands of the client. The company reacts only subsequently to the client’s requirements.The refurbishment works market however, defies this construction market scheme. The refurbishment is carried out on a specific construction project, so the location, “the product” – the renovated construction – and the customer are known. Only the date of the arising of the demand remains unknown. Although we recognise the general principles of the decision-making, that involves the purchasing by customers, it is fact that in the case of maintenance and refurbishment, we can expect that the moving force of the customer’s decision to carry out the refurbishment activity is especially the deteriorating technical condition of the building constructions or their direct malfunctioning. Therefore, it can be assumed that if we were able to determine the term of the implementation of the repair, we would get closer to knowing the term of the arising of the demand. Of course, we realise the

2005 SLOVAK UNIVERSITY OF TECHNOLOGY

ABSTRACT KEY WORDS

• refurbishment of buildings, • construction market simulations, • market research, • maintenance and repair

The need for the refurbishment of construction structures creates room for the supply activities of construction companies, while repairs, reconstructions and modernisations of construction structures presently offer more opportunities for companies to enter the market than new constructions do. The article discusses possibilities for the use of tools of the theory of the refurbishment of construction structures in an active search for individual orders as well as in forecasting the total volume of the refurbishment work market in the region under consideration.

2005/1 PAGES 14 – 29 RECEIVED 3. 3. 2005 ACCEPTED 18. 4. 2005

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USE OF QUANTITATIVE METHODS IN DETERMINING THE MARKET POTENTIAL ... 15

difference between a potential order characterised by a given term for the implementation of a repair and an actual order supported by a purchase-effective demand. Next, we will try to find an answer to the questions of where, when, to what extent and for what price it will be necessary to carry out the refurbishment activity, thus giving into the construction company’s hand a tool for the active search for construction orders.

2 MARKET SEGMENTATION

Let us start by asking “where”? The methodology for the selection of the target market is called ”segmentation”. Under the term ”market segmentation”, we understand a pragmatic activity based on market modelling, by which particular parts – segments – obtained from customers with similar needs, attributes and purchasing decision-making – are selected from the whole. Should the above action be rational, the resulting market segment must be:• identifiable and accessible so that it can be efficiently targeted,• measurable, i.e., we have to be able to determine its size and

purchasing power,• attractive from the viewpoint of its profitability and the activities

of the competition.The focus of this article on the refurbishment works market means targeting a specific market segment. However, such a targeting can be too broad for the efficient capture of a customer. Therefore, let us deal with a more detailed segmentation of the refurbishment works market. For now, let us bypass the viewpoint of the attractiveness of this segment, which will be detailed more thoroughly later, and let us proceed from the assumption that there are reasons why a company is interested in this segment. The choice of segmentation criteria under the fulfilment of the above general principles is a matter of the processor’s needs. In our case, that is the needs of a construction company interested in the refurbishment works market. Respecting the rationality of the segmentation for the needs of this paper, subsegments are established as shown in Figure 1. Stage 1. On this basic level, we will divide the non-selective offer represented by the construction market as a whole according to the relation to the final structure into work on new buildings and work on existing buildings. It is obvious that for the purpose of this article, only the “branch” of work on existing structures is worth following. Stage 2. At this stage, we will apply the segmentation of construction work according to the way the subsequent use of an existing structure is considered, into:• refurbishment work, whose aim is to restore, improve or change

the functions of the use of the structure,

• demolition work, whose aim is to free the land for the purposes of a new construction or a change in the form of the use of the land. It is logical that this branch of the “segmentation tree” will not be followed.

Stage 3. At this stage it is useful to apply a product-based sorting into civic, housing, industrial and engineering constructions.Why did we focus on housing constructions at this stage? The positive answer is that due to their mass character, they are the most suitable one for the use of the refurbishment model which is to be presented later.

Stage 4. Since we have chosen the housing construction sector as the main branch of our interest, it is appropriate at this phase to divide them into standardised structures and non-standardised structures.Standardised structures represent constructions carried out according to (usually) state-wide unified projects. The construction

Fig. 1 Subsegments of the refurbishment work market

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of structures of this type began after 1945 (standardization began after 1949 at STU Prague) and, as a result of their massiveness, they started to be called mass housing construction structures. The basic advantage of this type of structures is the general availability of the technical bases without the need for an individually detailed inspection of each individual structure. There are standardisation anthologies of individual systems as well as technical literature, for example [1], [4]. Their unification has the following advantages:• good knowledge of the structural and material solutions,• good knowledge of the dispositional arrangement,• good knowledge of the time of construction,• good knowledge of the shortcomings of particular systems,• massiveness and spatial concentration in geographically relatively

small areas.Non-standardised structures represent constructions carried out according to unique projects. Non-standardised structures suppress all the advantages of standardised structures (of course, if the advantage in this case is seen from the viewpoint of the availability of information); therefore, techniques suitable for the inspection of standardised structures can only be used provided there is information of the same quality available about each particular structure. Stage 5. On this level it is suitable to follow the resources of financing refurbishment work. The decisive form in housing structures are private resources accumulated in maintenance and repair funds, regardless of who is the owner or the administrator of the structure. Stage 6. On this level we will divide the subsegments according to the type of refurbishment work, i.e., maintenance, repair, reconstruction and modernisation.Stage 7. In the case of a dwelling house, the investor of the refurbishment work may be the owner of an accommodation unit or the administrator of the building, which ensures the central administration of the common area. A specific form of investor is a building administrator, which is at the same time a construction company. This form represents the entry of a purely supply-oriented construction company into a new market segment.Figure 1 clearly shows that in the case of a construction company acting as an administrative agency, its interest or need is to cover all the forms of refurbishment work. Regarding the other two investor forms, the decisive segments of interest are repairs, or their advanced forms, reconstructions and modernisations. Maintenance work has the nature of small works which are carried out by the building administrator or the flat owner in their own capacities. Their volume is so small that they are unattractive for construction companies. Stage 8. This segmentation stage requires the professional specialisation of a construction company in construction work,

installation work on building services (water and gas distribution, sewage, heating, air conditioning) and assembly work (lifts, machine equipment).A small construction company will probably not be able to cover all the professions of installation and assembly work to the required extent. However, if its goal is entry into a new market segment – administrative companies, it must be able to carry out these works, at least in the form of subcontracts. In the case of work for another administrator, the complexity of the offer also means a competitive advantage. Stage 9. In Slovakia, implementation of refurbishment work on housing structures means to act in geographically restricted areas – housing estates1. Therefore, especially due to a close company – client relationship, it is suitable that the firm, based on the consideration of its capacities, also define its segment geographically. If we sum up the results of this segmentation (stages 1 to 9), the overall result will be the following orientation of this article. The target group of users – construction companies – consists of small construction companies or strategic business units within large construction companies which are specialised in this market segment. On the basis of a geographically restricted territory, these companies or units try to penetrate the refurbishment work market of housing constructions towards three groups of target clients with a different emphasis on the type of refurbishment work carried out. This is clearly displayed in Fig 1, with the dark fields representing decisive segments and the wide lines representing decisive relations among them.

2.1 Geographic segmentation

Geographic segmentation can not be understood as the settling down of a company in a restricted geographical area, but as a means of getting to know the refurbishment work product – the construction structure to – be - repaired. Since its basic feature is its immobility, i.e., its anchoring to the ground, the geographic segmentation in this sense is actually a specific form of a geographic information system, which, for the given area, provides the necessary information about the structures in it. Although the subject of the refurbishment work is a construction structure, the repair itself is carried out on its indi-vidual constructions. Through geographic segmentation, we pursue not only getting information about the location and type of existing structures, but mainly also about their construction and material solutions, which constitute the basis for the refurbishment work.The geographic segmentation should provide a construction company with the following data:1. Identification data:

1 An unprofessional term is intentionally used here, which degrades “a housing estate” into the position of a “modern geographically concentrated housing unit”, and not its real meaning as a “geographically delimited grouping of permanent people’s dwellings combining all kinds of structures (housing, civic, production, business, technical). By this unprofessional term, the targeting onto the geographically delimited area of dwelling houses of the unified construction system is observed.

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• location of the structure• owner and administrator of the structure

2. Technical properties:• construction system of the structure• composition of constructions and technical equipment• construction and material solution of built-in constructions and

technical equipment• technical condition of the structure and its constructions• physical measurements

3. Biographical properties:• age of the structure• age of the constructions• years of repairs of the constructionsProvided that the construction company intends to focus on mass housing construction structures, it is suitable that for each geographic area of its interest (town, district), it at least develops an orientation “map” of the construction systems used, which will be gradually supplemented by more detailed information, which it gains by acting in the given locality.

Fig. 2 Geographically restricted “Bratislava – so-called Stare Krasnany” segment

Type 1

Type 2

Type 3

Type 4

Border of area

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For a more detailed analysis, it is necessary to “go down” to a lower level of individual housing estates, streets, or blocks. Let us take a particular area of Bratislava – the so-called Stare Krasnany as an example (Fig.2). The choice is not random at all. It is a locality where one of the first mass housing constructions in Bratislava was carried out in the 1950’s, namely in the T11 and T12 construction systems. The selected geographic area will accompany us in the text to follow as the data source of documenting the practical processing, and thereby the practical serviceability of this paper.There are 41 three-storey dwelling houses in the locality, each house having three sections (entrances), where the bases of the T11 and T12/52 construction systems were used as the basic variant. For the given construction period (1950-52), it is characteristic that the unification was not yet rigidly fulfilled; therefore, in this area we can find four variant structural solutions based on these two basic systems. Let us label the individual variants as types 1 to 4. The differences are in the dispositional solutions of the structures and the

types of roof. Since these differences especially affect the physical measurements of the individual constructions, which is the area of our interest, let us describe them in more detail.Type 1 is based on the T11 construction system and 27 structures that are carried out in this way in the given locality (see Fig.2). Constructional and dispositional solutions are in Fig.3 and 4. Type 2 is based on the T12/52 construction system and 11 structures that are carried out in this way in the given locality (see Fig.2). The constructional and dispositional solutions are in Fig.5 and 6 (left side). Within the type 2, two variants were carried out – one with an independent toilet and one with the toilet as a part of the bathroom and with an independent pantry – see Fig.5. The exterior of the structure remained the same.Type 3 is based on the T12/52 construction system and differs from type 2 only in the roof construction, which is, unlike the saddle roof with partial hip ends over the side walls, carried out as in type 1, i.e., a saddle roof with the gable brickwork in the side walls. There are two such structures in the given locality (see Fig.2).

1st Floor

2nd Floor

Ground floor

Fig. 3 Plan of the “type 1” structure with an illustration of two accommodation units

Fig. 4 Rear view of the “type 1” structure

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Type 4 is a completely atypical solution represented by a single structure in the locality. It is a combination of both of the basic systems with several atypical details. To determine the physical range of the components and constructions, it is suitable to use data from the “house technical data list” and the “flat technical data list”. The technical data list also defines the basic composition of the constructions, elements and equipment of the structure and flats. In cases where these data are not available, these areas can be determined to a sufficient degree from the available bases, which are project solutions of the individual construction systems from standardisation anthologies and data collected by means of an on-site inspection. Table 1 shows the decisive measurements that are necessary to be considered in repairs of the common parts of a dwelling house. In combination with the numbers of dwelling houses according to the individual types, we can get an idea about the overall range of

the constructions in the area of interest, which represents the basic base for modelling the future need for refurbishment work (the last column in Table 1).In case we also want to target the segment of owners of flats, it is necessary to increase the scope of our interest by physical measurements of the constructions in the flats. Considering the individual flats, it is necessary to pay attention to the small dissimilarities in the solutions of the flats, thus in the measurements of individual constructions resulting from the position of a flat within the individual sections (side, central) and storeys of the dwelling house, as shown in Fig.7. The picture clearly shows that a total of six types of flats can be identified in the dwelling house, which are labelled A to F.When creating a geographic information system, it is, of course, more suitable to create an information database from the data from the technical data lists individually for each structure, and to

Fig. 5 Plan of the “type 2” structure with an illustration of the two accommodation units

2nd Floor

1st Floor

Groundfloor

Fig. 6 Rear view of the “type 2” structure (left side) or “type 3” structure (right side).

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create the summary data as presented in Table 1 only from the data about the individual structures. In this way we can cover the small dissimilarities among structures of the same type and target the future offers of the refurbishment work truly accurately. The map of structures connected with the information database on the physical measurements of the constructions forms the input for planning the action of a company in this area. However, there has been nothing said thus far about the possibilities of placing one’s production in this area. The segmentation itself does not provide information about the state of the structures and the constructions that will need refurbishment.

3 MODELLING THE REFURBISHMENT WORK MARKET IN A REGION

Everything gets older. Construction objects are not exempt. Buildings are a complex of a large amount of various materials, and each of them withstands the effect of the operation of time differently. Due to getting older and worn, materials lose their original properties and stop functioning according to their projected purpose. Now is the time for the refurbishment of a construction structure.The need for refurbishment work itself arises as a reaction to the wear and tear of a construction structure. The wear of a construction structure is a consequence of the physical wearing of its individual construction parts. Thus, the refurbishment of a construction structure is carried out by the refurbishment of its individual constructions, which is carried out by means of continuous maintenance and repairs. From the results of the previous segmentation, it is assumed that the respective company has its market segment defined. Thus, to determine the potential volume of the refurbishment work market on a single structure means to determine the future occurrences of

malfunctions from the factual (by the range of the malfunction) and time (by the date of the origin of the malfunction) points of view. The high individuality of the construction solution and operating conditions necessarily leads to the need for an individual approach in the modelling of the operation of each construction structure. The basic properties used in modelling the refurbishment processes are the lifespan and wear. Since we will work with them hereafter, let us look at them more closely.

3.1 Lifespan of building constructions

The determination of the lifespan of a building construction has a decisive influence on the determination of the correct degree of the wear of the construction. All methods of calculating wear, based on the use of wear functions, consider wear as a relation between the age and the lifespan of the construction. In this case, the age is, an objectively determined quantity. Therefore, the correct determination of the construction’s lifespan is decisive. For building constructions, the construction practice has empirically observed data about the theoretical lifespan of building constructions at its disposal, e.g. [1]. The aforementioned source provides informative data about the lifespan of more than 300 independent constructions, fixtures and fittings, and equipment of construction structures. However, this only represents the theoretical lifespan level which a construction should reach until it becomes unusable, provided that the construction is impacted by no other influences, except ordinary maintenance. This state, however, seldom occurs. Usually there are several influences which cause the shortening or prolongation of a construction’s lifespan. In this case, to consider the lifespan as a theoretical figure means to ignore effects caused to the construction by its use. They are especially:• the effect of the construction manufacture’s quality• the effect of the environment

2nd Floor

1st Floor

Ground floor

Fig. 7 Division of flats in the dwelling house according to their position.

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Table 1 Physical measurements of constructions determined from the houses’ technical data list according to the individual types of the structures

Number of structurer of the given type in the locality

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• the effect of the quality of the maintenance carried out• the effect of the intensity of the use of the construction • the method of the installation of the construction (material)

At this point let us only mention that the consideration of the aforementioned effects can be carried out by means of the qualitative properties which determine the degree of how each influence is felt in more detail. Generally, this influence can be positive, neutral, or negative, which is represented by the recommended range of additions to and subtractions from the basic lifespan values.To determine the physical lifespan of a construction – T’ means to add to its basic lifespan – T, additions and subtractions according to individual influences – ΣV.

T’ = T + ΣV (1)

3.1.1 Lifespan of a construction after repair

Each technical intervention – the repair of a building construction also has its economic dimension, which can be expressed by repair costs. According to Fig.8 , which is based on the knowledge of the repair costs NO, construction acquisition costs C, construction residual value H and basic residual lifespan TZ, it is possible to determine the lifespan extension ∆T according to the relation (2):

(2)

Determination of the basic residual lifespan TZ is evident from Fig.8, which can be written as:

TZ = T - tO (3)

where tO represents the age of the construction during the repair’s implementation.

The construction residual value H in the repair year will be determined as the difference between the construction acquisition cost C and depreciation Z(tO), according to relation (4), where the construction’s depreciation expressed in Slovak crowns (Sk) corresponds to the construction wear rate in the repair year O(tO), relation (5).

H = C – Z(tO) (4)

Z(tO) = C . O(tO) (5)

The wear and its calculation are described in the next section in detail.The new lifespan after the repair – TO equals the sum of the basic lifespan - T and the extended lifespan - ∆T:

TO = T + ∆T (6)

Thus, such an adjusted lifespan value will be assessed with regards to the influences affecting the construction (expressed in additions and subtractions).

T’ = TO + ΣV (7)

The aforementioned procedure can only be applied if it relates to a construction where the wear is compensated for by cyclical repairs. If a construction is not repaired during its lifespan, but is replaced as a whole, repair costs are not assessed, but such a construction is considered as new as of the replacement date.

3.2 Wear of building constructions

The wear in a given time expresses the concrete technical state of a construction. As a gradual process running over time, it can be formally written, which enables the determination of the wear of a construction at any age of its life. The wear depends on the construction’s age, the objective – physical construction lifespan, and the quality of the maintenance carried out. The relation between the age and the lifespan of a construction is based on the fact that the older a construction is, the higher its wear is. The progression of wear is furthermore affected by the quality of the maintenance carried out.Over the course of time, several methods have been developed for the mathematical expression of the wear progress, which are applied in concrete situations, especially with regards to the quality

Fig. 8 Diagram of the principle of the calculation of the extension of a construction’s residual lifespan by means of repair costs

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of the maintenance carried out. However, there are only three basic methods of calculating wear (from the view of their practical use). They describe the course of wear as:• linear course of wear, as in neglected maintenance

t∈ [0, T] (8)

Generally, it is stated that a straight line does not give a true image of the course of wear in a sufficiently exact way. Especially right after a building is completed and when a construction behaves as if it were new, the calculated wear is too high. At a more advanced age, the linear course of the wear can reflect the technical state of a construction, namely in cases where the wear process is not compensated for by the maintenance carried out. This results in the use of this method, when the construction maintenance is neglected.• semi-quadratic course of wear as in normal maintenance

t∈ [0, T] (9)

The results of the wear when using the semi-quadratic method most faithfully reflect the course of wear in the common use of a construction. As a result, this method is recommended to be used in normal maintenance.• quadratic course of wear, as in very good maintenance

t∈ [0, T] (10)

Wear which occurs very slowly over the first years predetermines the area of the use of this method to constructions with very good maintenance.

3.3 Model of the refurbishment of a building constructions

Let us assume from the previous sections that a construction company is able to predict the development of the wear of building constructions according to the quality of the implemented maintenance by means of relations (8), (9), and (10). What do these simple equations tell us? They unambiguously answer the question of a relation between the construction’s wear, lifespan and age. If we reverse the task, knowing the concrete physical wear that is to be renovated by the repair and the physical lifespan, it is possible to determine the repair year for individual types of maintenance:• for neglected maintenance

to = T’ . O(to) (11)

• for normal maintenance

(12)

• for very good maintenance

(13)

where to – repair year

T’ – physical lifespan of the construction O(to) – wear in the repair year

The procedure for calculating the repair year is described by the following algorithm.Stage 1. Determination of the theoretical lifespan of the construction T.Stage 2. Determination of the physical extent of the repair Fo. The extent of the repair represents an empirically observed recommended value, which, in the event repairs are carried out on a regular basis, ensures conservation of the functional properties of a construction at its original level. The extent of the repair can be from 0% to 100%. In the case that the extent of the repair is lower than 100%, those are constructions which are renovated by repairs. In the case the extent of the repair equals 100%, those are constructions which are not repaired from time to time, but are replaced en bloc. Therefore, individual constructions can be divided into three categories, namely:• N – Constructions and elements that do not require repairs during

the lifespan of the structure. This group especially includes so-called elements of a long-term lifespan, i.e., foundations, vertical constructions, ceilings, staircases and roof trusses.

• O – Constructions and elements that require maintenance and regular repairs. This group includes so-called elements of a short-term lifespan, i.e., plaster, facings, floors, etc. It also includes piece items, e.g., windows and doors, which are repaired from time to time, and their replacement is recommended after their lifespan is over.

• V – Constructions and elements that are not repaired, but are replaced after their lifespan is over. They are especially piece elements like doorframes; constructions and elements where repairs are not possible or purposeful for technological reasons, e.g., tinsmith’s constructions; and constructions and elements where repairs are not carried out for hygienic or aesthetic reasons, e.g. painting, wallpaper, PVC coverings, etc.

At the same time, the wear and tear in the repair year O(tO) is determined by the physical extent of the repair. It is based on the assumption that repairs are carried out in the case of the loss of the construction’s functionality, while the functionality is regenerated

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by the repair to a concrete physical extent Fo [%] in the repair year to, which can be written as

(14)

Step 3. Determination of the real age v of the given structure and hence its individual constructions. In the case that the constructions have already been repaired, it is necessary to determine the year of the latest repair. If the construction has not been repaired, proceed to step 5; otherwise go to step 4.Step 4. Only in the case that the construction has already been repaired during its lifespan! Assessment of the implemented repair(s). In the case of constructions requiring repairs and in the case that the repair has renovated the construction to the recommended (or higher than the recommended) extent, the construction is deemed as new since the repair year, i.e., its age is calculated from the latest repair implemented. In the case that such a repair was not to the required extent, the effect of the repair on the prolongation of the theoretical lifespan is determined according to relation (2). The purpose of this step is to differentiate repairs according to their effect on the construction. In practice it happens

that a small action of a maintenance type or an emergency repair of a local nature, whose contribution to the technical state of the construction is small, is marked as a repair, too.Step 5. Calculation of the physical lifespan of the construction T’ as a prolongation or shortening of the theoretical lifespan due to factors affecting the construction. The basis of the calculation is the theoretical lifespan, or in reasonable cases (step 4), the lifespan adjusted by the effect of the repair implemented. Step 6. Calculation of the next repair year tO according to the quality of the implemented maintenance based on relations (11), (12) and (13).The calculated repair year tO also determines, under stable maintenance conditions, the cycle of future repairs of the construction τΟ. See Fig.9.

3.4 Market share in a geographic area

Let us go back to our geographic area of Bratislava – Stare Krasnany and see when it will be necessary to carry out repairs to the exterior plaster on all the 41 structures monitored. Step 1. The theoretical lifespan T = 40 years corresponds to the material-technical implementation of the lime-cement exterior plaster, which is used on all the structures monitored.Step 2. These are constructions requiring regular repairs. The recommended extent of the repair for the given plaster type is FO = 45%. Thus O(tO) = 0.45. (Note: The value of the theoretical lifespan and the extent of the repair are determined according to [2].)Step 3. In our sample of 41 structures, the age of the construction needs to be divided into two groups:• Group 1: Structures 1 – 32 have their original plaster. The age of

the plaster on the 32 structures is v1 = 2003 -1952 = 51 years.• Group 2: The plaster on structure 33 – 41 were repaired in

1987.Step 4. The extent of the 1987 repair conforms to the recommended Fig. 9 Construction repair cycle

Table 2 Influences affecting the lifespan of exterior plaster in the area monitored

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value of 45%. The plaster on the group 2 structures are considered as new since 1987. The age of the plaster on 9 structures is v2 = 2003 -1987 = 16 years.Step 5. The physical lifespan of the construction is determined by adjusting it by the additions or subtractions according to the effects on the construction in Table 2. The reasons for the individually considered effects are as follows:Effect of implemented repairs: No repairs on group 1 structures; the constructions on the group 2 structures are considered as new since the latest repair year. Therefore, no adjustment is considered.Effect of the quality of the manufacture: For the given implementation period, the construction represents the material standard; no additions are considered.Effect of the environment: The construction gets sufficient sun; the temperature differences in the locality are low; there is no effect from groundwater; the buildings are well aired; the neighbouring buildings and operations do not have negative effects on the structures monitored. The northward sides exposed to more negative atmospheric conditions are clad on all the structures. The effect is considered as favourable with an addition of 5 %.

Effect of the maintenance’s quality: No maintenance of the constructions was carried out. The plaster already falls off the walls, and no refurbishment work has been carried out (Fig.10). A subtraction of 10 % is considered.Effect of the intensity of use: The assessed part of the plaster is not directly exposed to a higher intensity of use. Vandal actions are noticeable only at the level of the socle. The socle, up to the level of the first above-ground storey, is not made of this type of plaster, but is considered as an independent construction made from artificial stone, or cement plaster. The effect is not considered.Effect of the installation method: This is a standard use and implementation of the construction. The effect is not considered.Step 6. With regard to the neglected maintenance, the repair year is calculated according to relation (11):tO = T’ . O(tO) = 38 . 0.45 = 17.1 => 18th year

Outputs:Group 1: The repair should have been carried out in the eighteenth year and subsequently every 18 years. The construction age – 51 years exceeds the basic and objectified technical lifespan of

Fig. 10 The current state of the exterior plaster on the structure in the area monitored. Left: Picture of a structure after repair in 1987. Only some parts of the plaster painting and the upper layer are damaged. Right: Picture of a structure with the original plaster from 1952. The plaster is falling off to a full extent.

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the construction. An on-site inspection confirmed the inadequate condition of the plaster. Whole pieces of plaster are falling off. An immediate refurbishment to the full extent of 100 % and preparation of a bid for implementing repair in 20042 is necessary. Since the external cladding does not meet the current thermo-technical norms, it is necessary to work out an alternative bid for simultaneous thermal insulation of the facade, too.Group 2: It will be necessary to carry out repairs in two years (18 - 16 = 2), i.e., in 2005. For that it will be necessary to prepare a bid for the repair of the plaster to the extent of 45%, as well as the alternative with the simultaneous thermal insulation of the facade. The bid should be addressed in advance together with a proposal to develop a financial plan of the assurance and creation of resources for the repair together with the bid.For both groups, the owners should be notified that in the case of unchanged maintenance, the next repair will be necessary in 18 years, and a variant solution of the facade should be submitted in another material and for higher - quality maintenance with an impact on the assumed postponement of the repair’s implementation.

Market share in a geographic area:The total market potential is characterised by the need for an implementation of the repair on four variants of structures defined in the geographical area monitored. Structure No. 23 (Hubeneho St. 22-24-26) has a special position, where the area of the exterior plaster is reduced to two - thirds, since the first storey is completely thermally insulated. The remaining two storeys have the original plaster from 1952. The total extent of the work in the locality is clearly presented in Table 3.

4 PRICING THE REFURBISHMENT WORK

To complete the refurbishment model of the construction work with the independent item of the pricing of the refurbishment work is needed from the viewpoint of the construction company’s requirements as well as from the viewpoint of the customer – the construction structure owner. In addition to the need for pricing the refurbishment work for the determination of the total market potential, the need for determining the price of each individual repair also emerges, which has a decisive importance in formulating the bid for the customer. It is not enough for the bid to react to the need for refurbishment with its definition only from the viewpoint of the technology, extent, and term, but it is also necessary to quantify the financial demands of the refurbishment activity. The issue of pricing the refurbishment work represents an independent area; therefore, let us only mention here that in the presented refurbishment model (Fig.11), it forms an independent part, which consists of the following steps: • Defining the repair structure according to the variant solutions by

taking different qualitative standards of the repair into account.• Pricing the repair and maintenance. • Taking the viewpoint of time in the pricing of the refurbishment

work into consideration.• Quantification of the advantage of better quality care for the

construction structure.When considering the repair of the exterior plaster according to the original solution, the repair costs were determined with a budget per square meter of wall. Based on this, the total market potential in the area is set forth in Table 4.

Table 3 The extent of the required repairs to the exterior plaster in the area monitored

2 With regards to compiling the example in November 2003, implementation in winter 2003 is not considered.

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5 CONCLUSION

The complex model of the system called the “refurbishment work market” can be outlined as a sequence of steps as shown in Fig.11. The background is the geographic area, which we are required to learn the market potential of. The area is subject to two stages of decomposition. In the first stage, individual construction structures are identified in the area. For further processing, they are divided into groups according to their construction systems and types so that it is possible to carry out further calculations collectively for groups with identical characteristics. In the second stage, individual building constructions and technical equipment are identified. The calculation algorithm itself is applied to each building construction or piece of technical equipment individually. Subsequently, the whole system is subject to two stages of composition. On the first stage, constructions are again “joined” into a whole represented by one construction structure. The set of information about the individual constructions forms the schedule of the construction structure’s repairs, and it provides the construction company with the data for submitting a bid for repairs to the owner (administrator) of this structure. In the second stage of the composition, the information for an individual construction structure are summarised for all the structures in the area monitored. In this way we get the total market potential in the geographical area monitored.The refurbishment model together with the costs model described above can serve in the creation of individual operational manuals for each individual structure. The use of the model for all the structures in the region would mean individually describing all the construction structures in the region, which could be an unfeasible

task from the viewpoint of the extent of the given region. Therefore, for such a use the model is suitable only in the case of mass housing construction, or in the case of the entry of a construction company onto a segment of administration organisations. In such a case it is almost inevitable that the administrator approach each non-standard structure individually.A collection of mass housing construction structures indicates the best prerequisites for the use of this methodology, especially due to:• spatial concentration, or rephrased, the same effect of climatic

conditions onto the construction structures can be stated• standardisation of these structures, i.e., the use of the same

construction materials and constructions; therefore, the same development of the wear of these constructions

• the low variety of the construction systems used• the common administrators of these structures; hence, the same

type of construction maintenance• at the same time, it could be seen as a very lucrative market,

insofar as both the extent and the financial effect of refurbishment work are concerned.

Taking the above into consideration, the number of structures monitored can be broadened into several characteristic groups, the construction systems of construction structures and their modifications, for which a common model can be formed. Then, several individually calculated characteristics provide information about tens of structures in the region, which positively gives this paper a practical serviceability. The methodology proposed in this way combines field market research with desk research and thus creates a full-fledged

Table 4 The market potential of the repair of exterior plaster on structures in the Stare Krasnany housing estate.

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Fig. 11 A complex model for the refurbishment of a construction structure and the determination of the market potential in a geographic area

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methodology for the determination of the market volume in a region. From the viewpoint of the field research it is especially necessary:• to determine the actual physical wear of the construction

structures by means of an expert on-site inspection• to obtain the necessary biographical characteristics of the

structure as well as its individual constructions• to determine the extent of neglected and unimplemented repairsFrom the viewpoint of desk research it is especially necessary:• In the preparation stage, to group the same types of construction

structures with the same type of construction maintenance; hence, to create an input data database.

• For individual groups of construction structures, to set up a plan of repairs and record the calculated data in a summary table sectioned according to particular constructions and technical equipment for each year of the operation of the construction structure.

• According to the year of the final approval of the construction structure it is necessary to "place" the "common model" of one

construction type of the structure on a timeline so that the needed data about the repair year are matched with the actual calendar.

The collected data can be used to address specific customers with a bid for refurbishment work, namely in advance of the formation of the malfunction itself and thus to call attention to the necessity to carry out this repair in the future. The construction company thus has a tool which will enable it to increase its success in searching for and winning orders. Of course, an objection could be that the results which the construction company wins by applying the presented methods, represent only the technical-economic part of the factors which affect the formulation of the customer’s requirements in the form of a particular demand for construction work. The effect on other factors influencing the purchasing decision-making of the customer should be left to the company management. Even if we trivialised such an asset to a maximum amount, its practical impact is at least the fact that the construction company does not discharge its potential by submitting a high amount of bids with little probability of success, but targets the customer with a high probability of its bid being accepted.

REFERENCES

[1] Kolektív autorov (1999) Životnosť stavebných materiálov a konštrukcií bytového domu (Lifespan of construction materials and dwelling house constructions), Ministry of Constructions and Public Works of the Slovak Republic, Bratislava, ISBN 80-88997-02-X

[2] Orientačné ukazovatele pre plánovanie a realizáciu údržby a opráv v družstevnom bytovom fonde (Benchmark indices for planning and implementation of maintenance and repairs in the Cooperative Housing Fund, Specific publication of the SZBD), DRUPOS Bratislava, 1985

[3] Sternová, Z. et al. (2001) Obnova bytových domov, Hromadná bytová výstavba do roku 1970 (Dwelling house refurbishment; Mass housing construction before 1970), Jaga Group, Bratislava, ISBN 80-88905-53-2

[4] Sternová, Z. et al. (2002) Obnova bytových domov II, Hromadná bytová výstavba po roku 1970 Dwelling house refurbishment II; Mass housing construction after 1970), Jaga Group, Bratislava, ISBN 80-88905-68-0

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