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Buildings 2014, 4(4), 785-805;

Valuing Indoor Air Quality Benefits in a Healthcare Construction Project with Real Option Analysis

Department of Real Estate, Planning and Geoinformatics, School of Engineering, Aalto University, P.O. Box 15800, FI-00076 Aalto, Finland
Author to whom correspondence should be addressed.
Received: 14 August 2014 / Revised: 15 October 2014 / Accepted: 16 October 2014 / Published: 24 October 2014
(This article belongs to the Special Issue The Impacts of the Building Environment on Health and Well-Being)
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Indoor air quality (IAQ) can produce significant economic benefits for the tenant during the use of the building. However, currently the potential economic benefits on a tenant’s employees’ health and performance are not considered in feasibility studies for IAQ investments. Here, the economic value refers to benefits that can be expressed numerically in terms of money such as cost savings and increased revenues and that which impacts the building user organization’s financial profitability. This paper is one of the first known studies to explore real option analysis (ROA) as a potential approach to evaluate the life-cycle profitability of investments in IAQ. The research is carried out as a case study, which is a healthcare construction project in Finland. The main finding of this paper is that ROA seems to provide a viable method for the evaluation of investments in IAQ. In the case study, the economic benefits of IAQ to the tenant are noticeable. The real option value of the economic benefits of better IAQ is almost 4 million euros and the real option pay-off of the IAQ investment exceeds 0.5 million euros. The results are indicative only but imply that ROA is a promising method to evaluate investments in IAQ. View Full-Text
Keywords: construction; indoor air quality (IAQ); real options construction; indoor air quality (IAQ); real options

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This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited (CC BY 4.0).

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Kajander, J.-K.; Sivunen, M.; Junnila, S. Valuing Indoor Air Quality Benefits in a Healthcare Construction Project with Real Option Analysis. Buildings 2014, 4, 785-805.

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