Search Results (2)

The cost segregation study is a tax planning strategy employed to optimize cash flow by redefining real estate assets as personal property and land improvement, enabling accelerated tax depreciation. However, conventional cost segregation practices suffer from limitations, such as time-consuming procedures and high associated costs, which hinder their effectiveness. To overcome these challenges, this paper presents an innovative strategy that integrates Building Information Modelling (BIM) to develop an automated cost segregation system. The research aims to optimize the workflow by developing a BIM model and using 5D BIM to perform a cost segregation study by categorizing building elements under a Modified Accelerated Cost Recovery System (MACRS). This workflow aims at minimizing the time and financial resources expended with traditional methodologies. The proposed workflow enables precise identification and separate depreciation of building components, resulting in significant tax deductions that would otherwise be unattainable. The results indicate that performing cost segregation with BIM leads to a significant increase in depreciation amounts, particularly during the initial six years, while also raising the net present value of depreciation by 45%. The integration of BIM technology facilitates effective management and sharing of cost segregation data among stakeholders, enhancing collaboration and decision-making throughout the project lifecycle. Owners can optimize cost management and financial planning, identifying tax-saving opportunities and improving cash flow. General Contractors (GCs) can leverage the system during the bidding process, enhancing their competitiveness and project acquisition potential. Future research can explore the integration of cost segregation modules from BIM with asset management tools, enabling improved facility and fiscal management of building components. Such integration holds promise for enhancing the construction and real estate industry’s overall efficiency and performance. Full article

With the negative climate impact of fossil fuel power generation and the requirement of global policy to shift towards a green mix of energy production, the investment in renewable energy is an opportunity in developing countries. However, poor economy associated with limited income, funds availability, and regulations governing project funding and development are key factors that challenge investors in the energy sector. Given the various power generation resources, including renewables, it is necessary to evaluate the possible power generation investment options from an economic perspective. To realize this objective, solar PV, wind and diesel power generations are economically compared, considering the incremental rate of return and incremental benefit to cost ratio techniques. The alternative investment options of distributed generation technologies are evaluated for Maharashtra, India under different depreciation methods, and the effect of the latter on selecting the best investment candidate is investigated. The paper also conducts sensitivity analysis to examine the impact of capital cost, operation and maintenance cost, and fuel cost variations on the selection decision considering a comparison of the different general projects’ cash flow structures discussed in the literature. The economic aspects of selecting a project among possible alternatives for an investment in the power sector are analyzed, and the presented review provides comprehensive comparisons with respect to the literature approaches. The results reveal that, in the benchmark case study, the PV project is rejected and disregarded from further comparisons with other candidate projects since its equity internal rate of return (10.25%) is less than the minimum accepted rate of return, leaving the selection between wind and diesel energy projects. The study reveals that the incremental rates of return under such a comparison are 37.88%, 45.94% and 37.50% when MACRS, declining balance and straight line depreciations techniques are applied, respectively. Thus, the wind energy project is the favored option in this case. For the economic assessment of other case studies, the application of both sensitivity analysis on the capital cost and operation and maintenance cost and literature approaches to structure the projects reveal that wind energy for Maharashtra, India is a more attractive and feasible option compared to other distribution generation projects, while diesel is only considered to be a good option when its fuel cost is reduced by 5%. Finally, the paper highlights policy implications that can influence the decision to move towards investment in distributed generation technologies as a future research direction. Full article