טכניון מכון טכנולוגי לישראל
הטכניון מכון טכנולוגי לישראל - בית הספר ללימודי מוסמכים  
M.Sc Thesis
M.Sc StudentRan Broides
SubjectNational Master Plan No.38 (NMP for Seismic Strengthening
of Existing Structures): Case Analysis of
Financial Feasibility and the "Top
Floor" Barrier in
DepartmentDepartment of Architecture and Town Planning
Supervisor Dr. Ben-Shahar Danny
Full Thesis text - in Hebrew Full thesis text - Hebrew Version


Abstract

A high probability of earthquake occurring in Israel has led in 2005 to the formulation of a National Master Plan for seismic strengthening (NMP 38). The purpose of NMP 38 is to encourage the private sector to take action to strengthen buildings, while balancing this need against the need to identifying financial resources. In practice, it seems that implementation of the Plan has encountered many barriers.

The paradox between the great potential of NMP 38 and its non-implementation in practice raises the research questions - What is the value of the financial incentive for the entrepreneur in NMP 38 in the cities of Tel Aviv, Ramat Gan and Givatayim? And, is there a greater resistance to implementing NMP 38 among tenants of the top floor - particularly, is there a ‘top floor’ barrier in the surveyed buildings in the cities of Tel Aviv, Ramat Gan, Givatayim and Petah Tikva?


This research examines the ‘financial pie’ of NMP 38, namely the budgetary components in calculating the profitability of such a project for the entrepreneur using Cost-Benefit Analysis (CBA). We offer a tool for calculating financial profitability of a project by summarizing the components of costs and incomes of a potential NMP 38 project. The research also examines the correlation between the willingness of tenants to participate in the project and the floor on which they reside, based on a survey among 65 tenants in 4 buildings.


Research findings show that the incentive for the entrepreneurs under NMP 38 project is limited. An examination of two scenarios for each of the five projects that were examined by entrepreneurs indicates a 5% to 24% return-on-investment when additional 1.5-floors are permitted. An additional floor (i.e. additional 2.5-floors in total), however?as permitted by the third modification of NMP 38?raises the return-on-investment to 18%-24% and thus places all projects in a range of reasonable entrepreneur profitability. Also, outcomes of our survey show that tenants of the top floor often require greater compensation under NMP 38?hence, potentially produce a “top-floor” barrier for the project.


In view of the research findings, it seems advisable to examine the need to increase the incentive offered by NMP 38 and to create a differential compensation mechanism to different residential units. This might minimize the barrier and lead to seismic strengthening of more numerous structures.