Authors: Janhavi Bhat, Madhav Kadam
DOI Link: https://doi.org/10.22214/ijraset.2023.53472
Certificate: View Certificate
Over time, mass housing projects have emerged as a solution to the problem of urban housing shortage, especially for MIGs and EWS, and continue to do so. Housing is an important indicator of development and mass housing is related to Sustainable Development Goals (SDGs). Along with adequate numbers of houses, basic amenities are the fundamental requirement of comfortable living. A major portion of urban infrastructure is constituted by power. In the year 2022, India faced acute power crisis when daily peak power shortage rose to 10,778 MW and energy deficit reached 5% at the national level. To deal with the shortage of conventional sources of energy, India had set a target in 2016 to reach 175GW of renewable energy by 2022 and by April 2022 it had 95 GW of solar and wind power thus missing its target by 51 GW. Investment decisions of the key stakeholders of mass housing project have heavily relied on the initial construction costs, government subsidy schemes and solving the problem of urban housing shortage. While climate change and energy crisis are a reality today, investments in sustainable development are slow due to the high initial costs. It is necessary for all the stakeholders – from developers to clients, to shift their attention to the long-term performance of a building which includes operational and maintenance costs. This study compares two alternatives of a mass housing project located in Navi Mumbai. To analyse the profitability of the project and its proposed alternative, Net Present Value or NPV is used. NPV is regarded as the best method to evaluate various building-related options. The total NPV of the project in case 1 at 50 years is 22,28,86,442 Rs. This value is then compared with that of case 2.
I. INTRODUCTION
A. General
According to the 2011 Census, 30% of India’s population lived in urban areas and is expected to reach 40% by 2030. The fast-paced migration of people from rural areas to urban areas in search for better work opportunities and living conditions leads to an ever-increasing demand for housing in the country’s cities. However, there is a big gap in demand and supply of housing – both in terms of numbers and quality. Pradhan Mantri Awas Yojana – Urban, a flagship mission of GoI implemented by Ministry of Housing and Urban Affairs addresses urban housing shortage among EWS/LIG and MIG categories.
Over time, mass housing projects have emerged as a solution to the problem of urban housing shortage, especially for MIGs and EWS, and continue to do so. Housing is an important indicator of development and mass housing is related to Sustainable Development Goals (SDGs). Along with adequate numbers of houses, basic amenities are the fundamental requirement of comfortable living. A major portion of urban infrastructure is constituted by power. In the year 2022, India faced acute power crisis when daily peak power shortage rose to 10,778 MW and energy deficit reached 5% at the national level. To deal with the shortage of conventional sources of energy, India had set a target in 2016 to reach 175GW of renewable energy by 2022 and by April 2022 it had 95 GW of solar and wind power thus missing its target by 51 GW.
The Ministry of New and Renewable Energy had set a target of 100 GW of grid-connected solar power by 2022. Government of India launched various schemes to encourage generation of solar power which includes Solar Rooftop System. According to Rooftop Solar Market Q3 Report by Mercom Research India, the cumulative rooftop installations at the end of Q3 2022 reached 8.3 GW. With 23% of total capacity Gujarat became the leading state in solar rooftop installations followed by Maharashtra and Rajasthan. Approximately 73% of the cumulative solar rooftop installations were contributed by the top 10 states.
With the increasing awareness of employing solar rooftop solutions for power generation, many builders and developers are designing residential projects as well as mass housing projects integrated with solar rooftop systems.
It is thus necessary to evaluate the available alternatives from an economic perspective of the project throughout its lifetime.
B. Life Cycle Cost Analysis
Unlike other economic methods, life cycle cost analysis significantly assesses the long-term cost effectiveness of a project by considering initial investment costs, different operating, maintenance, and repair (OM&R) costs. NIST defines LCCA as an economic method of project evaluation in which costs arising from owing, operating, maintaining, and ultimately disposing off a project are considered potentially important for the decision. Energy conservation projects are best examples of application of LCCA. As a direct contrast to the Payback method, LCCA focuses on the time value of money. It is ideal to be applied in cases where the high initial costs are traded for reduced cost obligations in the future. LCCA is extremely useful in decision making when a project comes up with different alternatives that meet all the necessary performance necessities but differ in their initial and operating costs. Though, this method is ideal for comparison between alternatives it is not used for the purpose of budget allocation.
1. Advantages of Life Cycle Cost Analysis
a. Enables to understand the long-term worth of any project or asset.
b. Reduces the financial risks in the long-term.
c. LCC is a required credit in many of the green certification programmes.
2. Disadvantages of Life Cycle Cost Analysis
a. With new technological advancements and additional attributes, LCCA technique has become complex.
b. Insufficient and fluctuating data due to advancements with time.
c. Inflexible method that does not adapt with market change.
C. Need of Study
Investment decisions of the key stakeholders of mass housing project have heavily relied on the initial construction costs, government subsidy schemes and solving the problem of urban housing shortage. Data suggests the dire need of making these settlements livable and at the same time provide for amenities that deal with the new age problem of energy crisis. This includes installing solar rooftop system for power generation which is one of the crucial part of Government’s initiative in promoting use of solar energy, an alternative to conventional energy sources. While climate change and energy crisis are a reality today, investments in sustainable development are slow due to the high initial costs. It is necessary for all the stakeholders – from developers to clients, to shift their attention to the long-term performance of a building which includes operational and maintenance costs.
D. Objectives of Study
II. LITERATURE REVIEW
Some theoretical and analytical investigations performed for the research are listed below.
The total NPV for the case 1 of the project is positive. Hence the project is feasible and developer may accept it. The results from case 1 are then compared with case 2 for choosing the best alternative.
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Copyright © 2023 Janhavi Bhat, Madhav Kadam. 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.
Paper Id : IJRASET53472
Publish Date : 2023-05-31
ISSN : 2321-9653
Publisher Name : IJRASET
DOI Link : Click Here