2. The indicators by macro-objective
6.2 Indicator of value creation and risk factors
6.2 Value creation and risk factors The potential for a positive influence on a market valuation
Reliability rating of a Level(s) assessment Calculation of the technical rating
This indicator relies on the gathering of the two types of results from each of the other indicators and life cycle scenarios:
o Valuation checklists: The information gathered from each of the two checklists per indicator is intended to provide an outlook on the potential for a positive influence of improved sustainability performance on a property valuation.
o Reliability ratings: The results of the ratings are intended to provide a semi-quantitative assessment of:
- the reliability of a Level(s) performance assessment,
- the professional capabilities of those carrying out a performance assessment, and
- the extent to which the results have been third party verified.
The checklists are to be completed following the guidance provided for each indicator and scenario. Guidance is then provided in 6.2.2 as to how ratings from individual indicators can be aggregated to present an overall report for a Level(s) assessment.
6.2.1 The potential for positive influence on a market valuation 6.2.1.1 Using the reporting checklists
The reporting for this first component of indicator 6.2 comprises two checklists which are to be applied to each of the indicators in the Level(s) framework. It is envisaged that these checklists are used by valuation professionals.
The first checklist identifies three potential influences on project costs, revenues and exposure to risk. The user shall identify which have been evaluated for the relevant indicator, and if so, what the resulting assumptions were.
The second checklist requests that the criteria used to appraise the property value are identified. The criteria and sub-criteria which are considered to have been influenced by the performance assessment shall be identified. Notes shall be provided on the extent of the influence and the supporting assumptions.
The completed reporting may be used separately to report on the result for individual indicators or scenarios, or may form part of the overall reporting for indicator 6.2.
6.2.1.2 Suggested reporting format
Checklist 1 – Evaluation of potentially positive influences on the market performance
182 Potential influence Evaluated? Resulting assumptions used in the
appraisal Potential influence 1
Increased revenues due to market recognition and lower void rates.
Yes/no
Potential influence 2
Reduced operational, maintenance, repair and/or replacement costs.
Yes/no
Potential influence 3
Reduced future risk of increased overheads or loss of income.
Yes/no
Checklist 2 – Accounting for a Level(s) assessment in the valuation criteria used
Valuation criteria
set used Identify the scheme or tool used
Version of the criteria set used
Indicative example Valuation criteria
set used VOB (Germany) Version of the
criteria used 2005
Criteria which the assessment has influenced Influence on the valuation or rating Valuation criterion Sub-criterion
Criterion x Sub-criterion y Notes on the extent of the influence and the supporting assumptions used
Indicative example EU Level(s)
framework indicator or scenario
Valuation or risk rating criteria influenced Valuation criterion Sub-criterion Scenario 2.2.1 Design
for refurbishment and adaptability
Quality of the property
cash flow Tenant and occupier situation:
duration and structure of rental contracts
Letting prospects Vacancy/letting situation Usability by third parties
183 6.2.2 Reliability rating of the performance assessment
6.2.2.1 Calculation methodology
Each indicator reliability rating consists of three separate ratings:
1. Technical rating - the extent to which performance optimisation aspects listed for Level 3 have been implemented. The aspects relate to the time, geographical or technical representativeness of the data and/or the
precision of the calculation method used.
2. Professional capability - the professional capabilities of the personnel carrying out the performance assessment for a given indicator or scenario, 3. Independent verification - the extent to which the input data and
calculation steps have been audited and third party verified.
The first rating is an aggregation of a number of ratings. It shall be determined from the arithmetic mean of the rating scores for each of the Level 3 performance optimisation aspects listed for a given indicator. If a performance aspect is not addressed, a zero score is assigned. The format used to present the rating of aspects for each indicator is shown in table 6.2.1.
Table 6.2.1 Format for the presentation of a semi-quantitative reliability rating
Rating aspect Brief description
of the aspect Rating score
(reflecting the degree of representativeness)
0 1 2 3
1. Time
representativeness aspect
Description of the
aspect Aspect not
addressed
2. Geographical representativeness aspect
3. Technical representativeness aspect
Indicator x.y
Indicator Reliability Rating
Resulting IRI
The Indicator Reliability Index (IRI) for each technical rating shall be calculated from the individual ratings as follows:
IRI = (𝑇𝑒𝑅 𝑚𝑖𝑛{𝑟𝑎𝑡𝑖𝑛𝑔 𝑎𝑠𝑝𝑒𝑐𝑡𝑠})+(𝐺𝑅 𝑚𝑖𝑛{𝑟𝑎𝑡𝑖𝑛𝑔 𝑎𝑠𝑝𝑒𝑐𝑡𝑠})+ (𝑇𝑅 min{𝑟𝑎𝑡𝑖𝑛𝑔 𝑎𝑠𝑝𝑒𝑐𝑡}) 3
Where:
TeR = Technical Representativeness GR = Geographical Representativeness TR = Time representativeness
The lowest score for each of the three types of rating aspect shall be used to calculate the arithmetic mean of the reliability.
184 The scales for the rating of professional capabilities and independent verification are provided below.
Table 6.2.2 Format for the professional capability rating
Rating aspect Rating score
0 1 2 3
2. Technical capability of the personnel carrying out the assessment(s)
No formal training and limited experience in using the calculation method
Formal training or some applied experience in using the calculation method
Formal training and some applied experience in using the calculation method
Formal training and significant applied experience in using the calculation method
Table 6.2.3 Format for the independent verification rating
Rating aspect Rating score
0 1 2 3
3. Independent verification of the assessment
Self-declaration of the performance assessment results
Peer review of the input data and calculation steps
Third party auditing and verification of the calculation steps
Third party auditing and verification of the input data and calculation steps
6.2.2.2 Suggested reporting format
The reporting format requires users to report on the ratings made for all the indicator s selected for reporting by users of Level(s). For each performance assessment carried out, the results of each of the three ratings (technical, professional capability and independent verification) shall be reported on using the ‘traffic light’ scale provided. The colour code corresponds to the same categories as for the rating score.
Indicator 6.2 reporting format
Reliability ratings for each performance assessment Indicator or scenario 1.
Technical reliability rating
2.
Professional capabilities rating
3.
Independent verification rating
Indicator x.y Colour coded
rating result Colour coded
rating result Colour coded rating result Rating key:
Rating aspect not addressed Low
Medium High
185 Overarching assessment tool 7: Cradle to cradle Life Cycle Assessment (LCA)
Cradle to cradle LCA Where to find the guidance for each Level Level 1 common performance assessment Level 2 comparative performance assessment Level 3 performance optimisation assessment Valuation influence and reliability rating (all levels)
The Level(s) framework seeks to address the life cycle environmental impacts of buildings in an integrated way. The quantitative assessment of the environmental impacts of a building using Life Cycle Assessment (LCA) is recognised at EU level as the best method to achieve this.
Whilst LCA was noted under macro-objective 2 as a method to assess the significant environmental impacts of building materials, LCA is promoted as an overarching method to assess performance within the Level(s) framework.
This section provides a toolkit to make LCA more accessible to new users. Guidance is provided on how to define the scope, boundaries, functional equivalent, time-related characteristics and scenarios required to carry out an LCA. Data quality is also addressed.