New residual value methodology makes circular school buildings financially and sustainably feasible

For good educational housing that contributes to the Dutch climate goals, circular construction is essential. As long as the residual value of school buildings is not included in business cases and financing, that added value remains invisible. A new generic national standard for calculating circular residual value now changes this. The methodology was presented during real estate exhibition Provada.

The calculation method for circular residual value was developed within the Educational Housing Program (POHV), commissioned by the Ministry of Education, Culture and Science, and initiators Association of Dutch Municipalities, PO Council and VO Council, with substantive support from Ruimte-OK. The POHV aims for all school buildings in the Netherlands to be healthy, educationally adaptive, energy neutral and affordable in use. Circular construction - where products and materials are designed to retain their value and waste is minimized - is the starting point. This added value is often not included in the accounts. As a result, on paper circular schools are still financially unattractive for municipalities and educational institutions.

A uniform approach

Until now, different parties have used different methods to estimate circular residual value. This makes comparison difficult and hinders accounting-technical processing. The new circular residual value methodology offers an objective, transparent and widely applicable calculation method. The method calculates the residual value of products, elements or modules based on the construction costs, minus costs such as disassembly and transport. This makes the outcome verifiable and usable for a variety of school buildings. The methodology is now widely supported by financiers, cost specialists and accounting firms.

"Circularity only becomes attractive if you can demonstrably and reliably show what the residual value is. This methodology makes the residual value of a building tangible, calculable and applicable. Henk ter Elst, Opgavemanager Duurzaam Veenendaal, Municipality of Veenendaal.

The added value of residual value

By making the residual value transparent at the outset, it can be included in both the investment case and the financing. An important step in this is the role of a cost specialist who objectively and verifiably determines this residual value so that accountants can incorporate it into the financial statements. This leads to both lower capital and financing costs and makes circular construction not only more sustainable, but also more feasible. The methodology builds on the successful approach Invest-NL previously developed with VRO for circular flex housing.