Domande esame Technical assessment

1) Define and exemplify the concept of environmental impact

The environmental impact is defined by the ISO 14001 standard as any change to the environment, whether adverse or beneficial, wholly or partially resulting from environmental aspects (activities, products, services that can interact with the environment) of an organization. It can be: positive or negative, short-term or long-term, reversible or irreversible, direct (primary) or indirect (secondary), critical (negative or positive).

The human action of an organization has an impact on so-called environmental components, category of physically identifiable elements that make up the environment considered, such as: the atmosphere and climate, water environment, soil and subsoil, vegetation and ecosystem and finally the human environment itself.

Examples: construction of a dam that severely alters the ecosystem, air pollution due to emissions from industry, noise pollution, pollution from electromagnetic fields, radiation, increasing the concentration of salts in the soil, raising the temperature of the seas, the consequences of deforestation.

2) Describe the environmental components

Describe the environmental components (defined as areas of interest and attention in the preparation of environmental impact studies).

In Italy the characterization of the environment is based on the list of the main natural and anthropic components indicated in D.P.C.M. 27 December 1988 (based on information supplied by the European Directive 337/85). In particular in the drafting of an Environmental Impact Study, assessing the effects of the work on the environmental system, the components that are evaluated are: atmosphere, water environment, soil and subsoil, vegetation, flora, fauna, ecosystems, public health as individuals and communities, noise and vibration, radiation, landscape.

3) Define and illustrate the concept of environmental impact

Define and illustrate the concept of environmental impact. So exemplify the relationship between source of impact, impact and indicators for the evaluation with reference to at least 2 environmental components.

The environmental impact is defined by the ISO 14001 standard as any change to the environment, whether adverse or beneficial, wholly or partially resulting from environmental aspects (activities, products, services that can interact with the environment) of an organization.

The environmental impact may be positive or negative, reversible or irreversible, direct or indirect, short- or long-term, critical.

For example the activity of a steel industry: emits CO2 into the atmosphere during the production of steel (source of impact 1), consumes much electric energy for the operation of the furnace (source of impact 2), it uses raw materials which come from the underground (impact source 3).

The impacts of the sources are: the atmosphere and climate (1), has an indirect effect on the atmosphere (plant emissions) and subsoil (extraction of non-renewable resources), underground (3).

The key indicators that refer to the three impacts are: total greenhouse gases in tons CO2/year (1), the total direct consumption of electricity in MWh/year (2), ores consumption in tonnes/year (3).

4) Define and exemplify the concepts of environmental component and environmental impact

The environmental impact is defined by the ISO 14001 standard as any change to the environment, whether adverse or beneficial, wholly or partially resulting from environmental aspects (activities, products, services that can interact with the environment) of an organization. It can be: positive or negative, short-term or long-term, reversible or irreversible, direct (primary) or indirect (secondary), critical (negative or positive).

The human action of an organization has an impact on so-called environmental components, category of physically identifiable elements that make up the environment considered, such as: the atmosphere and climate, water environment, soil and subsoil, vegetation and ecosystem and finally the human environment itself.

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The D.P.C.M. 27 December 1988, based on the European Directive 337/85, which defines the environmental components to be considered in the preparation of an Environmental Impact Study, also adds categories: public health, noise and vibration, radiation, landscape.

For example the activity of a steel industry: emits CO2 into the atmosphere during the production of steel (source of impact 1), consumes much electric energy for the operation of the furnace (source of impact 2), it uses raw materials which come from the underground (impact source 3).

The impacts of the sources are: the atmosphere and climate (1), has an indirect effect on the atmosphere (plant emissions) and subsoil (extraction of non-renewable resources), underground (3).

5) Describe the difference between degradation and obsolescence

Describe the difference between the concepts of degradation and obsolescence, and how these concepts must be taken into account in the context of a due diligence.

The degradation is the progressive decay of the physical integrity (alteration) and/or of the performance efficiency (performance decay) of a building component. There are two types of degradation: durability degradation is produced by the usual degradation phenomena given by the agents’ action and linked to reaching of the foreseeable service life end, while pathological degradation is produced by defects caused by mistakes of design, execution or management and it comes before the foreseeable service life end.

The obsolescence instead refers to a change in the expected quality level. There are three types of obsolescence:

• Functional: items become functionally obsolete when they can no longer adequately perform the function for which they were created.
• Technological: a new product or technology supersedes the old, and it becomes preferred to use the new technology in place of the old.
• Economic: dependent on the dynamics of developments in the housing market on certain types of buildings.

In the context of a due diligence, the obsolescence is considered in the investment plan as a future development of the assets, while the degradation is considered as a possible discount on the sale price.

6) List and describe the main areas of risk

List and describe the main areas of risk associated with the acquisition of real estate assets that can be identified by the due diligence.

Risk is defined in ISO standard 73 as the effect of uncertainty on objectives. An effect is a deviation from what is expected in both positive and negative. Goals can touch different themes (financial, health and safety, environmental, etc.) and can be explored at different levels (strategic, organizational, project, product and process). You can identify three areas of risk during the due diligence process:

• Economic and financial risk: typically considers its strategic and operational aspects of the activity performed by the company being acquired.
• Legal risk: it can relate to civil damages as a result of damage caused by defective products or criminal proceedings due to accidents at work or environmental crimes.
• Technical Risks: can relate to the degradation of the property and their obsolescence or the state of efficiency and safety of installations or the environmental aspects of its activities or territory related to real estate.

7) Describe the concept of benchmarks

Describe the concept of benchmarks in the context of due diligence. List, also with examples, the possible sources that can be used to define the reference criteria for the inspection in the context of a due diligence.

Evaluation means to compare what is with what should be. The "what should be" meets the benchmarks that during the due diligence are taken into account by the professional team. They may be national laws, European regulations, voluntary technical standards (UNI, EN, ISO), the specific requirements expressed by the client.

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For example, as regards the inspection activities of the plants in a building it is essential to deal with: D.M. 37/2008 (declaration of conformity systems), D.P.R. 162/99 (elevators), D.P.R. 74/2013 (air conditioning), D.P.R. 462/2001 (electrical grounding systems), etc.

8) Describe the concepts of due diligence of first, second and third part

Describe also with examples the concepts of due diligence "of first, second and third part" identifying possible subjects intervening, the contextual conditions in which these activities can be carried out and their purpose.

Due diligence is the process analysis of the conditions of an asset for a potential transaction before