RCAs

Question 1

What should be established prior to taking an RCA instruction?

Answer 1

• What is included within the “building”. Whether fixtures and fittings are to be included. This should be documented prior to proceeding with the instruction so that it can be reviewed at a later date if need be
• Any specific exclusions
• Base date
• Existing info - plans, O&Ms etc.

Question 2

What is the RICS position on desktop RCAs?

Answer 2

The guidance note does not cover desktop RCAs, and therefore they should be recommended against if possible

Question 3

What is the most common basis for RCAs to be prepared on?

Answer 3

A total demolition and reinstatement basis, Day One calculation

Question 4

How regularly should RCAs be reviewed?

Answer 4

If no major alterations are made to the property, the amount should be adjusted annually to take account of inflation, and a full review should be carried out every three years

Question 5

When inspecting a property for a RCA what should be surveyed and established?

Answer 5

• General overview of the building, ensure client description matches demise etc.
• Assess the age of the building (approx. acceptable if no certainty provided)
• Assess surroundings for any possible restrictions to demolition and re-building
• Likely presence of deleterious materials (will increase demo cost)
• Take notes, photos and measurements

Question 6

What information must your notes photos and measurements provide during an RCA inspection?

Answer 6

• Layout of the building
• IPMS2/GIFA of each construction type
• Schedule of accommodation use
• Summary of building structure, construction types, eaves/ceiling height, finishes
• Summary of building services
• Summary of externals (incl boundaries and outbuildings)
• Summary of specialist features (ornate stonework)
• Summary of general topography

Question 7

What will the final assessment figure be comprised of?

Answer 7

• Net rebuilding cost
• Demolition and debris removal
• Professional and statutory fees

Question 8

How is the net rebuilding cost calculated?

Answer 8

Multiplying the GIA by a suitable rate for the type of building

Question 9

What should be considered when deciding on the appropriate rate to use for the calculation of the net rebuilding cost?

Answer 9

• Location
• Listed building status
• Conservation area requirements
• Additional re-construction cost (think waterways)

Question 10

How is demolition cost normally calculated?

Answer 10

As a % of the net rebuilding cost, or as a lump sum from published prices

Question 11

What should be taken into account when considering demolition costs?

Answer 11

• Additional costs (access, reinforced concrete, high level works)
• Deleterious materials
• Allowance for clearing and repairing debris from surrounding services

Question 12

What professional fees should be considered?

Answer 12

• Those for a design team as would be required - architect, structural engineer etc.
• Sufficient allowance for the procurement of all necessary statutory approvals should be made

Question 13

Why should RCAs be regularly updated, outwith inflation?

Answer 13

As RCAs allow for the total reconstruction of a building as closely to the original as current regulations allow, the restrictions of building regulations will need to be regularly reviewed as they will effect what can be done

Question 14

What should be provided within the report for an RCA?

Answer 14

It should be a summary of the reinstatement cost, it’s not necessary to provide the calculation. It should include:

• Summary of the instruction, and the basis of the calculation
• Scope of the inspection, and any limitations
• Recommended base sum insured
• Details of what’s included (demolition, fees etc.)
• Extent of site (externals included)
• Specific exclusions (tenant fixtures)
• Caveats - no comment on condition, not market value, should be used for no other purpose
• Reinstatement period
• Photographs and plans for clarity

Question 15

What should be considered when providing a reinstatement period?

Answer 15

• Design/statutory consents/procurement period
• Construction period
• Any additional factors - archaeology

Question 16

What types of assessment for RCAs are available?

Answer 16

• Day one assessment (COMMON)
• Reinstatement including inflation provision
• Reinstatement less wear and tear
• Obsolete buildings
• Site clearance, debris removal and “making safe” only
• Second hand value of building materials

Question 17

How does a Day One assessment work?

Answer 17

A day one assessment allows for a new for old reinstatement basis, where regardless of the age the reinstated building will be like the original was when knew. It’s based in the declared value (as calculated by an RCA) and inflation. This inflation will be applied by the insurer to cover the year and the time it takes to reinstate