Evaluating Housing Maintenance Costs with Loss-Distribution Approach in South Korean Apartment Housing

Abstract

This study analyzes and evaluates building maintenance costs by applying the loss-distribution approach (LDA) normally used by financial organizations to assess operational risks to 7,267 historical maintenance data items for 1,915 apartment housing complexes in South Korea. These maintenance activities are classified into six categories and the period after construction into four categories in order to create a risk matrix, after which the severity and frequency distribution for each cell is calculated and the results combined to derive the total maintenance cost distribution. Maintenance activities incurred 11 to 20 years post-construction were found to have the greatest impact on cost and highest occurrence, likely because facilities such as fire safety and electrical equipment require replacement during that period and the painting is renewed. Adapting an LDA for maintenance cost evaluation, therefore, allows both the total cost distribution and the specific cost distribution incurred by particular circumstances to be analyzed, making it possible to allocate sufficient maintenance funding to properly maintain the building structure and systems and ensure adequate housing quality for occupants.