Delft

 University  of  Technology  

   
Faculty  of  Architecture                                                                                                            
 
 
 
 
AR2R016:  Management  &  Finance  2  (10  credits)  
13  April  2016,  9:00  –  12:00  hours  
 
Course  coordinator:  R.  Binnekamp  
The  subject  matter  is  in  accordance  with  the  course  book  
 
 
 
Exam  information:  
- This  exam  consists  of  15  questions  in  total;  11  open  and  4  closed  questions  [13  Law;  2  Economics];  
- has  8  pages  (including  this  front  page);  
- the  law  grade  counts  for  40%  of  the  total  course  grade,  the  exam  counts  for  75%  of  the  law  grade;  
- the  economics  part  has  10%  weight  of  the  total  course  grade;  
- the  maximum  number  of  points  to  be  obtained  for  the  law  part  is  120  points  (50  points  private  law,  50  
points  planning  law,  20  points  environmental  law);  
- the  maximum  number  of  points  to  be  obtained  for  the  economics  part  is  30  points;  
- the  weight  of  each  (sub)question  is  stated  in  the  exam.      
 
 
 
Exam  instructions:  
- Provide  your  answers  in  English  and  write  legible  (readable).  
- Please  argue  your  answers  unless  stated  otherwise,  because  too  short  answers  are  difficult  to  rate.  
- This   is   an   open   book   exam;   you   can   use   all   materials,   except   old   exam   reference   answers.   Do not copy-
paste irrelevant text from the literature in your answer.  
- The  use  of  a  calculator  is  permitted.  
- This  exam  has  2  parts:  Law  (subparts:  Private  law,  Planning  law,  Environmental  law)  and  Economics  
- Please start answering subsequent (sub)parts each on a new sheet of paper

 
  

Part:  Law  
Private  Law  
Lecturer  Monika  Chao-­‐Duivis  
 
A. Which  alternative  is  correct?  Do  not  motivate  your  choice.  
 
Question  1  
A  and  B  have  entered  into  a  sales  agreement,  on  the  basis  of  which  B  will  paint  the  house  of  A  before  
the  first  of  June  2016.  At  the  first  of  June  B  has  not  painted  the  house  of  A.  
 
Which  statement  is  right?  (5  p.)  
a.  B  is  automatically  in  default,  because  the  time  limit  to  fulfil  the  obligation  has  expired.  
b.  B  is  not  in  default,  because  a  default  notice  has  not  been  served.  
c.  B  is  not  in  default,  because  he  can  still  fulfil  his  obligation.  
 
Correct  answer:  A,  see  p.  20  Book.  
 
Question  2  
A   and   B   have   entered   into   a   building   contract.   The   contract   contains   a   clause   stating   that   if   the   steel  
prices  rise  between  10  and  20%  the  contractor  (A)  will  get  this  compensated  accordingly.  The  prices  
of  steel  rise  23%.  B  pays  A  a  compensation  of  20%.  A  demands  the  lacking  3%  as  well  invoking  the  
rule  in  Book  6  CC  on  unforeseen  circumstances.  
 
Which  statement  is  right?  (5  p.)  
a.  The  judge  will  deny  the  claim,  because  the  clause  only  allows  compensation  up  to  20%.  
b.  The  judge  will  assign  the  claim,  because  the  clause  only  allows  compensation  up  to  20%,  so  this  
is  an  unforeseen  circumstance.  
c.    The  judge  will  not  assign  the  claim,  because  although  the  clause  only  allows  compensation  up  
to  20%  and  this  is  an  unforeseen  circumstance,  A  can  be  expected  to  uphold  his  agreement  in  an  
unchanged  form  according  to  standards  of  reasonableness  and  fairness.  
 
Correct  answer:  C,  see  Book  p.  24  
 
Question  3    
Contractor   A   has   submitted   a   bid   in   a   tender   procedure,   which   deviates   from   the   requirements,  
because  A  has  a  better  plan  than  the  requirements  asked  for.  It  is  a  fact  that  A’s  plan  is  indeed  better.  
 
Which  statement  is  right?  (5  p.)  
a.   This   is   allowed   in   case   the   award   criterion   of   the   most   economically   advantageous   tender   is  
used.  
b.  This  is  never  allowed,  because  this  is  a  violation  of  the  equality  principle.  
c.   This   is   allowed   in   case   the   award   criterion   of   the   most   economically   advantageous   tender   is  
used  and  the  contracting  authority  has  explicitly  allowed  this  deviation.  
 
Correct  answer:  C,  see  p.  146  Book.  

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Question  4  
Which  statement  is  right?  (5  p.)  
 
a.  The  winner  of  the  tender  procedure  will  enter  into  a  contract  with  the  contracting  authority.  
b.  After  a  winner  of  the  tender  procedure  has  become  known  and  the  contracting  authority  wants  
to   enter   into   a   contract   the   winner   of   the   tender   will   be   the   one   with   whom   the   contracting  
authority  will  enter  into  contract.  
c.  If  the  contracting  authority  does  not  want  to  enter  into  a  contract  with  the  winner  of  the  tender  
procedure  it  can  choose  another  party  because  of  the  freedom  of  contract.  
 
Correct  answer  B,  see  p.  147  Book.  
 
B. Answer  the  following  questions  and  motivate  your  answer  
 
Question  5  
Contractor   A   has   realised   a   road   using   a   nominated   subcontractor.   The   UAC   2012   were   applicable.  
After  completion  it  turns  out  the  road  surface  cannot  be  driven  upon,  because  it  is  too  slippery.  The  
employer,  B,  holds  A  liable.  It  is  a  non-­‐disputed  fact  that  this  defect  was  not  discovered  at  the  time  of  
take   over.   At   the   time   of   take   over   B   has   had   the   work   checked   by   X,   for   whom   this   was   his   first   take  
over   procedure.   During   the   execution   the   work   was   supervised   once   a   week   for   one   hour   by   an  
experienced   supervisor   (Z).   The   employer   holds   A   liable.   A   has   the   following   defence   against   the  
claim:  1)  I  did  not  cause  the  problem  but  the  subcontractor,  so  he  should  be  sued;  2)  you  (B)  could  
and  should  have  discovered  the  mistake.  
 
Will   A   be   successful   with   this   defence?   As   far   as   the   question   on   the   subcontractor   (1)   you   will  
explain  what  the  situation  is  like  if  the  subcontractor  is  nominated.  (15  p.)  
 
1)   No:   he   is   liable   for   subcontractors   being   used,   see   par.   6,26   UAC   2012.   see   p.   64   Book.   If   the  
subcontractor   is   nominated,   A   will   be   liable   to   the   extent   he   can   hold   the   subcontractor   liable   but  
only  if  the  terms  and  conditions  used  by  the  subcontractor  in  relation  to  the  contractor  haven  been  
accepted  or  approved  by  the  employer.  P.  65  Book.  
 
2)   According   to   par.   12   UAC   2012   the   contractor   is   liable   for   hidden   defects,   meaning   for   defects   the  
employer  could  not  have  reasonably  detected  in  spite  of  careful  supervision  during  execution  or  on  
inspection   of   the   works.   So   the   question   is   what   could   have   been   reasonably   discovered   during  
execution  by  Z  and  at  the  time  of  take  over  by  X.  Z  is  experienced  but  has  had  hardly  seen  anything  
and  X  is  not  experienced.  So  chances  are  that  with  these  two  supervisions  not  much  could  have  been  
discovered  and  the  problem  with  the  surface  is  therefor  to  be  considered  to  be  a  hidden  defect  and  A  
will  not  be  successful  with  his  defence.  
 
Question  6  
Contractor   A   and   employer   B   have   entered   into   a   contract   governed   by   the   UAC-­‐IC   2005.   While  
working  on  the  design  B  notices  during  an  inspection  of  A’s  work,  that  A  is  thinking  of  using  European  
wood  for  the  windows.  B  knows  this  will  not  work  out  for  this  building  because  the  temperature  in  
the  building  (a  green  house  for  tropical  plants)  will  be  too  high  and  damage  the  wood  within  a  few  
weeks.  B  does  not  mention  this  to  A.  A  year  after  take  over  the  wood  shows  damages  and  B  holds  A  
liable.    
 

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A  defends  himself:  1)  it  was  not  known  to  him  the  green  house  was  to  be  used  for  tropical  plants  and  
needed  to  be  able  to  take  these  high  temperatures  so  he  is  not  liable  and  2)  B  should  have  warned  
him  since  he  knew  the  wrong  wood  was  going  to  be  used;  it  is  a  non  disputed  fact  that  B  knew  this  
when  he  checked  the  work  of  A,  but  B  says  as  an  UAC-­‐IC  2005  employer  he  is  not  supposed  to  involve  
himself  with  the  work  of  the  contractor.  
 
Will  A  be  successful  on  both  points?  (15  p.)  
 
1)   it   depends   what   B   has   told   A:   did   he   only   ask   for   a   green   house   or   did   he   ask   for   a   green   house   to  
grow   tropical   plants   in?   This   is   the   question   on   what   were   the   requirements:   explicit   and   if   not:  
normal.  See  p.  112  Book.  Depending  upon  the  discussion  of  these  requirements  in  this  specific  case,  
it  can  be  determined  if  A  will  be  successful  or  not.  
 
2)  The  answer  follows  from  par.  21,  10:  if  the  employer  actually  notices  a  mistake/defect  he  has  to  
inform  the  contractor.  
 

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Please  start  answering  part  PLANNING  LAW  on  a  new  sheet  of  paper  
 

Planning  Law  
Lecturer  Fred  Hobma  
 
Questions  7  up  to  and  including  11  relate  to  the  following  case.  
 
Case  
In  a  certain  area  10  property  developers  each  own  a  plot  of  agricultural  land.  The  developers  and  the  
municipality   want   to   develop   the   area   into   a   new   residential   area.   All   developers   and   the  
municipality  agree  on  the  following:  all  developers  will  sell  their  land  to  the  municipality  on  time  T1.  
Subsequently,   the   municipality   will   prepare   the   land   for   construction.   After   that,   on   time   T2,   the  
municipality  will  sell  plots  back  to  the  developers  who  will  realise  the  new  houses.  
 
Question  7  
What  is  the  name  of  this  type  of  agreement?  (Note:  no  further  explanation  needed.)  (5  p.)  
 
Answer:  development  rights  model.  
 
Question  8  
Suppose   that   property   developer   A   indeed   bought   a   plot   from   the   municipality   at   time   T2.   However,  
some  time  later,  it  turns  out  that  the  economic  crisis  has  severely  hurt  the  financial  position  of  A.  A  is  
in  need  of  finances  to  be  able  to  pay  for  the  construction  of  the  new  houses.  
Under  the  circumstances,  which  planning  law  instrument  can  be  used  by  A  and  municipality  to  help  
the  financial  position  of  A?  Please  explain.  (10  p.)  
 
Answer:  Ground  lease.  The  municipality  could  buy  the  land  back  from  A  it  has  sold  to  A  at  time  T2.  
Subsequently,  a  ground  lease  agreement  will  be  concluded  between  both  parties.  
Explanation:   If   land   is   leased   to   a   leaseholder,   the   initial   capital   investment   by   the  
leaseholder/developer   is   smaller   compared   to   the   situation   in   which   the   developer   has   to   buy   the  
land.  In  this  line  of  reasoning,  the  money  that  is  not  needed  to  buy  land  can  be  used  by  the  developer  
to   finance   the   building(s).   In   this   way,   the   initial   financial   position   of   A   is   improved.   The   financial  
position  of  A  can  improve  further  once  it  sells  the  new  houses  (resulting  in  a  profit).  
 
Question  9  
Some   people   already   living   in   the   neighbourhood   of   the   new   residential   area   will   lose   their   free   view  
over   the   open   agricultural   land.   They   argue   that   their   homes   decline   in   value   due   to   the   new  
development.  
Describe  the  conditions  under  which  a  neighbour  has  a  right  to  financial  compensation.  (15  p.)  
 
Answer:  
1. The  neighbours  must  suffer  or  will  suffer  a  loss.  
2. Only  capital  losses  and  income  losses  will  be  compensated.  
3. There  must  be  an  irrevocable  land-­‐use  plan.  

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4. The  losses  must  not  fall  ‘within  standard  social  risk’.  (Explain)  
5. The  change  of  the  land-­‐use  must  not  have  been  ‘forseeable’  for  the  neighbour.  (Explain)  
 
Question  10  
The  developers  and  the  municipality  agreed  on  time  T1  in  main  lines  what  the  new  area  will  look  like.  
For  this  purpose,  the  program  and  the  quality  of  the  new  residential  area  have  been  laid  down  in  a  
masterplan.  The  masterplan  is  signed  by  all  developers  and  the  municipality  on  time  T1.    
Of   course,   the   municipality   will   have   to   draw   up   a   land-­‐use   plan   for   the   area.   Most   likely,   the  
municipality  will  have  concluded  (on  time  T1)  an  agreement  with  the  developers  on  the  contents  of  
the  (future)  land-­‐use  plan.  
 
What  is  the  name  of  this  type  of  agreement?  (Note:  no  further  explanation  needed).  (5  p.)  
 
Answer:  land-­‐use  plan  agreement.    
 
Question  11  
 
Suppose   that   a   group   of   people   already   living   in   the   neighbourhood   of   the   new   residential   area   raise  
objections   against   an   apartment   building,   which   is   included   in   the   land-­‐use   plan.   They   feel   the  
apartment  building  will  be  too  high  and  will  cast  a  huge  shadow  over  their  gardens.  
 
What  is  most  effective  for  the  neighbours  to  do:  (a)  lodge  appeal  against  the  land-­‐use  plan  with  the  
Council   of   State,   or   (b)   lodge   appeal   against   the   environmental   permit   to   build   (for   this   specific  
building)  with  the  court?  Please  explain.  (15  p.)  
 

Answer:  most  effective  is  to  lodge  appeal  against  the  land-­‐use  plan  with  the  Council  of  State.  In  this  
case,  neighbours  could  argue  that  the  inclusion  of  the  apartment  building  in  the  land-­‐use  plan,  is  in  
conflict   with   a   ‘proper   weigh   of   interests’   by   the   municipal   council   (see   p.   68   text   book   ‘Planning   and  
Development   Law’).   To   be   more   precise,   they   could   argue   that   the   municipal   council   ‘did   not  
consider  the  different  interests  carefully’  (text  book  p.  68).  (Read:  the  interest  of  the  neighbours  that  
their   gardens   will   catch   sun   has   not   been   taken   into   account   by   the   municipality.)   If   they   are  
successful,  the  apartment  building  will  be  removed  from  the  land-­‐use  plan.  
Appeal  against  the  environmental  permit  to  build  is  an  alternative  which  is  not  as  effective.  Once  the  
apartment   building   is   included   in   an   irrevocable   land-­‐use   plan,   it   is   difficult   to   stop   it.   An  
environmental   permit   will   be   granted,   unless   that   application   (design)   is   in   conflict   with:   land-­‐use  
plan,  Building  Decree,  criteria  of  external  appearance  (these  are  the  most  important  grounds  to  test  
applications   against,   see   text   book   p.   43/44).   Once   the   building   is   in   the   land-­‐use   plan,   the  
neighbours  can  only  argue  the  building  is  in  conflict  with  the  Building  Decree  (which  will  be  almost  
impossible   for   them   to   prove)   and   is   in   conflict   with   external   appearance   (which   will   be   very   difficult  
if  there  is  a  positive  advise  from  the  external  appearance  committee).  

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Please  start  answering  part  ENVIRONMENTAL  LAW  on  a  new  sheet  of  paper  
 
Environmental  Law  
Lecturer  Pieter  Jong  
Question  12  
Four  examples  of  (real  estate)  functions  are:  
 
1. Offices  
2. Airport  
3. Homes  
4. Hospital  
 
Explain   if   each   of   the   four   functions   can   be   qualified   as   a   vulnerable   function   from   an   environmental  
law  perspective.  (10  p.)  
 
Answer:   Homes   (dwellings)   and   hospitals   are   vulnerable   functions.   Airport   is   not   a   vulnerable  
function  but  is  a  source  of  (noise)  pollution.  Offices  are  not  a  vulnerable  function,  that  is  why  they  
are  also  used  as  noise  screen.  See  PDL  regarding  ‘vulnerable  functions’:  p.  119,  p.  121  en  p.  125.  
 
Question  13  
 
Imagine:  a  new  highway  is  planned  close  to  the  campus  of  the  university.  It  will  take  about  five  years  
yet   to   prepare   the   necessary   plans   and   permits   to   facilitate   this   highway.   There   are   several  technical  
ways   to   deal   with   the   extra   noise   generated   by   the   use   of   the   highway   (noise   screens,   noise  
insulation  etc.).    
 
With   which   two   legal   measures   could   the   municipality   deal   with   this   noise   problem?   Give   a   short  
explanation  about  each  of  these  legal  measures.  (10  p.)  
 
Answer:    
-­‐  zoning,  see  PDL  par.  7.3  
-­‐  higher  noise  standard,  see  PDL  p.  120.  
 

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Please  start  answering  part  ECONOMICS  on  a  new  sheet  of  paper  

Part:  Economics  
Lecturers  Ilir  Nase  and  Peter  Boelhouwer  
 
Question  14  
Objections  of  the  welfare  state  (10  p.):  

a) In  his  book  Economics  of  the  welfare  state  Barr  states  that’s  it’s  difficult  to  give  a  clear  
description  of  the  welfare  state.  How  would  you  describe  the  welfare  state?    
b) The  welfare  state  can  be  categorized  in  five  different  types.  Which  five  types  could  be  
described?  
c) Please  give  for  each  category  a  short  description  how  the  housing  market  would  operate  
and  pay  intention  to  state  regulation,  stratification,  subsidization  and  housing  allocation.  

Answers:  
a) The  welfare  state  is  a  mosaic,  with  diversity  both  in  its  source  and  in  the  manner  of  its  
delivery.  It  are  the  state’s  activities  in  four  broad  areas:  cash  benefits,  healthcare,  education  
and  food,  housing  and  other  welfare  services.  
b) Liberal,  corporatist,  social  democratic,  family  based  and  needs  based.  
c) Liberal:  less  state  intervention;  low  stratification;  means  tested  subsidies  and  few  production  
subsidies;  market  determination  of  allocation  and  regulated  allocation  in  a  small  part  of  the  
stock  
Corporatist:  state  intervention  by  functional  decentralisation,  incremental  and  problem  
solving;  high  stratification  based  on  social  status;  specific  segments  are  subsidized;  certain  
groups  are  favoured  in  the  allocation  process.  
Social  democratic:    strong  influence  central  state;  low  stratification;  high  subsidies  for  
production  and  target  groups;  allocation  on  the  basis  of  need.  
Family  based:  few  state  subsidies;    allocation  on  the  basis  of  family  ties  and  high  
stratification;  family  orientated  income  transfers;  informal  allocation  rules.      
Needs  based:  moderate  state  intervention;  high  stratification,    subsidies  for  low  income  
groups  especially  for  home-­‐owners;  allocation  on  the  basis  off  need.      

 
 

  AR2R016:  Management  and  Finance  2     8/8  

 
  

Question  15  

Urban  economics  and  competitiveness  (20  p.)    

This  question  relates  to  the  information  given  in  the  figure  and  the  related  tables.  
 
The   figure   shows   a   fictional   system   of   six   cities   labelled   1  
through   6,   the   yellow   lines   indicate   administrative  
5  
1   boundaries   and   the   blue   and   brown   lines   indicate  
physical/natural  boundaries  (e.g.  mountain,  water  etc.).  The  
6   division   of   the   labour   force   (simplified)   and   resulting  
location   quotients   in   these   cities   is   given   in   the   tables  
below.  
4  
2    
3   Table1:  Employment  in  the  system  expressed  as  *10,000  persons  

Figure  1:  Spatial  distribution  of  cities  

City  
1   2   3   4   5   6   Total  (sector  labour  
Sectors  (simplified  SIC-­‐2008  classification)                           count  in  the  system)  
A  Agriculture,  forestry  and  fishing   3   4   2.5   2.5   3   6   21  
B-­‐F  Industry,  construction,  energy   4   5   3   4   4   7   27  
G-­‐I  Trade,  transport,  hotels,  catering   2.5   3   2   1.5   2   6   17  
K-­‐N  Financial  institution,  business  services,  real  estate     1.5   3.5   4   1.5   1.5   10   22  
O-­‐U  Government  and  care,  culture,  recreation,  other  services   1   1   2   1   1   7   13  

Total  (labour  count  in  a  city)   12   16.5   13.5   10.5   11.5   36   100  

Table2:  Location  quotient  values    

City1   City2   City3   City4   City5   City6  
 
A  Agriculture,  forestry  and  fishing   1.19   0.88     1.24   0.79  
 
B-­‐F  Industry,  construction,  energy   1.23   1.12   0.82     0.72  
 
G-­‐I  Trade,  transport,  hotels,  catering   1.07   0.87   0.84   1.02  
   
K-­‐N  Financial  institution,  business  services,  real  estate     0.57   0.96   0.65   0.59   1.26  
 
O-­‐U  Government  and  care,  culture,  recreation,  other  services   0.64   0.47   1.14   0.73   0.67  
   

Using   the   techniques/methods   discussed   in   the   lecture   identify   &   explain   the   spatial   specialisation  
and   clustering   in   this   system.   Redraw   the   figure   on   your   answer   sheet   and   show   your   thoughts  
graphically.  
 
Hint:    
1)   You   need   to   calculate   the   empty   cells   yourselves   to   be   able   to   do   a   complete   analysis   of   the  
specialisation  patterns  in  the  system-­‐only  basic  function  calculator  is  allowed  for  this.    
2)  Answers  without  empirical  evidence  support  will  not  be  accepted  (i.e.  you  will  need  to  support  your  
answer  with  numbers).  

  AR2R016:  Management  and  Finance  2     9/8  

 
  

 3)  Sometimes  in  one  cluster  you  might  have  more  than  one  city,  sometimes  cities  might  be  distant  or  
highly   specialised   to   form   a   cluster   (node)   on   their   own   or   be   even   highly   distinguishable   within   a  
cluster.    
 
Answers:  

LQ  Analysis  Outcomes:   City1   City2   City3   City4   City5   City6  

A  Agriculture,  forestry  and  fishing   1.19   1.15   0.88   1.13   1.24   0.79  
B-­‐F  Industry,  construction,  energy   1.23   1.12   0.82   1.41   1.29   0.72  
G-­‐I  Trade,  transport,  hotels,  catering   1.23   1.07   0.87   0.84   1.02   0.98  
K-­‐N  Financial  institution,  business  services,  real  estate     0.57   0.96   1.35   0.65   0.59   1.26  
O-­‐U  Government  and  care,  culture,  recreation,  other  services   0.64   0.47   1.14   0.73   0.67   1.50  
 
Overall,  the  system  exhibits  clear  spatial  clustering  of  different  sector  specialisations.  Cities  1,  2  and  5  
cluster  together  to  form  the  agriculture,  industry  &  energy  periphery.  Within  this  cluster  particularly  
City   2   can   be   identified   as   the   main   transportation   hub.   Cities   2   and   5   exhibit   trade   &   transport  
potential,   probably   related   to   the   main   industry   sectors   they   specialize.   City   4   is   a   node   of   heavy  
industry  with  agricultural  support.  Cities  3  and  6  form  the  financial,  business  and  cultural  heart  of  the  
system.  In  addition,  City  6  is  the  main  city  of  the  system  based  on  its  overall  labour  force  size.  It  is  
also  the  leading  city  (system  capital)  based  on  the  LQ  size  of  its  government  sector.    

 
Main  transportation  hub/city  of  the  system  
Agriculture,  industry  &  energy  peripheral  area    
 
 

5    
1   Main  (largest)  city  of  the  system  
 

6    

 
4   -­‐-­‐-­‐  
2   Heavy  industry  with  agriculture  potential  peripheral  city  

3  

Financial,  business  &  cultural  heart  of  the  system  

  AR2R016:  Management  and  Finance  2     10/8