Theory plus Experience are essential with the valuation of Plant and Machinery
Prime Objective considerations “In-situ Plant and Machinery”
- Is the machine relevant for the current industry?
- New improved machines and their replacement cost
- Remaining functional lifespan
- Major Capex for the plant to remain functional
- Quality of ongoing maintenance, records
- View plant in operational status
- Physical/Functional and Economical obsolescent
- Is the plant being overextended with the current production rate
- Future relevancy for the specific manufacturing
It is essential for the Professional Valuer to spend time with the Plant Manager and require information on the backdown history and the reasons for these defaults. Note that all plant and machinery have a limited economical lifespan, for which a Risk factor is applicable. Any uncertainty with the supply of the Raw materials and demand for the Final product, to be highlighted and included in the Gross Risk allowance. The age-old principle of supply and demand in the open market, tested by a willing buyer, a willing seller is eminent.