Project Brief

Rushton International was appointed to value 12 engineering facilities for an international engineering company specialising in the aerospace and automotive sectors, with facilities located across Europe and ranging in size and function. The appointment followed an acquisition by our client, but they had limited information on the insurable value for the plant, equipment and building assets.

The engineering valuation was required for insurance purposes and the client wanted to use the valuation to assist with further risk management studies. The scope of works included a detailed valuation report together with an allocation of value.

Our Approach

We arranged to visit each facility in order to complete the engineering valuation exercise. The valuation process can be split into two parts: the onsite survey and the desktop analysis. During the site survey, our valuation team reviewed the assets to be valued and began to collate information for the desktop analysis. The information collated included:

• Construction type and fit-out quality
• Floor area measurements and other key dimensions
• Plant and equipment working asset lists, which were prepared on a line-by-line or process-area basis to include make, model and capacity details

By using an experienced in-house valuation team to attend at each location, the client could be sure that the valuation was consistent in terms of the inclusions and exclusions. They could also be certain that the approach reflects what the valuer sees and records when onsite rather than relying on client-supplied information in isolation.

Benefits

The engineering valuation exercise provided the client with independent and impartial advice on the current reinstatement values for their fixed assets. The client’s insurance advisors were able to utilise our reported values and allocation of values for Estimated Maximum Loss (EML)/Probable Maximum Loss (PML) studies. The work enabled the client and their advisors to bring any insurance arrangements for the new locations into their existing insurance programme.

Our valuations showed that the site and its assets had been insured using a mixture of market and book value. Unfortunately, the client was underinsured across most of the sites as a result of using the wrong bases of value for insurance purposes. Our valuations also showed that the client was insuring a site where production had recently ceased, while the assets were repurposed at another nearby site. For this location, we provided a figure for the buildings only.