A critical evaluation of plant and machinery valuation approaches in Kenya

Abstract

Plant and machinery valuation is a multi-disciplinary subject involving law, engineering, statistics, economics, insurance, industrial process, environment and planning. In addition, it is a complex process which requires multi-disciplinary approach. In setting up of any project or economic activity whose key objective is adding value, the basic starting point is valuation of plant and machinery. The manner in which the exercise has been handled in this country is wanting. There is lack of clarity on who should really handle plant and machinery valuations and even more importantly on what areas should plant and machinery valuers be trained. The players in this exercise have been valuers with real estate training background, engineers with mechanical training and engineers trained in plant and valuation appraisal in addition to their background. The study evaluates the current practice on how plant and machinery valuation is undertaken and critically discusses the approaches applied together with their challenges and concludes by case studies as an illustration on how plant and machinery valuation is undertaken. This thesis has looked into how the exercise is conducted, the approaches applicable through literature review, primary data has been collected on valuation services providers (valuers and engineers and others), valuation services consumers (banks, insurance companies, Kenya Revenue Authority) and second hand international machine dealers touching on all aspects of plant and machinery valuation