INTRODUCTION TO PLANT, MACHINERY & EQUIPMENT (PME) VALUATION

DEFINITION OF PME


By Chris Derry, author of Valuation of Plant and Machinery Hand Book :

Can be thought as the fixed assets of a company,
other than land and building. Motor vehicle, mobile plant, ships, locomotive, aero planes and similar assets which are patently not physically fixed will normally be considered to be Plant and Machinery.

DEFINITION OF PME


By Edward J Watt in An Introduction to Plant and Machinery Valuation implication for building values :
.All fixed assets other than land and building.

DEFINITION OF PME


By Kirit Budhbhatti, India :

Plant and machinery are term used to refer to installations and support facilities for manufacturing in industry design to perform a specific pre-determined function, whether used singly or in combination with other items to enhance the productivity or operating facility, and includes all devices in fixed or movable form, other than real estate, deployed in manufacturing processing or assembling of products from the stage raw materials to finished good.

DEFINITION OF PME


International Valuation Standard Committee (IVSC) Tangible assets, other than realty that :


Are held by an entity for use in the production or supply of the goods or service for rental by others, or for administrative purposes, and Are expected to be used over a period of time

DEFINITION OF PME


The categories (IVSC Fifth edition) :



Plant : Assets that are inextricably combined with others and that may include specialized buildings, machinery and equipment. Machinery : Individual Machine or a collection of machines. A machine is an apparatus used for a specific process in connection with the operation of the entity Equipment : Other assets that are used to assist the operation of the enterprise or entity

Factors that influence the value



Physical factors
    

Type Make Model Size Capacity Taste and Preference of costumer Utilizing Products Manufacture by the machine Demand and Suply Availability of Money and Credit Interest Rate Zoning Enviromental protection law Taxation Policy Regulation of industry

Social factors
   

Economic
  

Legal
   

SCOPE OF WORK
        

Agriculture machinery Communication equipment Computers Contractors machinery Engineering Food and Beverages processing Government facilities Laboratories Mining

SCOPE OF WORK
      

Plastics and Rubber Printing and publishing Process Plant Pulp and Paper Textile Transportation equipment Utilities, wood working, etc

TYPE OF MACHINERY AND EQUIPMENT CLASSES

Production machinery Support equipment Motor Control Centre and switch gear Power Wiring Process Piping Foundation Structural Support Material Handling and storage equipment General Plant equipment Rolling Stock Laboratory and test equipment Office furniture, Fixtures and equipment Computer Equipment Tools Special Tooling Special Classes

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16.

TYPE OF MACHINERY AND EQUIPMENT CLASSES



Production Machinery
Represent a relatively large percentage of the total value of a plant e.g. Palm Oil Mill, Power Plant

TYPE OF MACHINERY AND EQUIPMENT CLASSES



Support Equipment
Machinery that maintains or increases the ability and capacity of the production equipment e.g. Scrap Grinder

TYPE OF MACHINERY AND EQUIPMENT CLASSES



Motor Control Centre and Switch Gear

Unless the plant has main electrical substations the MCC is usually the largest electrical distribution centre in the plant Other Acronym to be familiar : PLC ; AC ; DC: Single or Three Phase Electricity

What is PLC
A Specialized device used to provide high speed, low level control of a process. It is programmed using LD or some form of structured language, so that engineers can program it. PLC hardware typically costs a lot of money, and often has very good redundancy and fail over capabilities. When you walk around a factory, the thing with all the lights and buttons and switches is the PLC or DCS

What is Distributed Comunications System (DCS)

A DCS Network is an arrangement that allows multiple switches in the same or remote locations to work together as one switch.

TYPE OF MACHINERY AND EQUIPMENT CLASSES



Power Wiring
The Plant power wiring connects the plant equipment to MCC. The equipment is strung together with wiring, controls and switches.
the valuer estimate the size, number of lineal feet of conduit and wire, number of motor, supply boxes and switching between the equipment and MCC

TYPE OF MACHINERY AND EQUIPMENT CLASSES



Process Piping
Including piping, valves, fittings, pumps and process control e.g. Oil refinery plant

TYPE OF MACHINERY AND EQUIPMENT CLASSES



Foundation
Some massive machinery requires special pits or heavy foundation

TYPE OF MACHINERY AND EQUIPMENT CLASSES



Structural Support
Installed machenery may required structural steel, catwalks, ladders or platform

TYPE OF MACHINERY AND EQUIPMENT CLASSES



Material Handling and storage equipment

e.g. forklift, loaders, conveyors, cranes, hoist, pallet movers, programmable inventory system, etc

TYPE OF MACHINERY AND EQUIPMENT CLASSES



General Plant Equipment

Located in manufacturing instead of office areas e.g. Namely benches, rack, locker, scales, hand truck, time recorder, fire extinguisher and similar assets.

TYPE OF MACHINERY AND EQUIPMENT CLASSES



Rolling Stock


Two sub classes

Plant Vehicles Trucks, cranes, tractors and mobile equipment not licensed for road use.  Licensed vehicles Automobiles, trucks, tractors, trailers and other vehicles licensed for road use.


TYPE OF MACHINERY AND EQUIPMENT CLASSES



Laboratory and test equipment

Items necessary for the operation of a laboratory or a test facility Typical equipment would include microscope, clean tables, fume hoods, ventilating system, spectrograph, ovens, still, glassware and similar assets.

TYPE OF MACHINERY AND EQUIPMENT CLASSES



Office furniture, fixture and equipment

e.g. Desk, tables, chairs, credenzas, filling cabinets, portable partitions, calculators, photocopy machine, fax machines, etc

TYPE OF MACHINERY AND EQUIPMENT CLASSES



Computer equipment
This class includes various computer, monitors, printers, plotters, modems, scanners and similar assets that not included in offce furniture, fixtures and equipment.

TYPE OF MACHINERY AND EQUIPMENT CLASSES



Tools Devided into 2 subclases : - Permanent Tools Portable electric and air tools, anvils, vises, gauges, chuck and similar items - Perishable tools Drill, Chisel, reamers, taps and other assets

TYPE OF MACHINERY AND EQUIPMENT CLASSES



Special Tooling
Sometimes called tools, dies, jigs and fixtures Built for specific operation or aplication e.g. dies, jigs, molds, pattern, template and similar assets

TYPE OF MACHINERY AND EQUIPMENT CLASSES



Special Clases
e.g. Aircraft, bottles and cases (beverage industry), screens (bakery), ship and similar assets.