The International Conference on the Valuation of Plant, Machinery and Equipment was recently held in Sydney from the 3rd to the 6th of September. I would like to pass on my congratulations to the host committee John Mathe, David Crick, Rodney Hyman, Michael Pankhurst and Helen Sklavos and their support staff (if any…) for organising an excellent event. Those who have organised industry events know how much work goes in – often unnoticed. Congratulations again.
Feedback on the AVAA’s new look
As supporting sponsors, the AVAA board took the opportunity to coincide the event with the launch of our new branding and website. Feedback regarding the new logo and website was overwhelmingly positive – these changes represent the first steps in a new look AVAA – with more to come. Stay tuned. Back to the conference….
How Technology is impacting valuations
Over the course of three days a full house of attendees had the opportunity to hear from a truly international speaker list covering an array of topics. The conference was titled ‘How Technology is Impacting Valuation’, and many of the speakers, from local to international, made particular note of how their tools of trade and the manner in which they conduct their business has changed.
Common examples included;
- Hand written note taking replaced with tablets and voice recognition software
- Valuation research moving from ‘phone calls and trade publications’ to ‘internet searches and database subscriptions’
- Ease of access to global data – such as international machinery market websites
- Turnaround time moving from ‘weeks to days’ towards ‘days to hours…or even instant’
- Printed documents to paperless interactive digital documents and videos
- Reductions in valuation administration staff
- Increases in cost and time pressures
- 24hr online and email availability
Are the changes positive? What more changes might we expect?
Have the changes been positive? Generally, the opinion was a resounding Yes. As an industry, we have embraced the new technology and can now run faster and leaner than ever before – however the changes listed above are by no means the end of the progression. Innovation, the catch cry of the times, raised its head again. Masha Lewis, Director of Corporate Value Advisory at PWC reminded the attendees that innovation is what led to the evolution of the valuation process, and that it will be innovation that drives all industry into the future. (Steve Walls’ presentation on autonomous mine trucks certainly reinforced the message). Masha then challenged the experienced crowd to take a moment to think about where innovation may be implemented in the valuation industry. Responses included:
- The increased use of geotagging images and video to reinforce proof of existence and proof of location data
- Remote asset inspections via drone or satellite imaging
- The increased use of Apps and programs for data collection
- Digital documents that include videos, supporting documentation etc
And of course
- Valuations automatically derived from “Big Data”
Will technological changes and ‘Big Data’ threaten or enhance practices and job security?
These innovations are on the doorstep now and are most likely already implemented into some of our membership’s practices; however, it was “Big Data” that had the room talking. As one attendee put it…’so is big data and an algorithm going to make my job redundant?’ Comments from the banks and other instructing parties indicated NO. They see the role of their Valuers as more than providing ‘just numbers’, and reinforced the fact that they rely on professional advice based on current market conditions and the experience of their chosen practitioners. Keeping the lines of honest and transparent communication open was the take home message – and this is something that an algorithm cannot replace…. yet.
And what about technology and how it affects the items that we all value? The take home message here, from around the globe, is watch out for increasing rates of technical, economic and environmental obsolescence. Changes in manufacturing processes, fuel sources, power generation and environmental regulation are placing downward pressure on used equipment across many asset classes, from single items through to entire fleets.
New and updated Valuation Standards from the International Valuation Standards Committee (IVSC)
The International Valuation Standards Committee (IVSC) has recently released the 2017 International Valuation Standards (IVS 2017). These standards set global guidelines for valuation practice, and are supported by over 100 international organisations, including our neighbours in China and greater Asia (Did you know that China has over 34000 registered valuers!) as well as the United States and Europe. In this latest version, standards have been extended into the Plant and Machinery field, and overarching definitions have been set for the Bases of Value. These include:
IVS-Defined Basis of Value – Market Value
IVS-Defined Basis of Value – Market Rent
IVS-Defined Basis of Value – Equitable Value
IVS-Defined Basis of Value – Investment Value/Worth
IVS-Defined Basis of Value – Synergistic Value
IVS-Defined Basis of Value – Liquidation Value
Presenters encouraged the attendees not to stray from these definitions (i.e. – don’t make up your own…), and to include below full disclosure following regarding assumptions or limiting conditions that may apply.
AVAA Membership to the IVSC
The AVAA board is currently in talks with the IVSC regarding formal membership for our association, which will allow all members access to the current standards via our online portal. The current IVS Definitions are generally in line with AVAA Definitions that we are all familiar with, however included below following this report are the current definitions for both Market Value and Liquidation Value (just for interest however they are best read in context with the complete standards document). Members can purchase a current copy of the standards via the IVSC website; https://www.ivsc.org.
Once again, I would like to congratulate the organising committee and would also encourage AVAA members to attend future ICVPME conferences where possible. If you have any questions for require further information, please forward them through to the National Secretary