Valuing Plant and Machinery

How machines are valued, why it is a separate job from the building, and what a chartered engineer is actually checking.

Why separate from the building

A building loses value slowly over decades. A machine can lose half its worth in a few years, or hold value for twenty if it is well kept and still in demand. Averaging them together produces a figure that is wrong for both.

So a lender taking a factory as security wants three numbers: land, building, machinery.

What actually decides a machine's value

• Remaining useful life, not age. A well maintained ten year old machine can have more life left than an abused five year old one.
• Condition and whether it is running. Idle machines deteriorate.
• Make and model. Brands with easy spares and service hold value.
• Whether it is still manufactured. Obsolete machines with no spares fall sharply.
• Whether it can be moved. A machine set into a purpose built foundation is worth less to a buyer who has to extract it.
• The second hand market. Some equipment sells in a week, some sits for a year.

The process

1. Full listingMake, model, serial number, year, capacity, with photographs including the nameplate.
2. Condition assessmentRunning or idle, maintenance history, visible wear.
3. Replacement costWhat the same or an equivalent machine costs today.
4. DepreciationBased on actual remaining life, with the working shown rather than a formula applied blindly.
5. Market cross checkWhere a resale market exists, use it.

Book value is not market value

Your accounts show a depreciated figure calculated under accounting rules. That figure often bears no relation to what the machine would actually fetch. A machine fully written off in the books can still be worth a great deal, and occasionally the reverse is true.

Imported machinery

Bringing in used machinery normally needs a chartered engineer certificate covering age, condition and value for customs. We issue that alongside the valuation. More on CE certificates.