UNIT III – VALUATION
QUANTITY SURVEYING, CONTRACTS & TENDERS – Lecture 18
Prof. A.V. Pendse
abhijeet.pendse@viit.ac.in
Department of Civil Engineering
BRACT’S, Vishwakarma Institute of Information Technology, Pune-48
(An Autonomous Institute affiliated to Savitribai Phule Pune University)
(NBA and NAAC accredited, ISO 9001:2015 certified)
Objective/s of this session
1. Understand valuation and its types and how to prepare a
valuation report
Learning Outcome/Course Outcome
2. Explain valuation, types of values and prepare a valuation
Report on O-1 Format by applying Rental Basis, Land & Building
basis, Direct Comparison Method, Profit based method, Belting
of Land, Development method of valuation
Prof. A.V. Pendse, Department of Civil Engineering, VIIT , Pune-48 2
Content – Unit III
Part –I
Valuation: Purpose of valuation. Meaning of price, cost, and value. Factors affecting Value.
Part-II
Types of value: Fair Market Value, Book Value, Salvage, Scrap Value, Distressed Value and
Sentimental Value. Concept of free hold and lease hold property.
Part-III
Estimation versus valuation. Methods of depreciation and obsolescence, Sinking Fund, Years
Purchase.
Part-IV
Methods of Valuation of Building: Rental Basis, Land and Building basis, Direct Comparison Method,
profit based method, Belting of Land, Development method.
Part-V
Numerical on valuation.
Part-VI
Numerical on valuation
Prof. A.V. Pendse, Department of Civil Engineering, VIIT, Pune-48 3
Valuation
Valuation of Land
Valuation of Land
➢ It is based on the road frontage. Frontage land has a greater value than the back land. So in order to find
out the realistic value of land, the entire plot is divided into a number of convenient strips by lines
parallel to the centre line of the road.
➢ Each such type of strip is known as belt. Normally the plot is divided into three belts. The depth of
second belt is taken as 1½ times that of front belt and depth of third belt is 1½ times the depth of
second belt.
➢ Value of the front belt is maximum. The second belt is valued at ⅔ rate of the first belt and the third
belt value at half the rate of first belt.
➢ Value of recessed land not lying within the perpendiculars drawn on belting lines from the end point is
valued at three-fourth value in that particular belt of land.
Prof. A.V. Pendse, Department of Civil Engineering, VIIT, Pune-48 4
Contd..Valuation
Valuation of Land Valuation of Land
Example – A plot of land is situated along a highway. Solution –
x = 470/4.75 = 98.94m = front belt
The plot has an area of 20,000 sq.m. with single
Second belt = 1.5 x 98.85 = 148.42m
frontage of width 40m along highway. The front 30m Third belt = 1.5 x 148.43 = 222.64m
along the plot from the edge of highway is kept reserved Average rate = (20+25)/2 = Rs. 22.5 per sq.m
for providing gardening and other for green purpose,
also remaining 3 sides of plot is prohibited from any sort
Belt Width Depth Area Rate Value
of construction under law. Assuming that the prevailing
rate of land varies between Rs 20 per sq.m. to Rs 25 per 1 40 98.94 3957.6 22.5 89046
sq.m., find the value of the property.
2 40 148.42 5936.8 2/3 x 89052
Solution – 22.5 =
Plot Area = 20,000 sq.m
Width = 40m
15
Therefore, depth = 20000/40 = 500m 3 40 222.64 8905.6 1/2 x 100188
As per the given data, front 30m depth is kept reserved 22.5 =
Therefore, remaining depth = 470m
Let depth of front belt = x m
11.25
Therefore, x + 1.5x + 1.5(1.5x) = 470 Total 278286
Prof. A.V. Pendse, Department of Civil Engineering, VIIT, Pune-48 5
Contd..Valuation
Valuation of Land
Example – The plan of piece of land fronting 60m wide national highway is shown in figure below. The land is
suitable for developing commercial activities. Determine the value of land by belting method. Use following
data:
Depth of front belt = 100m
Present market rate for front belt = 1000/sq.m.
Prof. A.V. Pendse, Department of Civil Engineering, VIIT, Pune-48 6
Contd..Valuation
Valuation of Land
Solution –
Prof. A.V. Pendse, Department of Civil Engineering, VIIT, Pune-48 7
Contd..Valuation
Depreciation
Example – A building is constructed at cost of Rs 5 lakhs. The life of building may be assumed as 80 years
and scrap value of building to be 10% of building cost. Determine depreciation in 40 years. Use straight line
method, constant percentage method and sinking fund method, assuming 8% compound interest.
Prof. A.V. Pendse, Department of Civil Engineering, VIIT, Pune-48 8
Contd..Valuation
Depreciation
Solution –
Prof. A.V. Pendse, Department of Civil Engineering, VIIT, Pune-48 9
Contd..Valuation
Example – Determine the present value of a building including land using following data:
1. Income available from property = Rs 96,000 per annum
2. Life of property = 80 years
3. The rate of redemption is 6% and rate of interest on government securities is 5%
4. All outgoings = 35% of gross income
5. Present cost of land Rs 30 lakhs
Prof. A.V. Pendse, Department of Civil Engineering, VIIT, Pune-48 10
Contd..Valuation
Solution –
Prof. A.V. Pendse, Department of Civil Engineering, VIIT, Pune-48 11
Contd..Valuation
Example – A person wish to sell his building at Rs 15 lakhs. The life building may be considered as 80 years
& scrap value as 10%. Find the depreciated value of building of the current age of building is 20 years, also
what price the building should be purchased?
Cost of building at present = Rs 15,00,000
Life of building = 80 years
Scrap value = 10%
Age of building = 20 years
Depreciation = ?
Cost of purchase = ?
Prof. A.V. Pendse, Department of Civil Engineering, VIIT, Pune-48 12
Contd..Valuation
Solution –
Prof. A.V. Pendse, Department of Civil Engineering, VIIT, Pune-48 13
Contd..Valuation
Example – The depreciated value of building has to be found with following details:
Total area = 400 sq.m.
Age of building = 20 years
Life of building = 80 years
Scrap value = 10%
% sinking fund = 5%
Assume a rate of construction = 2000 per sq.m.
Prof. A.V. Pendse, Department of Civil Engineering, VIIT, Pune-48 14
Contd..Valuation
Solution –
Prof. A.V. Pendse, Department of Civil Engineering, VIIT, Pune-48 15
Contd..Valuation
Example – A residential building is constructed on a plot measuring 525 sq.m. The construction cost of the
building is Rs. 1,75,000. The land was purchased by the owner at Rs. 145 per sq.m. The total outgoings
including sinking fund is Rs 11,500. Workout the gross and net rent of the property, if the owner desires
6.5% return on construction and 5% on the value of the land
Prof. A.V. Pendse, Department of Civil Engineering, VIIT, Pune-48 16
Contd..Valuation
Solution –
Prof. A.V. Pendse, Department of Civil Engineering, VIIT, Pune-48 17
To be discussed next time
Part –I
Tenders: Definition. Methods of inviting tenders, tender notice, tendering procedure, Pre and post qualification of
contractors, tender documents.
Part-II
3 bid/ 2 bid or single bid system. Qualitative and quantitative evaluation of tenders. Comparative statement, Pre-
bid conference, acceptance/ rejection of tenders.
Part-III
Various forms of BOT and Global Tendering, E-tendering. (A mockup exercise of preparation, submission, opening
of tender documents is suggested).
Part-IV
Contracts: Definition, objectives, and essentials of a valid contract as per Indian Contract Act (1872), termination of
contract. Types of contracts: only lump sum, item rate, cost plus. Conditions of contract: FIDIC document, standard
contract conditions published by MOS and PI.
Part-V
Conditions of contract: General and Specific conditions. Condition regarding EM, SD, time as an essence of
contract. Important conditions regarding addition, alteration, extra items, testing of materials, defective work,
subletting, powers delegated to Engineer in charge regarding the above aspect, defect liability period, retention
money, interim payment or running account bills, advance payment, secured advance, final bill.
Part-VI
Settlement of disputes viz. dispute resolving board, arbitration, concept of partnering. Liquidated damages,
termination of contract.
Prof. A.V. Pendse, Department of Civil Engineering, VIIT, Pune-48 18
Thank You
Prof. A.V. Pendse, Department of Civil Engineering, VIIT, Pune-48 19
