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    Estimating and Costing: Gateway College of Architecture and Design

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    Chopra Shubham
    This document discusses methods for estimating the cost and valuing properties. It defines key terms like cost, value, depreciation, market value, book value, scrap value, and salvage value. It also outlines various methods for valuing properties, including direct comparison, land and building, development, rental, and depreciation rate methods. Specific depreciation calculation methods are also described, such as straight line, constant percentage, sinking fund, and quantity survey methods.

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    Estimating and Costing: Gateway College of Architecture and Design

    Uploaded by

    Chopra Shubham
    29 views14 pages
    This document discusses methods for estimating the cost and valuing properties. It defines key terms like cost, value, depreciation, market value, book value, scrap value, and salvage value. It also outlines various methods for valuing properties, including direct comparison, land and building, development, rental, and depreciation rate methods. Specific depreciation calculation methods are also described, such as straight line, constant percentage, sinking fund, and quantity survey methods.

    Original Title

    Estimating and Costing. Lecture 14

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    This document discusses methods for estimating the cost and valuing properties. It defines key terms like cost, value, depreciation, market value, book value, scrap value, and salvage value. It also outlines various methods for valuing properties, including direct comparison, land and building, development, rental, and depreciation rate methods. Specific depreciation calculation methods are also described, such as straight line, constant percentage, sinking fund, and quantity survey methods.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    29 views14 pages

    Estimating and Costing: Gateway College of Architecture and Design

    Uploaded by

    Chopra Shubham
    This document discusses methods for estimating the cost and valuing properties. It defines key terms like cost, value, depreciation, market value, book value, scrap value, and salvage value. It also outlines various methods for valuing properties, including direct comparison, land and building, development, rental, and depreciation rate methods. Specific depreciation calculation methods are also described, such as straight line, constant percentage, sinking fund, and quantity survey methods.

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    You are on page 1of 14

    Estimating and Costing

    ( AR – 313)

    Lecture 14

    Prof. Anurag Roy & Geeta Saha.

    Gateway College of Architecture and Design


    Cost
    Cost is a term used to express actual expenditure after the completion of the
    project or items of works.

    Value
    Value is an expression for its worth
    VALUATION
    Purpose of the Valuation
    • Sale or Purchase of a property
    • To fix up the gift tax payable to the govt when the property is gifted to
    somebody else.
    • To fix up the municipal taxes, wealth tax and estate duty on a property
    • To divide the property among the shareholders in case of the partition.
    • Rent Fixation
    • To work out the insurance value of a property
    • To determine the quantum of loan that can be sanctioned against a property
    as mortgage or security
    • For compulsory acquisition of the property by govt. for public purpose.
    • To determine the speculative value of a property, i.e. the purchase of a
    property with intention to sale at a later date and to make some profit.
    Depreciation

    It is the loss in value of a building or property due to structural deterioration,


    wear and tear, decay and obsolescence. It depends on use, age, nature of
    maintenance etc. A certain percentage (per annum) of the total cost may be
    allowed as depreciation to determine its present value.

    The percentage rate of depreciation is less at the beginning and increases with
    age. Annual depreciation is the annual decrease in the value of the property.
    Market value

    The market value of a property is the amount, which can be obtained at any
    particular time from the open market if the property is put for sale. The market
    value will differ from time to time according to demand and supply.

    Book value
    Book value is the amount shown in the account book after allowing necessary
    depreciations. The book value of a property at a particularly year is the original
    cost minus the amount of depreciation up to the previous year.
    Scrap value

    If a building is to be dismantled after the period its utility is over, some amount
    can be fetched from the sale of old materials. The amount is known as scrap
    value of a building.

    Salvage value
    If a property after being discarded at the end of the utility period is sold without
    being into pieces, the amount thus realized by sale is known as its salvage
    Methods of Valuation

    The valuation of a building is determined by working out its cost of


    construction at the present day rate and allowing a suitable depreciation.

    • Direct comparison method


    • Land and building method
    • Development method
    • Rental method
    • Depreciation rate method
    Calculation of Depreciation
    • Straight line method
    •  Constant percentage method
    • Sinking fund method
    •  Quantity survey method
     Straight line method
    It is assumed that the property loses its value by the same amount every year. A
    fixed amount is deducted every year, so that at the end of the utility period, only
    the scrap value remains.

    And the book value after n years = Original cost – n x D


    Constant percentage method (declining balance method)

    It is assumed that the property will lose its value by a constant percentage of its
    value at the beginning of every year.
    Sinking fund Method
    It is an amount which has to set aside at fixed intervals of time (say annually) out
    of the gross income so that at the end of the useful life of the building or the
    property, the fund accumulated should be equal to the initial cost of the property.
    The sinking fund may also be required for payment of the loans.
    Quantity survey method
    The property is studied in detail and loss in value worked out. Each step is based
    on some logical reasoning without any fixed percentage of the cost of the property.

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