
Radar | Nov 05,2022
A new directive that will formally include the private sector in construction equipment valuation is currently in the making. Dubbed Construction Equipment Registration & Disposal, the draft directive was prepared by a team of experts from Bahir Dar University and also incorporates availing machinery permits and valuation services online.
The new law, which has passed three consultative stages, also introduces a slew of construction materials previously excluded in the law and unknown to the industry.
Applicable only to governmental institutions and enterprises, the previous law had no clear directions for the provision of valuation services to the private sector. This process was formerly carried out using circulars and letters within the Construction Work Regulatory Authority, making it difficult to track.
Incorporating this within a legal framework is expected to help monitor the private sector and the standard of equipment used in the industry, according to Abubeker Haji, acting director for construction input & equipment inspection at the Authority.
Among its other duties, the Authority provides technical assistance whenever a government body requires an asset valuation for audit or sale.
Only machines like bulldozers were relevant when the directive was last written. The amount and types of construction materials in the country were also minimal at the time, according to Abubeker.
"Now we have many different types from various countries on the market," he said.
The draft directive will replace the previous method of approximating types of machinery to similar varieties listed under the two-decade-old directive. It also introduces technical evaluation, previously executed manually, to be governed by specific guidelines for the valuation of machinery.
There are three general approaches to valuation, namely the cost, market an income-based approaches. While the first is aimed at replacing the cost of the machinery, the second assigns worth according to the current market value. The income-based approach will evaluate the machinery based on the income it is capable of generating.
The approaches can be further broken down into formulas that take into consideration initial price, devaluation, depreciation, and other indicators like bank debt, as well as relevant customs fees.
The recording of machinery is another factor addressed under the draft directive. Moving to a web-based system will ease recording and provision of evaluation services for customers, according to Abubeker.
"We can start providing this service from anywhere," Abubeker said. "This was a challenge brought on by the pandemic."
Methods of disposal enlisted in the draft directive include repurposing for other use, selling, gifting, burying or burning the equipment when all other options fail and the equipment is found to be harmful to the environment.
The baseline study for the draft was carried out by a team consisting of 10 professionals in fields like hydraulics, mechanics and information technology and around 20 university lecturers from Bahir Dar University. The University secured the work after winning a financial and technical evaluation. It will place the draft directive up for approval by the Authority, which is leading the consultation process.
Offering services online will make things easier for those who are registered in the city but operating elsewhere in the country, according to Eyob Tafesse, general manager at Kibish Construction, a local grade one construction company.
"This is much easier even for those operating in the city as it takes time to do all the necessary steps physically," he said.
The restructuring in valuation is vital since the system in use at different government institutes is outdated, according to him.
"It doesn't correctly reflect market value," he said. "It calculates price [of equipment] based on depreciation when the actual market value places it higher than when it was initially procured."
Though there are private companies that conduct asset valuation, the validity of their reports are questioned by some institutions, and a unified approach will help ease things, according to Eyob.
Consultants in the industry like Yonas Sebsibie, CEO at Cheetah Consulting Architects Plc, believes that while the legal framework change is commendable, ensuring that the Authority has capable personnel overseeing the valuation process is important.
"The personnel should be well-informed and familiar with the types and models of machinery," he said.
Using available online resources will also aid in detecting cases of under or over-invoicing, according to him.
PUBLISHED ON
Oct 31,2020 [ VOL
21 , NO
1070]
Radar | Nov 05,2022
Fortune News | Apr 30,2022
Viewpoints | Jun 25,2022
Radar | May 25,2019
Fortune News | Feb 27,2021
Radar | Nov 27,2018
Fortune News | Nov 30,2019
Radar | Jun 12,2021
Fortune News | Jul 25,2020
Fortune News | Nov 13,2021
Dec 24 , 2022
Biniam Mikru heads the department of cabinet affairs under Mayor Adanech Abiebie. But...
Jul 2 , 2022 . By RUTH TAYE
On a rainy afternoon last week, a coffee processing facility in the capital's Akaki-Qality District was abuzz with activ...
Nov 27 , 2021
Against my will, I have witnessed the most terrible defeat of reason and the most sa...
Nov 13 , 2021
Plans and reality do not always gel. They rarely do in a fast-moving world. Every act...
Sep 30 , 2023
The recent gathering by the leadership - and the rank and file - of the Prosperity Pa...
Sep 23 , 2023
Ethiopia's contemporary political leaders and the policy wonks under their command ha...
Sep 16 , 2023
The Ethiopian economic narrative oscillates between pockets of resilience and signifi...
Sep 10 , 2023
Earlier this Ethiopian fiscal year, the heralding of a peace deal became synonymous w...