Valuation & Technical due diligence
Valuation and Technical Due Diligence (TDD) are professional engineering services performed by a Chartered Engineer (CE) to determine the fair value, technical condition, operational capability, risks, and remaining useful life of machinery, equipment, industrial plants, or infrastructure assets. These assessments are widely used for financing, mergers and acquisitions, insurance, customs, legal matters, asset sales, and compliance with tender requirements.
What is Valuation?
Valuation is the process of determining the fair market value, replacement cost, depreciated value, or liquidation value of an asset using accepted engineering and valuation principles.
A Chartered Engineer evaluates the asset by considering:
- Physical condition
- Age
- Technical specifications
- Capacity
- Remaining useful life
- Current market conditions
- Depreciation
- Obsolescence
- Maintenance history
The valuation is documented in a Chartered Engineer Valuation Certificate or Valuation Report.
Objectives of Valuation
The objectives include:
- Determining the current market value of machinery or equipment.
- Supporting bank loans and asset financing.
- Providing insurance values.
- Assisting customs authorities in assessing imported machinery.
- Supporting accounting and financial reporting.
- Determining sale or purchase price.
- Supporting insolvency or liquidation proceedings.
- Meeting tender and contractual requirements.
What is Technical Due Diligence (TDD)?
Technical Due Diligence is a systematic engineering assessment of an asset or project to evaluate its technical condition, operational performance, compliance, risks, and future maintenance requirements.
The objective is to identify technical issues that may affect safety, reliability, performance, cost, or investment decisions.
Industries Where Valuation and TDD Are Used
These services are commonly applied in:
- Oil & Gas
- Petrochemicals
- Power Plants
- Steel Plants
- Cement Plants
- Chemical Industries
- Pharmaceuticals
- Food Processing
- Manufacturing
- Infrastructure Projects
- Mining
- Renewable Energy
Common Applications
Valuation and Technical Due Diligence are frequently required for:
- Bank financing and loan security
- Insurance coverage and claims
- Mergers and acquisitions (M&A)
- Asset purchase and sale
- Customs valuation of imported machinery
- Public sector tenders (e.g., GAIL, ONGC, IOCL, NTPC)
- Financial reporting and fixed asset verification
- Lease transactions
- Insolvency and liquidation proceedings
Role of the Chartered Engineer
The Chartered Engineer:
- Conducts an independent inspection of the assets.
- Reviews technical and maintenance documentation.
- Applies accepted engineering and valuation methodologies.
- Identifies technical risks and operational limitations.
- Estimates the fair value and remaining useful life.
- Issues a signed and sealed report with professional conclusions and any assumptions or limitations.