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Civil - Estimation and Quantity Surveying - Valuation

**VALUATION**

**1. Define valuation**

Valuation is the process of estimating the cost of a property
based on its present condition. The properties may be immovable properties like
land, buildings, mines trees quarries etc., and movable properties such as
coal, oil, steel, cement, sand etc.

**2. ****What are
the important factors influencing the value of building? **

1. Type of
the building

2. Location
of the building

3. Expected
life of the building

4. Size and
shape of the building

5. The
Present condition of the building

6. Legal
control of the building

**3. ****What is
the purpose of valuations? **

1. For
assessment of wealth tax, property tax etc

2. For
fixation of rent

3. For
security of loans or mortgage

4. For
insurance, betterment charges etc

5. For
compulsory acquisition

6. For
reinstatement.

**4. ****Define
Floor rate. **

It is the ratio between the total built up area (Plinth area)
of all floors and the area of the plot.

Floor Area Ratio = Total
Plinth area of all floors / Plot area

**5. Define Plinth area rate.**

It is the ratio between the total present cost of a particular
type of building and its plinth area.

Plinth area rate = Total
present cost of a building/ plinth area.

**6. ****A
property fetches a net income of Rs.900.00 deducting all outgoings. Workout the
capitalized value of the property if the rate of interest is 6% per annum. **

Year's
purchase = 100/6 = 16.67

Capitalized
value of the property = net income x Y.P

= 900 x
16.67

= Rs.15003.00

**7. ****Find the
plinth area required for the residential accommodation for an assistant
Engineer in the pay scale of Rs.400.00 to 1,000 per month. **

Average
pay = 400+1000 /2 = Rs.700/month

Average
month rent @10% of salary = 700.00/10 = Rs.70.00 Average annual rent 70.00 x 12
= Rs. 840.00

Capital
cost of the building @ 6% interest = 840 x 100 / 6 = Rs.14000.00 Plinth area
required @ Rs.150.00 per sq.m of plinth area

= 14000/150 = 93.33sq.m Normally the quarters for the
assistant engineer should be constructed at the

cost of Rs.14000.00 having
plinth area of 93.33 sq.m.

But due to the increase in the cost of construction, this may
be increased by 100% and the capital cost of construction may be fixed as
Rs.28,000.00 and the approximate plinth areas of 93.33

**8. ****A pumping
set with a motor has been installed in a building at a cost Rs.2500.00.Assuming
the life of the pump as 15 years, workout the amount of annual installment of
sinking fund to be deposited to accumulate the whole amount of 4% compound
interest.**

The annual sinking fund I =
Si/(1+i)^{n} - 1

= 2500 x 0.04 /(1+0.04)^{15}
-1 = Rs.125

The owner is to deposit Rs.125/-annually in 4% compound
interest carrying investment for 15 years to accumulate Rs.2500/-

**9. An old building has been purchased by a person
at a cost of Rs.30,000/- excluding the cost of the land.Calculate the amount of
annual sinking fund at 4% interest assuming the future life of the building as
20 years and scarp value of the building as 10% of the cost of purchase.**

The total amount of sinking fund to be accumulated at the end
of 20 years S = 3000x (90/100) = Rs.27000.00

Annual installments of sinking
fund I = Si/(1+i)^{n} - 1

= 27000 x 0.04 /(1+0.04)^{20} -1 = Rs.907.20 Annual
installments for sinking fund requires for 20 years = Rs.907.20

**10.
****Write the necessity of valuation. **

•
Rent fixation. It is generally taken as 6% of the
valuation of the property

•
For buying and selling

•
Acquisition of property by Govt.

•
To be mortgaged with bank or any other society to
raise loan

•
For various taxes to be given and fixed, by the
Municipal Committee

•
Insurance: For taking out on insurance policies.

**11.Define
the Value :**

Value-Present day cost of
a engineering structures (saleable value)

**12.Define the Cost:**

Original cost of construction. It
is used to find out the loss of value of property due to various reasons.

**13.Define
the Gross income:**

Total amount of the in come
received from the property during the year, without deducting outgoings

**14.Define
the Net come:**

An amount left at the end of the
year after deducting all useable outgoings

**15.Define
the Obsolescence:**

The value of property decreases
if its style and design are outdated i.e rooms not properly set, thick walls,
poor ventilation etc. The reason of this is fast changing techniques of
construction, design, ideas leading to more comfort etc.

**16.Define
the Scrap Value:**

Scrap Value: If a building is to
be dismantelled 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. If various from 7% to 10% of the cost of construction according to
the availability of the material.

**17.Define
the 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 value.

**18.Define
the Capitalized value:**

It is defined as that amount of
money whose annual interest at the highest prevailing rate will be equal to the
net income received from the property. To calculate the capitalized value, it
is necessary to know highest prevailing on such properties and income from the
property.

**19.
Define sinking fund.**

A fund which is gradually
accumulated and set aside to reconstruct the property after the expiry of the
period of utility is known as sinking fund. The sinking funds may be found out
by taking a sinking fund policy with any insurance company or deposition

some amount in the bank. Generally while calculating the
sinking fund, life of the building is considered. 90 % of the cost of
construction is used for calculations 10 % is left out as scrap value.

sinking fund (I) = Si/
(1+i)^{n} -1

Where I = Annual instalment
required

n = Number of year
required to creat sinking fund

i = Rate of interest expressed in decimal i.e 5% as 0.05 S =
Sinking fund

**20.Define
Market value**

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.

**21.Define Book value**

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.

**22.Write
the various methods of valuation.**

1.Plinth area method 2.depreciation rate method 3.Rental
method

4.Land and building method 5.Development method

**23.The estimated value of a building is
Rs.5,00,000.The carpet area of the building is 70 sq.m If the plinth area is
20% more than this ,what is the plinth rate of the building?**

Value of building = Rs.5, 00,000

Carpet area = 70 m^{2}

Plinth area = 20 %
more = 1.20 x 70 = 84 m2

Plinth area rate of the building
= Value of the building/Plinth area

= 5,00,000/84 =
Rs.5952.38m^{2}

**24.The present value of a property is 20000/-
Calculate the standard rent. The rate of interest may be assumed as 6%.**

Annual rent @ 6% = 20000x 6 /100
= Rs.1200/-

Standard rent per month = 1200/12
= Rs.1200/12 = Rs.100/-

**25.Write
the various methods of depreciation**

1.Straigth
line method 2.Constant percentage basis 3.Quantity survey method 4.Sinking fund
method.

**26.Define
the Yea****r'****s purchase**

Year's
purchase : It may be as the figure which when multiplied by the net income from
a property gives capitalized value of the property.It can also be defined as 'a certain
amount of capital whose annuity of Rs.1/- at a certain rate of interest can be
received'

Year's
purchase = 100/rate of interest = 1/i

**27.Define
the Annuity**

Annuity : The return of capital
investment in the shape of annual installments monthly, quarterly, half yearly
&yearly.

**28.Define
Analysis of work:**

The process of determining the
rate of an item of work or supply of the material is known as the analysis of
rate or rate analysis.

**29.What is the size of septic
tank for 50 users?**

4 cum

**30.
****What is the size of septic tank for 25 users?
**

2.5 cum

**31.Define contract:**

The contract is an under taking by a person or firm to do any
work under certain terms and condition

**32.Define Contractor:**

A person or a firm who
undertakes any type of contract is termed as contractor.

**33.Define Tender:**

Tender is a written offer submitted by the contractors in
pursuance of the notification given to execute certain work under certain terms
and conditions.

**34.What are the Essentials of
contract:**

The contract language is
law full .

The
contract is made by parties competent to contract. The contract is made by free
consent of the parties. The contract is made under valid consideration.

There shall be a definite
proposal and its acceptance.

**35.What are the type of contract?**

1. Item rate
contract

2. Percentage
rate contract

3. Lump-sum
contract

4. Material
supply contract

**36.What are type of termination
of contract?**

Agreement
Breach Performance Impossibility of performance Operation of provision of law
Conditions relating to documents

Conditions
relating to the execution of work Conditions relating to labour and personal

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Civil : Estimation and Quantity Surveying : Valuation : Important Question And Answer: Civil - Estimation and Quantity Surveying - Valuation |

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