DRC Valuation - An in-depth discussion

GRC and DRC Valuation

Producing GRC and DRC Valuation has proven to be a daunting task. Many authorities made use of the spread sheet produced by Atkins in order to produce their GRC/DRC Valuations for 2011/12. However, the following needs to be taken into consideration.

For 2011/12 the use of the Atkins spread sheet for the production of the GRC / DRC valuation was permitted because the DFT made allowances due to the limited timeframe available during this period.

As the SAMPT describes it is only a “proof of concept model’ and ‘is NOT suitable for use with the asset management functionality, or the calculation of future years’ valuations”.

We have been advised that the development of the spread sheet has finished, and that Atkins have no scope to develop it further.

Limitations

The spread sheet calculates a DRC Valuation figure for ‘structure groups’; and does not provide the breakdown for individual structures.

The DRC Valuation is produced from running a single strategy, Unplanned Reactive.

There is no functionality to interrogate life cycles or allow you to compare different strategies for each structure or group.

Transition to a Depreciated Replacement Cost

Infrastructure assets that are currently accounted for on a historic cost basis, are inconsistent with the depreciated replacement cost (DRC Valuation) approach that has been adopted as the accounting policy for WGA. Highways infrastructure assets will transition to a current costs DRC basis in 2012-13.

Gathering and Reporting Information

Each authority is required to analyse a minimum of 3 different strategies outlined in the code, in-order for each authority to make an informed decision and select the most appropriate strategy for each structure or group.

Pontis automatically generates 4 different Strategies per structure. It provides detailed outputs to look at the effect of different budgets from a financial led analysis, and the effect this has on your valuation.

It enables you to ensure that the strategy for maintaining an asset is based on appropriate life cycle planning that endeavours to anticipate the future performance of the asset under various scenarios.

It helps develop a single set of financial management information about your assets that is robust.