Assessment of the market value of construction work. Independent valuation of an enterprise How to evaluate a construction company

Assessment of the market value of construction work
Determining the market value of actually completed work
Determining the market value of construction work, assessing non-residential premises, choosing a method for assessing non-residential premises, the process of assessing construction work

Object of construction assessment: non-residential premises

Assessment address: Moscow

The purpose of the assessment: to determine the market value of actually completed construction, installation and finishing work in non-residential premises with a total area of 199.4 square meters.

Certificate of quality assessment

The assessment has been carried out and the report compiled in accordance with the requirements set out in the following documents:

Federal Law “On Valuation Activities in the Russian Federation” No. 135-FZ of July 29, 1998, as amended. No. 91-FZ dated 05/07/2009;
“Federal valuation standards, mandatory for use by subjects of valuation activities”, FSO No. 1,2,3 approved by Orders of the Ministry of Economic Development of the Russian Federation dated 07/20/2007 N 256, dated 07/20/2007 N 255, dated 07/20/2007 N 254.

The facts stated in the report are correct and true. The analyses, opinions and conclusions contained in the report are those of the appraiser himself and are valid strictly within the limits of the restrictive conditions and assumptions that form part of this report. The appraiser's remuneration does not depend on the results of the final valuation, as well as those events that may occur as a result of the use by the customer or third parties of the findings and conclusions contained in the report.

Appraisers have no real or perceived interest in the property being appraised and act impartially and without prejudice towards the parties involved.

The facts presented in the report, on the basis of which the analysis was carried out, assumptions and conclusions were made, were collected to the greatest extent possible using the knowledge and skills of the Appraiser, and are, in his opinion, reliable and free of factual errors.

The source data used by the Assessors in preparing this report has been obtained from reliable sources and is believed to be reliable, although references to sources of information are made where possible.

Limiting conditions and assumptions made

The Certificate of Valuation, which forms part of this report, is subject to the following conditions and assumptions:

This report is reliable only for the purposes stated herein;
The Customer and the Contractor do not undertake any obligations regarding the confidentiality of settlements. The Contractor does not accept responsibility for describing the legal status of the assessment object;
The Contractor relied on the accuracy of the original information provided by the Customer;
The property assessment was carried out on the basis of an inspection of the property and information provided by the Customer.
In accordance with the task set by the Customer, the Contractor’s responsibilities do not include the assessment of the Customer’s property rights to real estate.
When conducting the assessment, it was assumed that there were no hidden factors affecting the value of the property. The Contractor is not responsible if such factors are discovered after the assessment.
Neither the Customer nor the Contractor may use the report (or any part of it) other than as provided for in the text of this report;
The Contractor's opinion regarding the value of the valuation object is valid only as of the valuation date. He does not accept responsibility for subsequent changes in social, economic, legal and natural conditions that may affect the value of the property being valued;
The Contractor is not obliged to provide additional advice on this report in connection with the subsequent provision of information that may in any way affect the conclusions made in the report regarding the value of the object;
The Contractor is not required to appear in court or otherwise testify regarding the completed report or the subject of the assessment, except on the basis of a separate agreement with the Customer or an official summons from the court.
The appraiser personally inspected the property. The determination of the market value of the actual work performed by the appraiser was carried out based on the volumes recorded during the survey without opening the external finishing coatings.
Acts for hidden work and design documentation were not presented to the appraiser.

The assumptions and limitations described above imply their full unambiguous understanding by the parties signing the report. All provisions, results of negotiations and statements not specified in the text of the report are void. These assumptions and limitations cannot be changed except by the signature of both parties.

Without the written consent of the Appraiser, this report must not be distributed or published, nor used, even in abbreviated form, for purposes other than those stated above. The appraiser does not accept any responsibility for losses that may arise to the customer or another party as a result of violation and/or disregard of the formulated limiting conditions.

Evaluation process

Basic concepts and definitions. According to Article 623 of the Civil Code of the Russian Federation, “improvements that can be separated from a thing without harm to it are recognized as separable. Accordingly, inseparable improvements, when separated from a thing, worsen its condition, as a result of which it acquires defects. The law does not say what the degree of damage to a thing must be in order for improvements to be recognized as inseparable. Therefore, one should come to the conclusion that the damage can be of any kind, the main thing is that as a result of it the thing has defects for which the tenant is responsible.”

Price is a term that denotes the amount of money demanded, offered, or paid for a good or service. It is a historical fact, that is, it refers to a specific point in time and place, regardless of whether it was declared openly or remained secret. Depending on the financial capabilities, motives, or special interests of the particular buyer and seller, the price paid for goods or services may not correspond to the value ascribed to those goods or services by others. However, price is an indicator of the relative value ascribed to goods or services by a particular buyer and/or a particular seller under particular circumstances. (MSO. General concepts and principles of assessment. M., 1994).

Value is an economic concept that establishes the relationship between goods and services available for purchase and those who buy and sell them. Value is not a historical fact, but an estimate of the value of specific goods and services at a specific point in time according to a chosen definition of value. The economic concept of value expresses a market view of the benefit that the owner of a given product or a client to whom a given service is provided has at the time of assessing the value. (MSO. General concepts and principles of assessment. M., 1994).

The cost of replacing the appraisal object is the sum of the costs of creating an object similar to the appraisal object, in market prices existing on the date of the appraisal, taking into account the depreciation of the appraisal object. Replacement value is usually used for insurance purposes as an estimate of the total cost of restoring property. Valuation procedures that use replacement or new construction costs as the basis for calculating the value of a business for financial reporting purposes are considered appropriate in limited circumstances, as discussed in ECO 4 on depreciated replacement costs (ARC). Calculations of valuations for insurance purposes are sometimes carried out simultaneously with asset valuations.

Reinstatement value - the costs that are necessary to replace, maintain or overhaul the insured property in order to bring it into substantially the same, but not better, condition than that in which it was when new (without expanding it ). (MR 3, clause 3.5.5)

Appraisal is the act or process of determining value. Synonym for Valuation. (Business Valuation Standard, BVS-I. Terminology). Appraisal date – the date on which the appraiser’s conclusion on the value is valid. (Business Valuation Standard. BVS-I. Terminology).

Property is a legal concept that covers all interests, rights and benefits associated with property. Property consists of private property rights that give the owner the right to an interest in what is owned. To distinguish between real estate as a physical object and ownership of it in a legal sense, ownership of real estate is called real estate. Ownership of an interest in objects other than real estate is called personal property. The word property, when used without further definition or identification, can refer to either real or movable property, or a combination of both. (ICO. Concepts/principles, paragraphs 2.3, 2.4).

Property rights are rights associated with ownership of real estate. Property includes the right to use property (property), sell it, rent it out, donate it; as well as development, agricultural use, mining, alteration of its topography, division, consolidation or refusal to exercise all these rights. A combination of property rights is sometimes called a bundle of rights. Property rights are generally subject to public and private restrictions, such as easements, rights of way, zoning, building densities, and other restrictions that may encumber the property. (MR 1, 3.0).

Types of property - international valuation standards clearly distinguish between the concepts of real estate and real estate. Real estate is a material object (thing) and is defined as a physical plot of land, subsoil plots, isolated water bodies and everything that is directly related to the land, i.e. objects, the movement of which without disproportionate damage to their purpose is impossible, including: forests, perennial plantings, buildings, structures. (IVS, Concepts/Principles, paragraphs 2.0, 2.1)

Real property is a legal concept that refers to all the rights, interests and benefits associated with the ownership of real estate. An interest in real estate is usually formalized by a formal document, such as a title deed or a lease. (IVS Concepts/Principles, 3.2).

Real estate is the physical land and all things that are a natural part of it, as well as objects attached to the land by people. (IVS. Concepts/principles, paragraph 3.1).

Market value is the estimated amount of money for which property would be exchanged on the date of valuation between a willing buyer and a willing seller in an arm's length transaction, after proper marketing, in which each party acted knowledgeably, prudently and without coercion. Market value is an objective assessment of the established ownership of a particular property as of a given date. (IVS 1, paragraph 3.1).

Market approach is a general method of determining the value of an object or its equity capital, which uses one or more methods based on comparing a given enterprise (object) with similar investments (objects) that have already been sold. (Business Valuation Standard, BVS – I, Terminology).

The income approach is a general way of determining the value of an object or its equity capital, which uses one or more methods based on the recalculation of expected income. (Business Valuation Standard. BVS-I. Terminology).

The cost approach is an approach to valuation that determines the value of an object by determining the present (current) value of the asset minus various elements of wear and tear: physical, functional and economic. (Business Valuation Standard. BVS-I. Terminology).

Selecting a valuation base

The purpose of this assessment is to determine the reasonable cost of the costs necessary to create an object similar to the appraisal object, in market prices existing on the date of the appraisal, taking into account the depreciation of the appraisal object - Replacement cost of the appraisal object. Replacement value is the sum of the costs of creating an object similar to the appraisal object, in market prices existing on the date of the appraisal, taking into account the wear and tear of the appraisal object. The expert selected replacement cost, determined by the cost approach, as the basis for the assessment. The assessment procedure includes the following:

visiting the site to conduct an inspection and record the volume of work performed;
collection and analysis of necessary information and documentation;
calculating the cost of costs by drawing up estimate documentation or costing for property repairs;
preparation of a written report.

Selection of approaches and methods of assessment

To select valuation approaches, a comparative analysis of information on the relevant real estate market with the information necessary to apply one or another approach was carried out.

The cost approach is a set of methods for estimating the value of an appraised object, based on determining the costs necessary to reproduce or replace the appraised object, taking into account wear and tear and obsolescence. The costs of reproducing the valuation object are the costs necessary to create an exact copy of the valuation object using the materials and technologies used to create the valuation object. The costs of replacing a valuation object are the costs required to create a similar object using materials and technologies used at the valuation date. As already reflected above, it is applied in the absence of market information on transaction prices or income from real estate. In this case, when assessing the market value of the repairs performed, it is the only option.

Comparative approach - to apply the comparative approach when valuing real estate, it is necessary to have information about the sale of comparable properties. However, in the absence of information on actual transactions, it is possible to use data on the offer of sales of comparable analogous objects.

The income approach is a set of methods for estimating the value of the valuation object, based on determining the expected income from the use of the valuation object. The income approach includes two main techniques. According to the first, the value of an object is calculated on the basis of the current annual income from its operation, using special coefficients that reflect the relationship between property values and income level that has developed in the market. In the second, a forecast is made regarding operating income for a certain period in the future and the likely sale price of the object at the end of this period, and then the present value of all future income is calculated and summed up, using a special coefficient reflecting the risk that accompanies the investment in this object .

Description of the valuation object

The object of assessment is a complex of construction, installation and finishing works, as well as materials and equipment spent to carry out inseparable improvements in non-residential premises. The room with a total area of 199.4 sq. m., located on the first floor of a residential building, consists according to explication of rooms 1,2,3,4,5,6,7,8,9 premises XXXIII.

Appraiser's conclusion

The purpose of the assessment is to determine the market value of the actual work performed in order to inform the Customer. In accordance with international and Russian standards, the determination of the market value of the valuation object must be obtained by agreeing on the values of value determined as a result of the use of various valuation methods, namely: cost, comparative and income approaches. Coordination of results obtained by different methods is usually carried out by introducing for each of them a corresponding weighting coefficient, reflecting the degree of its reliability. As follows from the conclusions made by the Appraiser in the process of preparing this report, one of the three assessment approaches was used - costly. Based on the above, and guided by his experience and professional knowledge, the Appraiser considered it possible to assign the following specific weight to the value obtained by the cost approach - 1.0 (100%).

Thus, the market value of the valuation object - actually made inseparable improvements to the premises, as of the valuation date, taking into account VAT and rounding, is: 2,358,000 (Two million three hundred fifty-eight thousand) rubles.

Assessing the real value of construction company shares is one of the most difficult tasks for an investor. This was always true because they were never traded at their true price. Before the crisis, they were placed at extremely high prices; currently they are quoted significantly below their fundamental valuation. This article is based on conclusions from research into the specifics of several large construction companies. This analysis made it possible to construct an adequate algorithm for estimating the value of their shares.

Why are standard methods powerless against SC?

developers are not amenable to standard approaches to assessment. For example, such an exponent as revenue for an insurance company has no content, since without property revaluation, this index reflects only how actively sales of real estate assets were carried out in a certain period of time. If this indicator for company X is zero, then this means that during the reporting period it was engaged exclusively in construction, without selling anything on time. On the same basis, it is impossible to forecast the value of shares in the future using traditional ratios (P/BV, P/E, P/S and others).

to predict the price of shares of the insurance company

Based on the above, in relation to construction companies, the alternative is to make a forecast of the book value of a specific insurance company in the future, that is, you need to estimate the market value in the future of the projects that it currently has. Of course, the task is more extensive than standard methods. So, the sources of information on the insurance company should be the following documents: standard financial statements; IC quarterly and annual reports; financial statements according to international standards with comments; expert appraiser's report; information that the insurance company presents to investors; additional open access sources: articles, news feeds, forums, etc. Emerging problems in information processing: As a rule, the standard accounting statements of the insurance company are not consolidated, that is, each construction project is identical to a new legal entity. International reporting standards also create an obstacle: civil engineering projects (they are the ones that prevail in the insurance company’s portfolio) are classified under the heading “Reserves” and are valued at real cost, and not at fair cost. The appraiser's report, published by some companies, contains a complete list of properties with basic characteristics and ratings for each of them. But, firstly, the investor needs the value of the share in the future, that is, the price of the insurance portfolio in the future. Secondly, the parameters by which the cost of objects is derived may be different. What is important for an investor, first of all, is the forecast of changes in the value of real estate and construction projects. Returning to the crisis, we remember that the same experts either did not change prices in their estimates for a number of years (despite changing market trends), or seriously underestimated them throughout the year. Therefore, the reports of such specialists do not deserve trust, and their reports can be taken solely as data about the object and its main parameters (type and class of real estate, work deadlines, location, share of the insurance company in the project and area).

Algorithm for predicting the price of shares of insurance companies

Based on the foregoing, in order to be able to assess the value of shares of a construction company in the future, it is necessary to revaluate the entire volume of real estate of the insurance company and express it in the company’s balance sheet. To do this, you need to perform the following actions: 1. All available information about the objects of the insurance company, required for assessment, is collected. 2. First, all objects are assessed according to their belonging to specific real estate segments. 3. The total value of the developer's portfolio is calculated. 4. We predict the financial position of the company in the future. 5. Forms are drawn up: profit and loss statements, as well as balance sheet. 6. The predicted yield and ownership rate of the securities are calculated. 7. We calculate the generalized return on 1 share. Now let's look at some aspects in detail. Valuation of residential sector objects The distinctive characteristics of this segment is the difference in the time of project implementation and the time of actual sales. You also need to track actual sales according to reporting: for a month, for six months, for a year. Another distinctive point is sales by stages, that is, the difference between the cost at the stage of construction of the object and the market value of the constructed object. It is explained both from the side of the developer and from the side of the shareholder. From the first point of view, this is raising funds for construction. For the shareholder, the discount is fraught with risks. As the property is built, the discount and risks decrease. Ultimately, the object comes down to the difference in the income of the insurance company from sales of apartments and construction costs. Valuation of commercial sector facilities The distinctive characteristics of this segment are: Occupancy rate – part of the areas commissioned from the total area of the facility. Capitalization rate is the ratio of real estate rental and its value (taking into account market conditions). Commercial real estate involves two implementation options: sale and. In both cases, in addition to a discount similar to residential real estate, a discount is implied for the sale of all areas at once, or parts of areas in large quantities. If the premises are to be rented, the proceeds from it are calculated. The volume of a developer's portfolio is the sum of completed objects and unfinished ones. Assessment of objects at the design stage and land When calculating these parameters, you need to understand: Both agricultural land and land for the construction of structures are calculated using the comparative method. The sale of land in suburban settlements is calculated in terms of monetary profit. If the project is not started within the next few years or specific documentation for the object is not received, then it is calculated as land. Various IC business models Some insurance companies conduct additional (usually related) activities in parallel with their main activities. For example, a construction company produces building materials. In this case, the calculation may be different: 1. Additional directions are calculated separately, and as a result, all components are taken into account. 2. Indicators from all types of activities are taken into account in one statement of losses and profits. Generalized assessment of the developer's portfolio At this stage, the following indicators are summarized: Price of unfinished objects. Price of finished objects. Expenses for the construction of facilities. Income from sales of residential space. Income from sales of commercial space. Rental income. At the forecasting point, the first two indicators reflect the balance sheet capital stock in the future. in monetary terms they reflect income minus expenses. Part of it will remain undistributed and will also reflect the book capital of the insurance company in the future. The other part reflects the funds necessary for the company to carry out its activities. Adjustments based on actual reporting of the insurance company At this stage, we proceed directly to drawing up a forecast of the book capital of the insurance company in the future; to do this, we compare it with the current book capital. Only those objects that exist at the beginning of the term are subject to revaluation. The implementation of new objects is not recorded. Next, the volume of financing for the implementation of the activities of the insurance company is calculated. Their implementation is possible through additional issue of shares, sale of objects or debt management. In addition, it is necessary to take into account the insurance company’s tax obligations, including those on sales. And finally, calculating the profitability potential The final parameter of the attractiveness of an insurance company for an investor consists of 2 parts: the ownership rate and potential profitability. The holding rate reflects the return over the long term. Here, each type of real estate is taken into account at its own rate, which is then summed up by their proportions in the developer’s portfolio. Don't forget about the discount adjustment. Potential return reflects profitability in the short term. Here we compare capitalization at the forecast point and capital according to the forecast. Do not forget about the rent of the insurance company and the standard return in the average value. Don't forget about the discount adjustment. Correctly assessing the profitability of an insurance company is a rather difficult task. This is precisely what is associated with the inappropriate behavior of individual investors who deal with the securities of these companies. But the proposed assessment algorithm is relevant for calculating the real state of affairs in the insurance company - to reduce the risks of an investor who wants to invest his own money in their securities.

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The constant increase in construction volumes in large cities has led to explosive growth in the construction industry and a sharp increase in the number of individual companies engaged in the construction business. Construction, like any other business, involves constant movement of capital, one of the forms of which is the purchase and sale of construction companies.

When a company changes hands, the question of fair monetary compensation to its owner for the assignment of ownership rights to the company always arises. If a transaction occurs in an open, competitive market, with both buyer and seller acting reasonably, without coercion, each in their own interests, then the price of the transaction will be equal to the market value of the company.

Assessing the market value of a construction business has its own characteristics.

As you know, the value of a business can be determined by three approaches - cost, comparative and profitable. However, in the case of evaluating a business based on the provision of services (namely, this is the type of construction business), the cost approach turns out to be ineffective.

Indeed, the main value of a construction firm lies in its position in the market, which gives it the opportunity to regularly receive construction contracts. The higher the “contractual potential” of a company, the greater its profit, and, consequently, its market value.

The value of a construction company's assets is usually not high. If you determine the value of a company based on the market value of its assets (as should be done when applying the cost approach to valuation), then the market value of the business will be significantly underestimated. The only case when the use of a costly approach to business valuation is justified is a pre-bankruptcy situation, when the company experiences a chronic lack of orders, and the prospects for further obtaining new construction contracts look uncertain.

It is best to evaluate the business of construction companies using income approach methods, which rely on both retrospective and forecast data on the income and expenses of a construction company for a certain period. At the same time, the depth of the retrospective analysis must be at least 3 years, and the forecast period - at least 2 years. A retrospective analysis of an enterprise’s activities is very important, since it allows you to create an objective basis for further forecasts and reasoning. For example, if a company has shown a stable increase in net profit by 30% per year over the past 5 years, then with a high probability this pattern may continue in the future. Therefore, when making a forecast of business income and expenses for the next 2 years, the appraiser can more reasonably determine the forecast values of net profit for the forecast years. This valuation method is suitable for determining the market value of any business related to the provision of services, including construction services.

Comparative methods for evaluating a construction business can also give good results, but the practical application of the comparative approach is limited by the lack of reliable information on sales of similar enterprises. Indeed, sellers and buyers of construction companies are not inclined to disclose the prices of completed transactions - as a rule, price information in these cases does not extend beyond a narrow circle of participants. The shares of construction companies are practically not traded on the organized securities market, so it is not possible to obtain information about sales here either.

Thus, the most reliable way to evaluate the business of construction companies is the income approach.

To approximate the market value of a construction business using the income approach, you can use our free service “Online Business Valuation”

Moscow 2013
Chapter 1. Theoretical foundations for assessing the business of a construction organization

1.1. Characteristics and features of the business of a construction organization

According to the author's interpretation, business is proposed to be understood as a combination of the material component, represented by the enterprise as a property complex, and the intangible component, characterized by the efficient use of available resources. At the same time, the goal of a business is to create and increase the wealth of its owners or, which is the same, the value of the business.

Existing definitions of business as an activity aimed at making profit do not take into account the fact of resource consumption in the process of making profit, which is an omission.

At the same time, one cannot identify a business and an enterprise as a property complex. The concept of “business” cannot be reduced to a set of raw materials and equipment for the production of certain products. The profit gained will largely depend on how effective the actions are to organize the work of the property complex.

In this regard, the author expressed a thesis about the influence of business efficiency on its market value. According to the author's point of view, business efficiency is considered as the main criterion of its market value.

The author presented the relationship (Fig. 1) of the financial indicators of a business and its market value, which characterizes the integral nature of the value indicator . The goal of any investment, modernization of production and organizational structure of a business, mergers and consolidations is to increase sales volumes, reduce production costs, i.e. increase profits, assets and, as a consequence, the value of the business. The growth rate of business value reflects the efficiency of business development.

Fig.1. The relationship between the financial performance of a business and its market value.

The use of generally accepted financial indicators of a business and the determination of its market value make it possible to justify those areas on which the company's management should focus its efforts in order to make adequate financial decisions to provide the business with a competitive advantage and increase its value.

1.2. Analysis of the regulatory framework and information base for assessing a construction organization

An assessment has been carried out and this report has been compiled in accordance with applicable

legislative and regulatory documents:

The problems of diagnosing the competitive position of any economic entity are difficult to overestimate due to the special influence of such an economic factor of activity as competition in various forms of its manifestation. And, despite the significant interest in this problem, the methodology for diagnosing competitive confrontations and their components, trends in the position of enterprises in the market segment and many other issues require specification, as well as taking into account domestic differences when introduced into management practice. In the construction market, competition manifests itself in such diverse forms (specific, price, seasonal surges of competition, etc.) that conclusions about the diagnosis of the state of an economic entity are possible only based on the results of multilateral studies of activity. The problematic aspects of economic diagnostics within the framework of a competitive position also include assessing the value of a business, which is directly related to the formation of the stock market in the country as a necessary element of an integral economic system. This aspect of diagnosis most often relates to a separate task of entrepreneurship, but is fully a component in the system of factors that determine the state of an economic entity.

1.4. Analysis of existing approaches and methods for assessing the business of a construction organization

The Federal Valuation Standard “General Concepts of Valuation, Approaches and Requirements for Conducting Valuation (FSO No. 1)”, approved by Order of the Ministry of Economic Development of Russia dated January 1, 2001 No. 000, defines the income approach as “a set of methods for assessing the value of an appraisal object, based on determining the expected income from the use of the valuation object.”

When applying the discounting method, future income streams of each period are converted to present value by discounting using an appropriate discount rate. The discount rate is a measure of investors' assessment of their requirements for return on invested capital, taking into account the risk of obtaining income characteristic of a given object. The discounted income method is usually applied to properties that have unstable income and expense streams.

When using the direct capitalization method, the amount of income for a typical year of operation of the property is divided by the appropriate capitalization rate. The capitalization method is most applicable to objects whose net income from the use is constant or changes at a constant rate.

The capitalization rate is determined, as a rule, on the basis of market data by identifying the relationship between annual income and the cost of similar properties. It is also possible to use the cumulative construction method.

Unfinished construction project

Using the income approach to assess the value of properties requires the existence of a developed rental market for similar assets, or information about the functioning and profitability of businesses in similar properties.

Knight Frank notes that, despite some uncertainty in the market, construction activity is at a high level, and an increase in the commissioning of new office space is predicted in 2013. The share of vacant space has reached pre-crisis levels. In 2013, investor interest in high-quality development projects at various stages of implementation is expected to grow.

Taking into account the above, the Appraiser came to the conclusion that, within the framework of this assessment, the income approach can be used with a sufficient degree of reliability to determine the value of an unfinished construction project. When performing calculations using the income approach, the discounted cash flow method was used.

Movable property

The income approach requires a forecast of future income for the remaining life of the assets being assessed. It is difficult to solve this problem directly, since income is created by the entire production system, which, along with the movable property being valued, includes other fixed assets that are not included in the object of evaluation - a hotel building, a kitchen and dining room, a land plot, etc.

Based on the above, the Appraiser decided to abandon the use of the income approach to determine the market value of movable property.

The cost approach, as defined by the Federal Standard FSO No. 1, is a set of valuation methods. The comparative approach, as defined by the Federal Valuation Standard FSO No. 1, is a set of methods for assessing the value of an appraised object, based on a comparison of the appraised object with analogous objects of the appraised object, in relation to which have pricing information. An object-analog of an object of assessment is an object that is similar to the object of assessment in terms of the main economic, material, technical and other characteristics that determine its value.

The comparative approach is based on the principle of substitution: the buyer will not pay for an object more than the amount required to purchase a similar object on the market that has the same utility. Prices paid for identical or similar objects serve as the initial information for calculating the value of the object being appraised.

The comparative approach is applied, as a rule, when there is a sufficient amount of reliable information about purchase and sale transactions or price offers.

This approach is implemented through a number of successive stages:

Collection of data on sales of objects similar to the object being assessed. Only by analyzing this data can we say to what extent real prices reflect market value;

Comparison of the assessed object and analogous objects according to individual elements of comparison;

Adjustment of actual sales prices of compared objects based on comparison elements. The adjustment is carried out from the analogue to the object being evaluated.

Once prices are adjusted, they can be used to determine the value of the property being appraised.

In foreign practice, it is generally accepted that valuation based on this approach gives the most reliable results, which is due to the stable state of the economy, a widely developed market and reliable information about completed transactions available to appraisers.

The degree of similarity between the valuation object and the analogue, as in the cost approach, is determined by the elements of comparison. In this case, the elements of comparison are not only the characteristics of the objects of comparison, but also the characteristics of transactions that cause changes in value.

Comparison elements are combined into groups:

Characteristics of the object: functional purpose, technical parameters, manufacturer, quality (certificate of conformity);

Condition of the object: age, cumulative wear and tear, technical condition, completeness, presentation;

Location: geographical location of the object, physical location of the object within the enterprise;

Market conditions: recession or rise, supply and demand ratio;

Conditions of sale: time of sale, place of sale, average market exposure time;

Characteristics of prices of analogue objects: availability of preferential lending, presence of transport and other costs of the seller in the price.

This valuation approach is based on determining market prices that adequately reflect the “value” of the object in its current condition. The basic principle used is the comparison that must be made:

With an exact analogue sold on the secondary market;

An approximate analogue sold on the secondary market, with corrective amendments made in the absence of an exact analogue;

An important step when using the comparative approach is the selection of comparable analogues and the use in calculations of adjustments for the difference in the technical indicators of analogues and the object being evaluated.

The main problems of this approach are due to the difficulties of obtaining the necessary information, namely current market prices, creating databases with the choice of analogues that are adequate for the objects being valued, taking into account the degree of discrepancy in the composition and numerical values of the characteristics of analogues and the objects being valued.

By applying a comparative approach, if there is a sufficient amount of reliable information about the sale of analogous objects, it is possible to obtain the market value of the valued object as accurately as possible for a specific market.

A necessary prerequisite for applying comparative approach methods is the availability of information on transactions with similar real estate objects (which are comparable in purpose, size and location) that occurred under comparable conditions (the time of the transaction and the conditions for financing the transaction).

The main difficulties in applying comparative approach methods are associated with the opacity of the Russian real estate market in terms of disclosing information about real transaction prices. In this situation, the Appraiser can focus on offer prices, since a potential buyer, before making a decision to purchase a real estate property, will analyze the current market offers and come to a conclusion about the possible price of the property, taking into account all its advantages and disadvantages relative to comparison objects.

There are practically no comparable unfinished construction projects on the market. Due to the limited information available in the public domain on unfinished construction projects of similar functional purposes, the application of appropriate adjustments will not allow calculating the market value with a sufficient degree of reliability.

Using constructed buildings accepted for operation as analogues, followed by a proportional reduction in the offer price of analogous objects by the degree of incompleteness of the property being assessed (by 62%: 100% - 38%) will not allow taking into account market risks associated with organizing the completion of construction and the commissioning process object into operation.

Thus, having analyzed the volume and degree of reliability of the available information necessary to conduct an assessment using the comparative approach, the Appraiser came to the conclusion that within the framework of this assessment, the comparative approach cannot be implemented.

In 2012, the expert council assessed the company’s achievements in expanding the range of services to a new quality level, taking into account the needs of the market and maximum satisfaction of customer requests, which was noted Diploma of laureate of the Republican competition “Best Products of Bashkortostan”.

2.2. Analysis of the financial and economic activities of a construction organization

Key performance indicators of the Construction Company based on the results of 2011.

Table 1

Financial indicators for 2011:

Name	Indicators, thousand rubles.

Net profit

table 2

Net assets

(balance sheet currency minus loans, accounts payable, deferred tax liabilities)

Long-term assets

(fixed assets, construction in progress, intangible assets), including:

Fixed assets

unfinished production

Current assets:

Accounts receivable

Cash

(inventories, accounts receivable, cash), including:

(including 436,606 costs in unfinished production, 40,907 finished products, 182,295 raw materials)

598 unfinished, 98,736 finished etc., 227,921 raw materials and materials)

Short-term financial investments: - loans to legal entities

Accounts receivable

LIABILITY (sources of funds for the Construction Company)
Name	Indicators for 2011, thousand rubles.	Indicators for 2010, thousand rubles.	Changes, thousand rubles	Changes, %
Sources of own funds
Additional and reserve capital
Unallocated
Credits and loans
Accounts payable

An analysis of the composition and structure of the balance sheet shows that during the reporting year the balance sheet currency decreased by thousand. rub. (2 percent), this indicates an increase in the costs of work performed. The value of the Construction Company's net assets, which characterizes the amount of equity capital, increased by thousand during the year. rubles (18%) and at the end of the reporting year amounted to thousand rubles. Net assets far exceed the authorized capital. This positively characterizes the financial situation on this basis.