Department of Mechanical Engineering,

Obafemi Awolowo University, Ile-Ife,

Osun State.

18th of April, 2019.

The Valuation Coordinator,

Faculty of Technology,

Obafemi Awolowo University,

Ile-Ife,

Osun State, Nigeria.

Dear Sir,

LETTER OF TRANSMITTAL

In view of the vital requirements for the successful completion of the course, MEE400 and the

award of Bachelor of science (B.Sc.) degree in Mechanical Engineering, I hereby submit this

valuation report on the industrial training which took place at OBKAZ ENGINEERING STEEL

WORK located at Lagos Ojoo Express road, opposite celestial bus stop Amuda Oojere Area Iwo

road Ibadan, Oyo State, Nigeria, for a duration of twenty four weeks(Six months) from October

2018 to March 2019 for your necessary action.

Thanks for your anticipated approval.

Yours faithfully,

BINUYO Ayodeji Samuel

MEE/2014/018
 CERTIFICATION

This is to certify that BINUYO Ayodeji Samuel wrote this technical report as part of the

requirements for completion of Students Industrial work Experience Scheme (MEE 400) in the

Department of Mechanical Engineering of the Obafemi Awolowo University, Ile-Ife, Nigeria.

Engr H.A. Owolabi ……………….. ………………

Departmental SIWES Coordinator/Committee Signature Date

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 DEDICATION

I dedicate this project to God Almighty my creator, my strong pillar, my source of inspiration, wisdom,

knowledge and understanding, and also to my beloved parents, and to all staff at Obkaz engineering

steel works for your love and support. God bless you all.

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 ACKNOWLEDGMENT

All praises and honour to Almighty God for the strength and wisdom given to me for the

completion of this Industrial Training , to the entire Binuyo's family and friends, and to all staff

of Obkaz Engineering Steel Works, for helping me with this project, I say a big Thank you.

And to the entire staff of The Department of Mechanical Engineering, Obafemi Awolowo

University, Ile-Ife, for their invaluable teachings, without which I wouldn’t be here, I also say

Thank You.

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 ABSTRACT

Obkaz Engineering Steel works is a foremost metal fabrication company located at Lagos Ojoo

Express road, opposite celestial bus stop Amuda Oojere Area Iwo road Ibadan, Oyo State. They

specialize in Design and fabrication of agricultural and food processing machines to make life

easy for the innovative farmers, food processing companies and Entrepreneur individuals. They

make use of a lot of mechanical machines and equipment which often require maintenance,

repairs and so many other measures for effective production. Assets in the company range from

buildings, to machines, tools and equipment in use in the workshop and company vehicle.

The cost approach of engineering valuation was used to determine the existing used value and

book value of all the equipment assets of the company. The machines were evaluated as and M&E

which was evaluated together. Keeping in mind that the purpose of the valuation process was to

determine the fair market value of all these equipment, the straight-line method of depreciation

was adopted to determine the depreciation rate of these equipment.

It was discovered at the end of the valuation process that the overall existing use value of the

equipment is; N2, 607,749 while their total fair market value was estimated to be; N856,500.

It was concluded that OESW will need a gradual replacement of all their equipment asset over the

next few years in order to prevent any discontinuity in its design and fabrication operation which

may arise as a result of machines breakdown.

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 TABLE OF CONTENTS

CERTIFICATION…………………………………………………………………………….ii
DEDICATION………………………………………………………………………………...iii
ACKNOWLEDGMENT……………………………………………………………………...iv

ABSTRACT……………………………………………………………………………………v
TABLE OF CONTENTS………………………………………………………………………vi
LIST OF TABLES…………………………………………………………………………….viii
LIST OF PLATES……………………………………………………………………………..ix

LIST OF FIGURE........................................................................................................................x

CHAPTER ONE …………………………………………………………………..1

INTRODUCTION ...........................................................................................................................1
1.1 Background ............................................................................................................................1
1.2 Introduction to the Company................................................................................................1
1.3 Nature of Company Business .................................................................................................2
1.4 Engineering Equipment Asset Management Approach of Obkaz Engineering ..............2
Steel works ...................................................................................................................................2
1.4.1 Definitions of Assets ........................................................................................................2
1.4.2 Types of Assets ..........................................................................................................2
1.4.3 Assets Management System ............................................................................................3
1.4.4 Obkaz Engineering Steel works Maintenance Strategy ..................................................3
1.4.5 Introduction to MP2 Maintenance Management System ................................................3
Table 1.1: Types of Maintenance Strategy Used By Obkaz Engineering ....................................4
Steel works ...................................................................................................................................4
OBJECTIVES ..............................................................................................................................5
CHAPTER 2 ....................................................................................................................................6
LITERATURE REVIEW ................................................................................................................6
2.1 Background ............................................................................................................................6
2.2 Concept of Value ....................................................................................................................7
2.2.1 Ordinary Valuation ..........................................................................................................8

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 2.2.2 FORMAL VALUATION ...............................................................................................8
2.2.3 Engineering Valuation (E.V.) ..........................................................................................8
2.3 General Introduction to Engineering Valuation .................................................................8
2.4 Purposes of Engineering Valuation ....................................................................................9
2.4.1 Financial Purposes .........................................................................................................10
2.4.2 Insurance Purposes ........................................................................................................10
2.4.3 Disposal Purposes ..........................................................................................................10
2.5 Method of Valuation by a Company ....................................................................................11
2.5.1 Replacement Cost Method.............................................................................................11
2.5.2 Depreciated Replacement Cost Method ........................................................................12
2.5.3 Comparison Method ......................................................................................................13
2.6 The Present Method used at Obkaz Engineering Steel Works...........................................13
2.7 The Data Source, Equipment Manufacturer, Class of Industry .........................................14
2.8 Depreciation .........................................................................................................................15
2.8.1 Estimation of Depreciation ............................................................................................16
2.8.2Types of Depreciation ....................................................................................................19
CHAPTER THREE .......................................................................................................................21
METHOD OF VALUATION ........................................................................................................21
3.2.1 PHYSICAL CHARACTERISTICS ............................................................................26
CHAPTER FOUR ..........................................................................................................................27
RESULTS AND DISCUSSION ....................................................................................................27
4.1 Table and Graph of Results Obtained ..................................................................................27
CHAPTER FIVE ...........................................................................................................................32
CONCLUSION AND RECOMMENDATION .............................................................................32
REFERENCES ..............................................................................................................................34
APPENDIX 1 .................................................................................................................................36

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 LIST OF TABLES

Table 3.1. List of Equipment, date of purchase and estimated price the equipment.

Table 4.1. Results of Computation Carried Out

viii
 LIST OF PLATES

• Plate 1: View of a Welding machine

• Plate 2: View of a Single Phase Diesel Generator

• Plate 3: View of a Drilling Machine

• Plate 4: View of a Lathe Machine

ix
LIST OF FIGURE

Figure 4.1: Graph of EUV against years used of a Pick Up Van