A key issue facing many public sector organisations is that many of their physical non-current assets are highly specialised, with the markets for such assets generally non-existent. This is particularly relevant for major water infrastructure including pumping stations, sewage treatment plants, pipelines and the like. 

Advisian’s approach 

In the absence of market based information, AASB 168 and relevant Treasury guidelines allow for physical non-current assets to be valued using the ‘depreciated replacement cost’ method. This is determined by calculating the asset’s current replacement cost less any accumulated depreciation, to reflect the portion of the asset’s useful life that has already been consumed. Advisian takes the following approach to determine fair valuation: 

  • determining current replacement costs: 
  • applying the MEERA concept (Modern Engineering Equivalent Replacement Asset) to determine the current replacement cost consistent with AASB 116 and relevant Treasury guidelines.  
  • using engineering expertise to identify, and adjust for, elements of over-design, overcapacity and redundancy in existing assets. 
  • providing accurate valuations based on a combination of first principles estimating, market and actual contract pricing. 
  • determining accumulated depreciation costs: 
  • advising on suitable procedures to determine an asset’s remaining useful life for depreciation and asset planning purposes 
  • conducting asset condition appraisals to assist clients with the determination of the remaining useful life. 
  • presenting depreciated replacement values: 
  • tailoring the presentation of the final depreciated replacement values to suit a client’s individual reporting and asset planning requirements.

Advisian’s work

Sydney Water Corporation & Sydney Catchment Authority

Assisting with the revaluation of their existing water infrastructure assets including sewage treatment plants, water filtration plants, above and below ground water mains and tunnels involving: 

  • preparing replacement cost estimates of water infrastructure assets by applying the MEERA principle, using Advisian’s experience in the latest water and sewage treatment and pipeline construction technologies. 
  • developing a comprehensive escalation tool that enables clients to update the valuations annually to reflect the actual rates of escalation experienced in the market. 

Gosford and Wyong Council 

  • Assisting with the fair valuation process for their major water infrastructure assets, which consisted of sewage and raw water pump stations, major underground pipelines, reservoirs, sewage treatment, and water filtration plants, involving: 
  • preparing replacement cost estimates of water infrastructure assets by applying the MEERA principle. 
  • assisting with the determination the ‘current written down value’ for each asset, considering the economic value of the asset already consumed. 


Due to Advisian’s understanding of financial principles and extensive experience in the costing, constructability and delivery of complex infrastructure projects, our clients in the water industry have confidence: 

  • that through the application of a proven and tested valuation process they comply with AASB 116 and relevant Treasury guidelines and policies. 
  • in the valuations and that values will not differ materially from fair value at the reporting date. 
  • that updating valuations in the future will be simple through the use of specialist estimating software with a powerful and integrated database system.

Producing up to date ‘fair valuations’ on highly specialised public sector assets