NIGERIA SOCIETY OF ENGINEERS
COMMENTS ON NIESV SUBMISSION TO APBN TITLED: VALUATION OF SPECIAL ASSETS OR THE ESTATE SURVEYOR AND VALUER: REF. ESV/ ADM/11/VOL. 1 OF 21st MAY 2001
 

1. ROLE OF ENGINEER IN CERTAIN VALUATIONS

NIESV STATES:
‘’The Nigeria Institution of Estate Surveyors and Valuers (NIESV) accepts that the engineer has a role to play in the valuation of complex special assets. But that role is not that of valuer’’.

NSE affirms that it is the laws of the Federal Republic of Nigeria that determines who is a valuer and not the NIESV. The laws are there. What do the laws say? Reference to Decree No. 1 of 1990 Sec. 554,603 and 137 as amended by Decree No. 46 of 1991 Sec. 3; and Decree No. 27 of 1992 Sec. 12 would lay this matter to rest.

Relying on NIESV or NSE opinion for that matter, would tend to lawlessness. The consequences of the latter are clear to all.

Professional scale of fees does not constitute statutory definition of ‘’practice of a profession’’

The FMW&H scale of fees being relied on by NIESV for establishing their claim to the word valuation is ungazatted and so cannot supercede the laws.

2. AFFIRMATION BY MAJOR GEN. KONTANGORA & M.D. NEPA

Neither Engr. Gen. Momman Kontangora, FNSE nor Engr.Hamzat Ibrahim M.D. NEPA in the late 80’s would affirm that the Estate manager is the plant and machinery valuer. Gen. Kontangora endorsed the NSE petition that led to the amendment of sec. 137 of Decree No. 1 of 1990 to align with sec. 554 & 603 of the same Decree, all three sections consistently recognizing the Engineer as valuer.

The intervention of Engr. Ibrahim in 1990 brought about the engagement of engineering firms for the valuation of machinery and equipment assets of NEPA then while Estate managers were retained for land.

3. CONTINUING PROFESSIONAL EDUCATION

‘’NSE through chief Otis Anyaeji claims that they have been running continuing professional Education Courses in plant and machinery Valuation. NIESV sees those courses as an attempt to make Engineer valuers in 3 or 4 day courses. That cannot work.

NSE believes that NIESV knows what continuing education of estate managers means. NSE also knows what continuing education of Engineers is. Engineers know there onions. For NSE due to the rapid growth of science and technology continuing education is an imperative for professional engineers by law, make the Engineer: an investigator, adviser, reporter, evaluator /appraiser/valuator/valuer, cost estimator, material estimator, inspector, instructor/ educator/teacher, planner, designer, supervisor, constitution manager, commissioning manager, operations manager, procurement manager, maintenance manager, etc.

Technological advances, increases in knowledge, changes in National priorities and funding patterns, alterations in social conditions in addition to changes in the profession itself combine to affect the demand and requirements for engineering services. The increasing accumulation of practical knowledge in all fields of engineering makes it impossible to provide a comprehensive initial education of disciplines within engineering. As has been explained in a previous write up, the main function of a previous education up to first- degree level is impacting of basic scientific knowledge. This basic scientific knowledge can be applied in planning, in design, in valuation, in estimating, in operating of systems, in maintenance, etc.

For the engineering profession, continuing education means the education which the engineers acquire throughout their working life bearing on all the practical problems they are likely to encounter in various aspect professional, intellectual, aesthetical, political and physical. At the individual level the engineer’s need may be to keep up with new developments in his or her own and related fields; to acquire new and advanced knowledge and to develop new skills to improve his or her position in the technological hierarchies; or to gain knowledge to enable him or her to live a fuller life and become a more integral part of the society

This is the philosophy behind the courses, seminars, workshops, symposia, lectures and conferences organized by the Nigerian society of Engineers for Engineers year in year out. Thus when the society organizes a 3-day course on Design of Bridges, or Design of Highways, she is not seeking to make Engineer bridge Designers in 3 days. The basic scientific training for bridge design had been done at the initial education stage.

Similarly, when she organizes a 5-day course in machinery & equipment valuation, she is not trying ‘’to make Engineers valuers in 3 or 4 days’’. Such participant were already valuers by virtue of the basic scientific training in the university or similar teaching institution and also by law. The advertisement purportedly dated 14th, August 2000 for a 3 day workshop on plant, machinery and Equipment valuation supposed organized by the Lagos branch of NSE was not a Nigerian Society of Engineers course. NSE is of the view that if such a course ever held, Estate managers must have seduced some Engineering persons into that posture so that NIESV can make the point that estate managers are the facilitator of the NSE training programmes in valuation. Fact is that estate managers are not required in the teaching of engineering valuation courses. Those who contracted such a transaction where out of six facilitator, for plant, machinery & equipment valuation, four are estate managers, must have had Real estate valuation in mind.

The Nigerian Society of Engineers knows that NIESV is incompetent to deem and hold expansionist NSE’s plan to present a course on Mine Examination & Evaluation (a core course in mining Engineering), for the simple reason that NIESV ‘’re-emphasized’’ mineral evaluation in her march 2001 Jos conference. NSE hold the same position on the courses on machinery & equipment Evaluation(mechanical/industrial Engineering), Oil & Gas property valuation (petroleum engineering),  Transport Equipment Valuation (Automotive/Aeronautical/Locomotive/marine Engineering) etc.

4.0 FURTHER AND BETTER INFORMATION

4.1 Decree No.24 of 1975

NSE has already explained to APBN that Decree No. 24 of 1975 being relied upon by NIESV for the regulation of their profession is an irregular machinery that confers a misnomer as titles to practitioners in the noble profession of estate management. Were Engineers to similarly manipulate the law making process, then their entire titles would have been endless. Samplers: Engineer &  Adviser, Engineer & Reporter, Engineer & evaluator /Appraiser /Valuator /valuer, Engineer &  Instructor/ Teacher/Educator etc.

4.2 Rules & Regulations for the practice of estate Surveying valuation

Federal office Gazette No. 5, Vol 76 dated 19th January, 1989 government notice no. 9, RULE 2 defines the scope of practice of estate managers in valuation to be limited to Real Property . NSE has always agreed with this and is urging NIESV to be law abiding on this.
For the avoidance of doubt we restate that Real property includes the interest, benefits, and rights inherent in the ownership of physical real estate.

4.3 NUC Minimum Academic standards, July 1989

The body charged with the regulation of engineering in all its ramifications in Nigeria is ‘’ the council for regulation of Engineering in Nigeria’’ (COREN). This body is responsible for accrediting University Engineering programmes as adequate for post graduation registration of the institution’s products. COREN’s enabling decree has also defined ‘’practice of engineering” as including “valuation’ inter alia, as one of the functions of the engineer. The duty of NUC is to set standards that minimally offers courses to adequately equip the students with tools that can be applied to this functions. It is not the business of NUC to determine the functions of any profession. For an engineering programme to be accredited it must offer Engineering Economy. This is where valuation of Assets is taught.

That advanced valuation II includes mineral valuation, plant and machinery etc. in Estate management programmes is as revisionist as it is curious. Who teaches these courses in the Estate management departments? Are these not the same mineral valuation and plant & machinery valuation which NIESV told the whole world in match 2001 that there is no single member of NIESV in these fields?

5.0 NIESV INTERNAL EXAMINATION

NIESV draws attention to the preparatory courses an under graduate in Estate management must take as pre- requisite for the study and understanding valuation. Such courses they say are Economics, Accounting, Law, Mathematics. In any case we repeat that every Engineering student in the university studies Engineering Economy. In that course most of what Estate management students study as evaluation for five years is taught in one year, in addition to many other things. The reason for this is clear. Even if NIESV is to make the choice, they do not need the assistance at all to tell who is the mathematical mind between an Engineer and Estate manager.

 6.0 DEFINITION OF LAND

The law of property Act, 1925 of England defines land as follows:

“Land” includes land of any tenure, and mines and minerals, whether or not held apart from the surface, buildings or parts of building… and other corporeal hereditaments and an easement, right, priviledge or benefit in over, or derived from land…

It is of course common sense that land includes the thing on and in it, particularly from the ownership angle. The main object of this 1925 legislation was to render the sale of land and simple a matter as is the sale of goods or of shares, so explains cheshire’s “ The Modern Law of Real property” 8th Ed. (1958). The intention was not to gang up land/mines/minerals/trees/building/ etc. such that as owner of land also owns the others, so the geodetic surveyor of land is also the geological surveyor of earth or the designer of landscape also the designer of buildings, much less the valuer of land also the valuer of mines.

Classical jurisprudence has already disaggregated land/buildings (real estate) from trees,  crops, oil, ore, etc (personal property). We are to glean this from the English “status of frauds” (1676) of the full title “An act for the prevention of frauds and perjuries”. Every state in the united states has had to enact this statute, either in part or in its entirety.

Under the clause for “contracts for the sale of Real Estate” a clear distinction is made as to what is considered as real estate. Actual land and building are regarded as real estate but the question is to whether trees, oil, ores, etc are real estate or personal property must be ruled upon. Canfield and Boaman (1954) in their book “Business, legal and ethical phases of Engineering”, explains that the general rules( from the statute)is that the natural product in or on the land which grow without cultivation or expenditure of the labour of man, if not to be cut or mined by the vendor, are part of the realty. They give example like growing timber, grass on uncultivated fields, ores, etc., are part of realty, but crops that are planted annually or oftener,  upon which the labour of man has been expended are personal property. However, if the former natural product of the land is worked upon they become personal property. Thus, if timber is to be cut before being sold, if grass is to mow, or if ore is to be mined, these become personal property. Engineers and Agronomists are concerned with personal property, while estate manager are concerned with real property.

7.0 DEFINITION OF VALUATION

If Jowitt’s Dictionary of English Law, Vol 2, 1977 says that Valuation is “ The equivalent in money of any kind of property”. We would like to know what it says about Value.

At any rate in our “Glossary of Valuation terms” earlier submitted, we have defined these terms including price and cost.

8.0 DEFINITION OF PROFESSION

If the law regulating estate management do not define what it is, those regulating Engineering clearly define practice of Engineering.

Ref. Sec. 12 Decree no. 27 of 1992

From D. Richmond’s (1993) “Introduction to valuation” We know that the general practice sector of the Royal Institute of chartered Surveyors (UK) is concerned with valuation, marketing and management of all types of residential, commercial and industrial property for occupation or investment.

In the next sentence Richmond defines the valuer as primarily concerned with the valuation of land and/or buildings, and immediately next, valuation as the estimation of the capital or rental value of land and /or buildings at a certain time.

It is thus clear that real estate in the residential, commercial and industrial property is what the RIC valuers are ‘primarily concerned about’.

9.0 VALUATION OF ASSETS IN THE UK

David Richmond is principal lecturer in valuation at Nottingham Trent University.  His books are used in estate management departments in Nigerian Universities. Thus when the matter is value or valuation, he should know what he is talking about. But that is in the UK, where since 1949 their France Act abrogated the requirement for qualifications for being a valuator.

In engineering we rely more on developments in the US, over there they have three professional associations in the field of Real Estate Valuation viz.

  1. American Institute of Real Estate Appraisers (of National Associatio of Realtors)
  2.  The Society of Real Estate Appraisers
  3. Society of Industrial Realtors

The American society of Appraisers covers the interests, and promote the advancement of Business, machinery and equipment, personal property, Oil & Gas,Mines & Querries, technical etc. Valuation Engineers affiliate to ASA in the relevant specialist (not general) division.

10.0     BOOKS & LITERATURE ON ENGINEERING VALUATION
              The books used in Engineering Valuation practice like for general engineering practice are mostly American. Some of these are:

  1. Marston,  A.R. Winfrey and J.C Hempstead, “Engineering Valuation and Depreciation”, Iowa State University press, Ames, Iowa 1937.
  1. Alico, J. (Ed.) “Appraising Machinery & Equipment,” (sponsored by  American Society of Appraisers) Mcgraw Hill Book Company, 1989
  2. Bolotin, V.V, “prediction of service life for machines and Structures”, ASME press New York 1989
  3. Campbell, J.M., “Oil property Evaluation”, Prentice Hall, New Jersey, 1959.
  4. Hughes, R.V., “Oil property Valuation”, John Wiley & sons, New York 1967.
  5. Parks R.D.,” Examination and Valuation of Mineral property”, 3rd & 4th  Ed. 1949 and 1955.
  6. McGraw, A.W., “Petroleum Evaluations and Decisions”, Prentice Hall, New Jersey 1957.
  7. Campbell, J. M. Et. Al “ Mineral property Economics (Vol 1 III)’’, Campbell petroleum series, Oklahoma, 1978.
  8. Etc

All the authors of the above listed books are Engineers.

 

For: THE NIGERIAN SOCIETY OF ENGINEERS
Engr. Otis Anyaeji, MNSE
Chairman, Engineering Valuation & Privatization Committee
June 2001.

INSTITUTE OF APPRAISERS & COST ENGINEERS

A Division of
The Nigerian Society of Engineers
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