Abstract: This article addresses factors in the management of multidisciplinary appraisals of large companies and discusses some of the complexities that may add to the challenges of appraising certain industries.
Large companies – those with the largest operating structures and highest revenues in the global market – often hold many different types of assets, which means a wide range of appraisal specialists is required to determine their values.
While this article focuses on appraisals of large companies, it is important to mention that the specialist appraisal areas (real estate, machinery, biological assets, financial instruments, and so on) do not distinguish between sectors of the economy, only between assets within those sectors.
Effectively coordinating the various activities of such a range of appraisal experts is key to the successful delivery of valuation projects. Successful delivery is defined as delivering the best technical solution on time and within budget. Choosing the best technical solution for each case requires identifying and applying the most suitable methodologies and processes for the task, while meeting time and budget limits demands excellent planning and the best use of the available resources. Moreover, all this must be done to the satisfaction of all those involved (International Journal of Project Management).
Quality is never an accident, it is always the result of an intelligent effort. – John Ruskin
Planning, executing, and managing projects involves developing scope of work and assigning activities to all the professionals involved, documenting work in process while monitoring risks and opportunities, and always being prepared to adjust strategies according to any new scenarios and variables that may arise.
Above all, when undertaking such projects, the code of ethics and conduct must be rigorously enforced, especially among those working in the most sensitive areas in the appraisal process, namely analysis, research, and calculation.
Excellence is not a gift, but a skill that must be practiced. We do not act correctly because we are excellent, in fact, we achieve excellence because we act correctly. – Plato
Becoming an appraisal specialist who can work within the multifaceted environment requires great experience, involving both failure and success. Making the most of ongoing projects to improve and develop one’s professional skills and knowledge is the greatest profit. Such experience can be leveraged to create the largest possible knowledge database for the professional and for the company.
Having the correct professional and ethical attitude, respect for society, and for oneself ensures long-term professional benefits.
Making the most of ongoing projects to improve and develop one’s professional skills and knowledge is the greatest profit.
To eliminate or reduce any threat to the project, the professionals involved must feel they have the support of the appraisal management; when such support is not possible, appraisers must be removed from the relationship.
Ensuring high quality management requires following well-defined steps and processes and conducting repeated quality control audits.
Audits must be carried out to check the key points in the process to avoid any failures that can generate errors in appraisals. Management must demand total quality and reliability to strengthen the appraisal profession.
Importantly, due to the complexity of the managerial challenges and the volume of ongoing appraisals, there is a need to use specialized software to manage processes and services as well as the appraisers and their professional development.
The care taken with these processes is designed to ensure the quality and usefulness of the appraisals, the professional independence and appreciation of the appraisal profession, reliability of the appraisal reports and trustworthiness in relation to market information.
Constantly improving managerial processes by applying the lessons learned in challenging projects, and the knowledge acquired through training and at congresses and seminars keeps professionals motivated, updated and better able to deliver high quality services.
This management approach will be successful in any region of the globe, as it is people who make global companies and the greatest capital of a company is the people working with it and their knowledge.
The greater the variety of asset types to be appraised, the greater the number of specialized appraisal experts required and, consequently, the greater the managerial challenge.
For instance, companies that have non-traditional assets – such as natural resources, biological assets, financial instruments, and intangibles – in addition to the traditional assets of land, buildings, industrial facilities, machinery and equipment – may be more challenging to appraise. Non-traditional assets are commonly found in companies in the mining, chemical, oil and gas industries. These industries may also prove complex due to the specialized equipment involved, while other industries are complex not because of non-traditional assets but only because of the specific nature of the assets involved, such as softwares, technologies, formulas, specialized machinery, specialized aircraft, and some kinds of real estate.
The management of appraisals with specialized or non-traditional assets of any kind will require special attention and specialized knowledge. Good communication with the appraisal team experienced in such specialties will be of great benefit to the appraisal management in creating a scope of work.
Effectively managing the activities of such a multifaceted project with a range of appraisal experts requires high quality committed management, whether the assignment is for large companies within a complex and specialized industry or more standard, less complex assignments, in which the companies hold predominantly traditional and non-specialized assets. While experience is an important aspect of appraisal management, education offered through ASA can provide critical support in helping appraisal managers provide successful delivery of valuation projects.
Joao Mynarski is the principal of Mynarski International Valuation in Latin America and is dedicated to advancing the appraisal profession to meet the needs of national and international companies operating in Latin America.
Joao earned a degree in civil engineering in 1983 from Pontificia Universidade Católica do Rio Grande do Sul. He went on to specialize in appraisal at UFRGS - Federal College of Economics, UCLA - Berkeley Extension and IBEF - Institute of Finance Executives.
He started Mynarski International Valuation in 1991 offering
the full range of appraisal and valuation services, asset management, business
combination and software development in all business sectors for corporations,
investors and funds.