1. Investment Value vs. Market Value in the assessment process of special constructions assets – pipeline transportation systems
Eng. Ciprian GHEORGHE
Real Estate Valuer, Full Member of The Romanian Association of Appraisers ANEVAR
PhD Student, Valahia University of Targoviste, Faculty of Economics, Targoviste, ROMANIA
Eng. Gabriela POTORAC
PhD Student, Valahia University of Targoviste, Faculty of Economics, Targoviste, ROMANIA

2. ``VALAHIA University`` of Targoviste, ROMANIA
Multidisciplinary Science and Technology Research Institute of  Valahia University of Targoviste

3. Research Areas of
Multidisciplinary Research Institute of  Valahia University of Targoviste
Research Center "Academic School of Materias Science„
Research and Studies Center in Accounting and Finance
Research Center "Applied Sciences and Modern Technologies„
- Biotechnology and Applied Engineering Sciences Center
- Research Center for Electrical Engineering, Electronics and Information Technology  - Energy Environment Research Department  - Center for the Study of the Environment, Habitat, Motor and Leisure Activities  - History of International Relations and Cultural Studies "Grigore Gafencu" Research Center  - Center for Research and Studies in Management and Marketing  - Nanomaterials for Micromechanical Systems Research Center  - Research and Expertise Centre of the Natural Resources and Environment  - Research Center for Political Science and Comunication

4. The objective of this paper:
to analyze the advantages and disadvantages between the estimation of the market value using traditional evaluation approaches for pipeline transportation systems vs. the evaluation "at investment value " using incoming approach in comparison to the cost approach

5. THE EVALUATION PROCESS
Property Right
Evaluation
THE EVALUATION PROCESS
Economic
Evaluation
Technical
Evaluation

6. Investment Value vs. Market Value in in the assessment process of pipeline transportation systems
``market value`` is usually done by cost approach because there are not available enough market information for this industry in the analyzed area
``investment value`` concerning to the EVGN 5 requirements, we use the incoming approach (Discounted Cash Flow method )

7. The Investment Value may be different from the Market Value
In the book `` About evaluation and verification assessment `` Vascu, A., Ed. Iroval , Bucharest, 2015 in Chapter 7 – How many values has a good? :
`` an asset theoretically has only one value `` but there may be more values of the same good depending on the purpose of valuation, but between the values of the same good there should be no differences greater than 20%.
In practice valuation of pipeline transportation systems the difference between market value and investment value is more than 20%

8. Fluid & Gas transportation by pipelines systems:
Advantages:
pipeline transportation is the perfect tightness
possibility of a continuous transportation (non-stop pumping)
Disadvantage:
- it requires very large investments

9. Evaluation of special construction assets like pipelines is a complicated process that does not use traditional approaches to evaluation, but rather a mixture of evaluation methods because each pipeline is unique in its own way, but also because its value is influenced by many factors. These factors, acting together, represent the influences the value of a pipeline from several points of view: the physical - chemical, technological and economical.
The main factors that should be taken into consideration when carrying out a modern, high quality evaluation, under specialty standards existing on the market are as follows:
factors which depend on the material themselves (e.g. physicochemical characteristics and technological);
factors that depend on the working conditions (e.g. temperature, pressure, chemical composition and properties of working environments-relax, streamline, corrosion etc.)

10. Pipeline Evaluation for MARKET VALUE
Pipeline Systems Evaluation for MARKET VALUE
Pipeline Evaluation for MARKET VALUE
Economic Evaluation
Technical Evaluation

11. Pipeline Evaluation for INVESTMENT VALUE
Pipeline Systems Evaluation for INVESTMENT VALUE
Pipeline Evaluation for INVESTMENT VALUE
Economic Evaluation

12. In accordance with the recommendations of EVS 5 and EVGN 5 requirements, for the estimation of the Investment Value the assessor will usually use the Discounted Cash Flow method
Specific Economic Elements for Pipeline Transportation Systems evaluation analyzed in Discounted Cash Flow method:
revenue,
operating costs
land costs
interest
tax
amortization
depreciation

13. How should I decide whether or not to make an investment
THE EVALUATION OF THE DECISION FOR INVESTMENTS
How should I decide whether or not to make an investment
or go forward with a financial project?
How do I evaluate an investment’s performance some time period after the investment has been made ?
If I have a number of alternative investment options, how I decide which is the best alternative?

14. There are a number of techniques that can help with these questions and to obtain the INVESTMENT VALUE
Payback method
Accounting rate of return (ROR) method
Internal rate of return (IRR) method
Net present value (NPV) method
the net present value (NPV) method as the most effective and accurate technique of evaluating potential investments

15. The corrosion process is a complex mechanism that occurs during operation of all equipment and technological equipment in the refineries or pipelines systems or found in petrochemical installations and is done at oscillating temperature and pressure (high/low), in the presence of some work environments (type: crude oil, compressed gases, petroleum and petrochemical products, etc.).
Corrosion is defined as the destruction, in a certain span of time, of metals and metal alloys as a result of chemical and/or electrochemical actions of the technological environments and surrounding or due to physical dissolutions

16. In normal operation of the pipeline system there are complex corrosion processes which depend on many factors, but this corrosion processes can be grouped in two categories: corrosion which have as finality added mass of corrosion material and corrosion which have as finality loss mass of corrosion material. In these conditions the influence factor of depreciation due to corrosion it has the following relationship:
𝜑= 𝑀𝑖+𝑀𝑎 𝑀𝑖−𝑀𝑐 (4)
Mi - the initial mass of the pipeline at the initial time;
Ma – the added mass of corrosion material; Mc – the loss mass of corrosion material
If in the process of corrosion occurs only added mass of corrosion material and if in the process of corrosion occurs only loss mass of corrosion material are also the situations that can be explained and graphics dependencies that can be analyzed.

17. Conclusions:
Estimating the investment value is very useful and important for the investors, but to estimate the investment value of the pipeline transportation systems that are special construction assets are made different by the market value
The relation between depreciation and the influence factor of depreciation due to corrosion is the quantitative expression of the correlation between depreciation and corrosion and is a very useful tool for appraisers in predicting of the market value for pipeline transportation systems
The value of the pipeline transportation systems is directly influenced by the corrosion
The higher thithe influence factor of depreciation due the corrosion is, the higher the amount of depreciation is and the smaller marhet value is
- As the value of depreciation directly affects the market value, it can be said that the factor of influence of depreciation due to corrosion φ directly influences the market value of the pipeline systems.