Annual Report 2014-15

NOOSA SHIRE COUNCIL

Notes to the financial statements
For the year ended 30 June 2015
  14   Fair value measurements continued

       Infrastructure Assets (level 3)
       Due to the specialised nature of Council's infrastructure assets and the services they provide, there is
       no active measurable market. The fair value of all infrastructure assets is determined on the basis of
       replacement of a new asset or modern equivalent.
      Current Replacement Cost (CRC) is measured by reference to the lowest cost at which the gross economic
       benefits of the asset could be obtained in the normal course of business. Where existing assets were
      over designed, had excess capacity or where redundant an adjustment was made so that the resulting
      valuation reflected the cost of replacing the existing economic benefits based on an efficient set of
       modern equivalent assets to achieve the required level of service output within the Councils planning horizon.
       Infrastructure assets are comprehensively revalued every three to five years, based on component unit
       rates developed in line with asset renewal methods.
      Specific valuation techniques used to value Council infrastructure assets comprise:
       Road and Bridge Network - current replacement cost
       Roads
       Road and bridge infrastructure was comprehensively valued by independent valuer Aurecon Australia Pty Ltd
      as at 30 June 2014.

      The valuation technique used to determine fair value is essentially based on price modelling of the fair
      value through ‘Level 3’ unobservable inputs. These include a variety of sources to obtain the best information
      available for each asset type, including actual contract prices or supply quotes for similar assets.
      The unit rates were predominanily developed from first principles by estimating the plant, material and labour
       required for asset replacement. The base rates were sourced from local suppliers estimates and quotes,
      contract schedules for work recently completed and council records. Where costs have not been readily
      available then rates were obtained from Aurecon's cost database or the Rawlinson 2014 edition of the
      Australian Construction Handbook.

      Council uses 3 distinct location factors categorising its road infrastructure into urban, rural and commercial/
      industrial. Roads are further categorised as sealed or unsealed and managed in segments. All road
      segments are then further componentised into the sub classes of assets that make up each segment, i.e.
       Road Surface, Road pavement - base, Road pavement - sub-base, Road shoulder, Formation, Kerbs, footpaths
      etc. Each asset unit rate is determined on cost to construct, material type and useful life to facilitate valuation
      and depreciation.
      A review of market data obtained from the Australian Bureau of Statistics, Queensland Roads and Bridges
       Index rates for the period 30 June 2014 to 30 June 2015 shows no significant material changes and therefore
      the values are considered still at fair value. As a result of this, no indexation has been applied to this class.
      Accumulated Depreciation
       In determining the level of accumulated depreciation, roads are disaggregated into significant components
      which exhibit different useful lives. Useful lives are an estimate of the total service capacity in years for that   :
      type of asset.
       Bridges
      A full valuation of bridges assets was undertaken by independent valuers, Aurecon Australia Pty Ltd
      effective 1 January 2014. All bridges, with exception to 3 major bridges, were valued based on unit rates
      developed according to varying material types used for construction, the deck area, size and length.
      Construction estimates were determined on a similar basis to roads. Significant bridge structures were
       individually assessed by Aurecon Australia Pty Ltd.
      A review of market data obtained from the Australian Bureau of Statistics, Queensland Roads and Bridges
       Index rates for the period 30 June 2014 to 30 June 2015 shows no significant material changes and therefore
      the values are considered still at fair value. As a result of this, no indexation has been applied.

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