Once the damages have been documented, the owner faces the next question: how much will it cost to rebuild what was destroyed? The answer comes from a distinct type of valuation — determining the costs required to reinstate property that suffered destructive impact as a result of military operations (para. 6 of Methodology 3904/1223). It is this figure that underpins reconstruction programmes, budget requests and decisions on whether reinstatement is worthwhile.
The Kanzas company performs this assessment under Section V of the Methodology — "Methodological Framework for Assessing (Determining the Amount of) Property Reinstatement Needs".
What the assessment covers
Under para. 1 of Section V, reinstatement needs are assessed for:
- real estate — buildings, structures, transmission facilities;
- vehicles, inventory and current biological assets;
- assets of enterprises of all forms of ownership as integral property complexes, machinery and equipment, and long-term biological assets.
Gross development value — the basis for real estate
For damaged and destroyed real estate, the Methodology requires determining the gross development value (GDV) — the price obtainable at the valuation date upon the sale of the completed development, sufficient to cover the costs of acquiring the land plot and improving it, including the financing costs and the developer's profit.
The accepted market procedure is a cash flow compounding model based on the unrecovered investment principle: the gross development value is the sum of the future value of the land plot and the future value of the direct and indirect costs of its improvement — using modern design solutions, materials and technologies. This is a matter of principle: reinstatement is priced not "as it was", but to modern construction standards.
The model's components are the initial investment (the land plot), the replacement or reproduction cost of the improvements (direct costs — the construction cost; indirect costs — consultants' fees and marketing) and the compounding rate, which secures the investor's and the developer's interest.
Development risks are taken into account: unforeseen complications that increase construction costs; delays in supplies and works; delays in finding buyers or tenants; inflation.
Reinstatement of other asset classes
For vehicles, inventory, machinery and equipment, reinstatement needs are determined through the replacement cost (the cost of creating or acquiring a similar asset of equivalent utility) or the reproduction cost (the cost of an exact replica) — depending on the nature of the asset and the existence of a market.
The three dimensions of war losses — and where this assessment fits
Methodology 3904/1223 provides for three monetary dimensions of the consequences of the war: actual damages (what was lost), loss of profit (what was foregone) and reinstatement needs (what rebuilding will cost). These are different figures with different purposes: damages support compensation and litigation, while reinstatement needs support reconstruction planning and fundraising. The Kanzas company performs all three types of valuation, providing a complete monetary picture of an enterprise's losses.
Planning reconstruction or preparing a budget request? We offer a defensible calculation, realistic timelines and an individual approach to every reinstatement project. Write to us by email or messenger to discuss your project.
FAQ
How do reinstatement needs differ from actual damages? Damages are the difference in value before and after the harm; reinstatement needs are the cost of rebuilding to modern standards.
Can part of a property be assessed? Yes — the gross development value of part of a property is determined as its share of the total area.
What is the assessment used for? Reconstruction programmes, budget requests, fundraising, and reinstatement feasibility decisions.
