Project Overview

TAG Advisory was engaged by GHD to deliver a comprehensive asset valuation for Arc Infrastructure, Western Australia's premier freight rail network operator managing approximately 5,500 kilometres of rail track. The project required application of the Depreciated Optimised Replacement Cost (DORC) methodology to establish regulatory-compliant asset values during a period of significant post-COVID cost pressures.

Key Challenges

The valuation presented substantial complexities requiring sophisticated technical and commercial expertise. Post-pandemic economic volatility had created unprecedented cost inflation across labour, materials and equipment, with regional delivery premiums further complicating accurate valuation. Additionally, knowledge of existing assets was limited to information provided by Arc Infrastructure, necessitating development of robust assumptions frameworks and quality assurance protocols.

The valuation needed to satisfy multiple stakeholder requirements, including regulatory bodies, financial auditors, and internal governance frameworks, each with specific reporting expectations.

Methodology

TAG Advisory implemented a structured DORC approach tailored to Arc Infrastructure's unique requirements. The team systematically categorised assets into distinct classes including civil infrastructure, permanent way, signalling systems, structures and support infrastructure. For each category, modern equivalent asset specifications were established incorporating current engineering standards, safety requirements and technological advances.

Comprehensive replacement costs were developed through analysis of recent comparable projects, consultation with specialist rail contractors and application of Western Australian regional location factors. The team conducted detailed optimisation assessments to ensure valuations reflected efficient asset configuration, including network capacity analysis, technology optimisation and redundancy elimination.

A sophisticated depreciation methodology considered physical deterioration, functional obsolescence, economic factors and remaining useful life assessments for each asset class.

Outcomes and Value

TAG Advisory delivered a robust valuation framework that withstood regulatory scrutiny and provided Arc Infrastructure with detailed asset valuations, clear methodology documentation, sensitivity analysis and benchmarking against comparable networks. The project identified asset renewal priorities, informed capital planning aligned with asset lifecycles and enhanced stakeholder confidence in Arc Infrastructure's asset management.

Beyond technical deliverables, the engagement provided strategic insights for future investment planning and risk assessment of critical infrastructure components. The thorough approach enhanced regulatory acceptance, board endorsement for financial reporting and improved the basis for future funding negotiations.

Conclusion

The Arc Infrastructure asset valuation demonstrated TAG Advisory's capability to deliver complex infrastructure valuations under challenging conditions. By combining DORC methodology expertise with deep understanding of Western Australian infrastructure markets, TAG Advisory provided a robust framework supporting regulatory compliance, strategic planning and stakeholder confidence, reinforcing our position as trusted advisors in infrastructure asset valuation.