RAN Valuation: Insurance Cost Assessment for Process Plant Facilities
Replacement as New (RAN) valuation is a specialist cost estimation discipline required by insurers and asset owners. We explain the methodology and how it differs from CAPEX estimation.
What Is RAN?
Replacement as New (RAN) — also referred to as Replacement Cost New (RCN) — is the estimated cost to replace an existing facility with a new equivalent, using current materials, equipment and labour costs at the date of assessment. It is the foundational metric for property insurance valuation of industrial facilities.
Four Key Concepts
RAN/RCN — Full replacement cost assuming new construction at current prices. RAV (Replacement Asset Value) — The insurable value declared to insurers. DRC (Depreciated Replacement Cost) — RAN adjusted for physical depreciation and obsolescence. TIC (Total Installed Cost) — The engineering estimate basis covering direct materials, equipment, civil, piping, electrical, instrumentation and indirect costs.
Why RAN Differs from CAPEX Estimation
A CAPEX estimate starts from a defined scope and process design. A RAN assessment starts from an existing facility — physically surveyed or assessed from as-built documentation — and works backward to determine what it would cost to recreate it today using current costs and modern equivalent equipment.
RAN Assessment with Kpex
CAF Corporation performs RAN assessments using Kpex as the cost basis. Equipment replacement costs are drawn from current market data calibrated against executed EPC projects. Location factors (CAF LFI) are applied for the country of the facility. The CAF Cost Adjustment Index (CAI) ensures all costs reflect the current date of assessment.
Replacement as New (RAN)
Valuation for Insurance
One of the most demanded — and most frequently underestimated — services in asset-intensive industries. RAN valuation establishes the cost to rebuild your entire process plant from zero at today's prices, providing the technically grounded sum insured that insurance carriers and brokers require.
Plant owners and operators are often over-insured on paper but under-protected in reality — because their declared insurable value is based on book value or outdated appraisals, not on what it would actually cost to rebuild the plant today. CAF Corporation provides independent, third-party RAN valuations that are technically rigorous, market-calibrated and fully documented for submission to insurers.
