R1-2409.22_20
Page 1 of 31
FOREST SERVICE HANDBOOK
NORTHERN REGION (REGION 1)
MISSOULA, MT
FSH 2409.22 – TIMBER APPRAISAL HANDBOOK
CHAPTER 20 – RESIDUAL VALUE APPRAISAL
Amendment No.: 2409.22-2012-1
Effective Date: July 20, 2012
Duration: This amendment is effective until superseded or removed.
Approved: FAYE L. KRUEGER
Regional Forester
Date Approved: 07/11/2012
Posting Instructions: Amendments are numbered consecutively by handbook number and
calendar year. Post by document; remove the entire document and replace it with this
amendment. Retain this transmittal as the first page(s) of this document. The last amendment to
this handbook was 2409.22-2009-2 to chapter 80.
New Document
2409.22_20
42 Pages
Superseded Document(s) by
Issuance Number and
Effective Date
2409.22-95-1_Contents (4/04/1995)
2409.22-95-2 (05/15/1995)
2409.22-95-3 (05/22/1995)
2 Pages
16 Pages
23 Pages
Digest:
20 - Updates coding and reformats Chapter.
21.1 (3) - Removes calendar year 1993 prices and recovery for Chip and Miscellaneous
Byproduct.
21.1 (4a) - Revises direction for obtaining constructed logging costs.
21.1(4b) - Revises direction for obtaining log haul costs.
R1 AMENDMENT 2409.22-2012-1
EFFECTIVE DATE: 07/20/2012
DURATION: This amendment is effective until superseded or removed.
2409-22_ 20
Page 2 of 31
FSH 2409-22 – TIMBER APPRAISAL HANDBOOK
CHAPTER 20 – RESIDUAL VALUE APPRAISAL
Table of Contents
21 - RESIDUAL VALUE APPRAISAL. ........................................................................... 3
21.1 - Cost and Value Update ..................................................................................................... 3
21.11 - Indices, Selling Value Adjustment Factors and Profit Ratios ............................................ 5
21.2 - Stump to Truck Costs (RV) .............................................................................................. 6
21.3 - Transportation and Road Maintenance Costs ................................................................. 21
21.4 - Administrative Costs ...................................................................................................... 26
21.5 - Environmental Protection Costs ..................................................................................... 26
21.6 - Temporary and Specified Road Developments .............................................................. 28
21.7 - Manufacturing Costs ...................................................................................................... 28
21.8 - Profit and Risk ................................................................................................................ 28
R1 AMENDMENT 2409.22-2012-1
EFFECTIVE DATE: 07/20/2012
DURATION: This amendment is effective until superseded or removed.
2409-22_ 20
Page 3 of 31
FSH 2409-22 – TIMBER APPRAISAL HANDBOOK
CHAPTER 20 – RESIDUAL VALUE APPRAISAL
21 - RESIDUAL VALUE APPRAISAL.
The Transaction Evidence Appraisal (TEA) method is the approved method of appraising sawlog
timber sales in Region One. The Residual Value method of appraising is described in this
section since the principles of residual value are used for appraisals for environmental
modifications, damage appraisals, timber violation appraisals and timber settlements.
Brief, but adequate, explanations of the value determination and cost allowances should be
included with the appraisal summary to fully describe the rationale for the appraisal. All
essential facts must be included. Given the essential data, a systematic arrangement of the
conclusions will be a considerable aid. First, a clear summary gives the appraiser an opportunity
to follow the different items step-by-step, to guard against omissions and errors, and to see
whether the variations from other appraisals of similar timber are logical and well considered.
Second, systematic treatment gives the reviewing officers a uniform arrangement of the salient
points and a means to assure that the estimated stumpage value appears reasonable, and that it is
consistent with values developed in other cases.
21.1 - Cost and Value Update
The last Cost and Value Update has the Effective date: SEPTEMBER 1994.
1. Selling Value and Recovery. Information on product selling values will be collected and
summarized yearly, and will be published in July.
For sales where the species or sale volume is so small that it makes tree grading impractical,
selling prices should be determined by comparison of the stand in question with a log graded
stand of comparable quality. This precludes the need for developing and publishing local selling
values and recovery factors for species with minor volumes.
Use the larch - Douglas-fir lumber price adjustment factor to adjust cedar sawtimber selling
values.
The basic recovery factor for species for which realization expectancy tables have been prepared
will be determined from log stock tables and shipping tally volumes. When rates for older sales
are redetermined the basic recovery factors will be adjusted to reflect changes which have
occurred since the original mill study. The adjustment factors to be applied are shown with the
basic recovery data. If the sale being redetermined is older and never had adjusted recovery
factors, it should not be adjusted now.
Realization from the sale of chips and miscellaneous byproducts will be added to lumber or stud
selling values whether or not a mill at a specific appraisal point actually sells these products.
Chip and byproduct cost and selling data are included in the representative collected cost and
selling values to the extent that such items are actually produced by the sample mills. Since
R1 AMENDMENT 2409.22-2012-1
EFFECTIVE DATE: 07/20/2012
DURATION: This amendment is effective until superseded or removed.
2409-22_ 20
Page 4 of 31
FSH 2409-22 – TIMBER APPRAISAL HANDBOOK
CHAPTER 20 – RESIDUAL VALUE APPRAISAL
these items do not follow the market trends of lumber or plywood, the zone average value will
not be adjusted by the Western Wood Products Association (WWPA) adjustment factor.
2. Saw logs (LT) CY 1993
West Side Zone (live and dead)
Selling prices and recovery percents for white pine, ponderosa pine, grand fir, alpine fir,
hemlock, larch, Douglas-fir, and spruce will be determined from tree grade data and application
of Realization Expectancy Tables contained in the R-1 Cruise Program. Contact Timber,
Cooperative Forestry, and Pest Management (TCFPM) for formulas and prices, to work out
values by hand. Selling prices for cedar and lodgepole pine are determined from average
collected grade recovery data. For the exceptional cases, where the sale or species volume is so
small that it makes tree grading impractical, selling prices should be determined by comparison
with a stand of comparable quality that was graded.
(Calendar Year 1993 prices and recovery)
Selling Price/M
Recovery Percent
Cedar
$694.17
1.17
Live lodgepole
372.04
1.70
Dead lodgepole
334.48
1.60
East Side Zone
(Calendar Year 1993 prices and recovery)
Selling Price/M
Recovery Percent
Douglas-fir
$353.37
1.70
Whitewoods
319.00
1.70
Dead lodgepole
287.10
1.60
4. Logging Costs
a. Constructed Logging Costs. The following costs are Regional averages and
should be adjusted to the conditions being appraised. If adjustments are needed,
use the logging cost equations found in the spreadsheet titled, “Stump to Truck
and Haul Cost Equations. This spreadsheet is found at the following website:
http://fsweb.r1.fs.fed.us/forest/sales/appraisal1/index.htm.
R1 AMENDMENT 2409.22-2012-1
EFFECTIVE DATE: 07/20/2012
DURATION: This amendment is effective until superseded or removed.
2409-22_ 20
Page 5 of 31
FSH 2409-22 – TIMBER APPRAISAL HANDBOOK
CHAPTER 20 – RESIDUAL VALUE APPRAISAL
Average Logging Costs (2011 $)
Felling & Bucking (with chain saw)
Feller - Buncher
Processing at Landing
Ground-Based Skidding (10" ADBH, 600'
EYD)
Skyline Skidding (10" ADBH, 800' EYD)
Loading
Cut to Length System (12" ADBH, 2000' EYD)
Harvester
Forwarding (2000' EYD)
Loading
Admin
Total Cut to Length
Helicopter
Felling & Bucking (with chain saw)
Flying (12" ADBH, 2000' EYD)
Loading
General Administration
Total Helicopter Cost (stump to loaded
truck)
Avg. Cost /
Ton (2011 $)
$4.67
$6.82
$6.34
$5.14
$22.37
$3.55
$11.67
$10.49
$3.55
$1.21
$26.92
$12.00
$53.00
$3.20
$3.00
$71.20
Note: The table above is also posted at the following website:
http://fsweb.r1.fs.fed.us/forest/sales/appraisal1/index.htm.
a. Log Hauling Costs. For log hauling costs use the haul cost equations found in the
the spreadsheet titled, “Stump to Truck and Haul Cost Equations. This
spreadsheet is found at the following website:
http://fsweb.r1.fs.fed.us/forest/sales/appraisal1/index.htm.
21.11 - Indices, Selling Value Adjustment Factors and Profit Ratios
The adjustment factors to be used in appraising timber will be computed and sent to the field by
Interim Directive for species which an index is available. This Interim Directive will also advise
of the base indices and normal profit ratios for current use.
R1 AMENDMENT 2409.22-2012-1
EFFECTIVE DATE: 07/20/2012
DURATION: This amendment is effective until superseded or removed.
2409-22_ 20
Page 6 of 31
FSH 2409-22 – TIMBER APPRAISAL HANDBOOK
CHAPTER 20 – RESIDUAL VALUE APPRAISAL
21.2 - Stump to Truck Costs (RV)
Average verified experienced logging costs will be used by all Forests as the base for adjustment
to individual sale conditions using Regional cost adjustments. These average costs are
applicable only for the conditions they represent and must be varied, as necessary, for other than
average conditions. In those instances where the given experienced costs, along with their
appropriate adjustments, have no reasonable application in appraising a particular sale
requirement, computed or analytical cost data may be used. The reasons must be documented in
the report.
The cost of winter logging and all movement of skidding and loading equipment is included in
the averages to the extent of actual occurrence. The cost of unloading, decking, and handling
logs is included in the manufacturing cost estimate. Small fire tools are included by cost item.
Average cost by item includes crew transportation. Average log acquisition costs are included in
lumber manufacturing. Log painting and branding costs are included in stump-to-truck costs.
Flag persons and safety signs are not included in any of the published costs.
Felling and bucking costs for all zones include saw boss wages, shoveling snow, some fellerbuncher costs and woods scaling. They do not include snag and cull tree felling.
Tractor skidding costs for all zones include all expenses related to landing construction and
cleanup during yarding (final cleanup, piling, and burning is a slash disposal job); equipment
move (in-out and between landings, except for skidding); knot bumping; decking machines,
pickups and shop trucks; uphill and downhill skidding; skid trails and erosion control measures
except seeding and fertilizing.
For the West Side Zone, groundlead and skyline yarding costs are in section 21.1 constructed
costs. They include all three types of single span skyline systems, accessories, rigging, tailcats,
moving within the sale, labor, crew transportation, operating costs, uphill and downhill yarding,
depreciation and overhead. They do not include multi-span yarding, installation of man-made
anchors, moving into and out of the sale or erosion control seeding.
In the Northern Rocky Zone, the costs in 21.1 for groundlead and skyline small wood yarding
include setting up (except purchase and installation cost of man-made anchors), clearing around
tail blocks; decking machines, pickups, shop trucks; uphill, downhill yarding and all labor, crew
transportation, depreciation and overhead. This excludes multi-span yarding and erosion control
seeding.
Loading costs for all zones include landing helper, equipment moving and all other loading costs.
R1 AMENDMENT 2409.22-2012-1
EFFECTIVE DATE: 07/20/2012
DURATION: This amendment is effective until superseded or removed.
2409-22_ 20
Page 7 of 31
FSH 2409-22 – TIMBER APPRAISAL HANDBOOK
CHAPTER 20 – RESIDUAL VALUE APPRAISAL
General logging overhead for all zones includes all general administrative expense relative to
stump-to-truck. Other logging and contractual cost items bear their appropriate share of General
Administration (GA).
Current Zone average stand condition to be used to calculate appraisal costs are in section 21.1.
Following are examples of computation and adjustment of costs in the West Side and Northern
Rocky Zones, and of cost adjustments to be made when more than one skidding or yarding
method is required in the sale. See 21.1 for updated costs and adjustment factors.
1.Felling and Bucking Cost Adjustments - All Zone. The following cost adjustment
procedure will be used to adjust average regional felling and bucking cost to individual
timber sale conditions.
Sale
Felling
Bucking & =
Delimbing
Allowance
|
| [(11,641 - F)] + 1
| [ 11,641]
|
|
| x
|
|
| sale avg
| 1 + defect
|
100
|
|
| x
|
|
|Zone |
|average |
|felling |
|cost
|
Where adjustment factor F = 6,511.8 + 31.5 (average gross cut tree volume in board feet) - 36.0
(average slope percent)
For adjustment factors less than 5,800 use 5,800.
For adjustment factors greater than 17,400 use 17,400.
The above data was derived from 60 fellers on eight R-1 Forests in timber stands ranging from
clear cuts of 46.8 MBF/A to partial cuts of 1 MBF/A. The ratio of cut trees to total trees in the
stand averaged 0.858. All seasons of the year were sampled.
The above data was collected from the following stands.
Item
DBH
Tree volume
Logs/MBF
Slope %
Mean
13.0"
193 Bd. Ft.
21.1
26.6
Range
8" - 22"
21 - 733 Bd. Ft.
6 - 40.6
0 - 70
Felling and Bucking Example:
For a timber sale in the West Side Zone.
Sale Condition:
R1 AMENDMENT 2409.22-2012-1
EFFECTIVE DATE: 07/20/2012
DURATION: This amendment is effective until superseded or removed.
2409-22_ 20
Page 8 of 31
FSH 2409-22 – TIMBER APPRAISAL HANDBOOK
CHAPTER 20 – RESIDUAL VALUE APPRAISAL
- average gross cut tree volume = 193 board feet
- average ground slope percent = 26.6%
- average defect percent = 7%
Adjustment Factor F = 6,511.8 + 31.5(193 bd.ft./tree) - 36.0(slope
of 26.6%)
= 6,511.8 + 6,079.5 - 957.6
= 11,633.7
Sale
Felling |
|
|
|
|Zone
Bucking & = |[11,641 - 11,633.7] + 1| x
|1 + 7 | x |average
Delimbing |[ 11,641
]
|
|
100
|cost
Allowance
= (1.0006) x (1.07) x (24.99)
= $26.75 For line 11, FS 2400-17 on residual value
appraisal
|
|
|
If the sale offering requires specified road construction, the road clearing cost estimate includes
an estimate for felling and bucking. In order to avoid duplication of cost allowances, the felling
and bucking cost estimate must be adjusted using the following method:
(Total sale volume1/-R/W volume)(Felling & bucking cost estimate)
Total sale volume 1/
= Felling and bucking cost/MBF
In a 10,000 MBF sale with 1,000 MBF of R/W volume and a felling and bucking cost of
$22.70/M, the adjustment would be:
10,000M - 1,000M x $22.70/M = $20.43/M
10,000M
(Line 11, FS-2400-17 on residual value appraisal)
2. Tractor Skidding. The zone average tractor skidding cost should be adjusted using the
following formula to arrive at the tractor skidding cost allowance for the sale being
appraised.
Sale
tractor
skidding =
cost
|
||2900 - F |
|| 2900 | + 1
|
|
|
|
| x
|
|
|
| Sale
|1 + scale
| defect
|
|
|
| x
|
|
|Zone
|Average
|Tractor
|Skid
|Cost
|
|
|
|
|
R1 AMENDMENT 2409.22-2012-1
EFFECTIVE DATE: 07/20/2012
DURATION: This amendment is effective until superseded or removed.
2409-22_ 20
Page 9 of 31
FSH 2409-22 – TIMBER APPRAISAL HANDBOOK
CHAPTER 20 – RESIDUAL VALUE APPRAISAL
Where F = 4,743 -[(97.3) (Sale average Logs/MBF)]
For adjustments greater than 1.70, use 1.70. For adjustments less than .50, use .50.
The above tractor skidding regression formula was developed from measurements taken on all
the area tributary to 30 landings. Measurements were taken in all seasons of the year. Tractors,
rubber tired skidders, and soft tract vehicles were included. Sale conditions in the sample areas
had the following characteristics: bd. ft. Volume Per Acre has a mean of 11,848 feet with a
range of 1,800 to 19,500 feet; external skidding distance had a mean of 1,020 feet with a range of
10 to 3,300 feet; logs/M had a mean of 18.9 feet and ranged from 1 to 47 feet; downhill slopes
had a mean of -25.2 percent downhill and ranged from -5 percent downhill to -50 percent
downhill while uphill slopes had a mean of +11.6 percent uphill with a range of 0 percent to +17
1/Appraised volume excluding unsound sapwood, cedar products and pulp.
R1 AMENDMENT 2409.22-2012-1
EFFECTIVE DATE: 07/20/2012
DURATION: This amendment is effective until superseded or removed.
2409-22_ 20
Page 10 of 31
FSH 2409-22 – TIMBER APPRAISAL HANDBOOK
CHAPTER 20 – RESIDUAL VALUE APPRAISAL
percent uphill; obstacles varied from smooth terrain, light brush and few down logs to uneven
rocky terrain with heavy brush and blowdown. Production per hour had a mean of 2,900 bd. ft.
with a range of 400 to 4,500.
Example: For a sale in Northern Rocky Zone all units 100 percent tractor skidded.
Unit
1
2
3
Logs/M
34
28
24
301/
Scaling
Defect
7
8
11
81/
F = 4,743 - [(97.3)(30)]
F = 1,824
Sale
tractor
skidding =
cost
|
| |2900 - 1824|
| | 2900
| +1
|
|
|
| x 1.08 x $27.99/M
|
= 1.37 x 1.08 x $27.99/M
= $41.41/M
If the sale offering requires specified road construction, the road clearing cost estimate includes
an estimate for skidding. To avoid duplication of cost allowance the tractor skidding cost
estimate must be adjusted using the following method:
(Total sale volume-R/W volume)(Skidding cost estimate) =
Total sale volume 2/
skidding
cost/MBF
If more than one skidding system is appraised for on the sale, develop the weighted average cost
considering all skidding systems and then make adjustment for specified road right-of-way
volume.
3. Risk Allowance For Forwarders. Concern has been expressed about how the current
Transaction Evidence (TE) equations handle long skidding distances.
On the Westside the average tractor skidding distance was 702 feet and ranged between 5 and
2,400 feet. On the Eastside the average tractor skidding distance was 550 feet and ranged
R1 AMENDMENT 2409.22-2012-1
EFFECTIVE DATE: 07/20/2012
DURATION: This amendment is effective until superseded or removed.
2409-22_ 20
Page 11 of 31
FSH 2409-22 – TIMBER APPRAISAL HANDBOOK
CHAPTER 20 – RESIDUAL VALUE APPRAISAL
between 113 and 1,800 feet. Tractor skidding distances within these ranges are accounted for in
the equations.
On some sales we are encouraging or requiring forwarders. Preliminary indications are
significantly less environmental side effects, fewer roads, economical skidding distances up to
1/ Weight by gross volume or take directly from R-1 Cruise printout, Logging Method Summary.
2/ Appraisal volume, excluding unsound sapwood, cedar products, and pulp.
2,500 feet, and lower overall stump to truck costs per MBF. Since these machines are new there
is an increased risk to the purchasers who invest in these machines, therefore, it is appropriate to
make some appraisal allowance where sales are designed for forwarders. The following
adjustment should only be used where the contract and sale area maps require forwarders
(regardless of distance) and temporary roads are prohibited, except for short stub roads to
landings; or in sales where skidding distances are longer than the maximum above and temporary
roads are prohibited.
Continue to enter forwarder acres, volume, and distances under tractor on card G but add FWRD
to the end of the sale name on card A.
ON THE WESTSIDE USE 1.5 PERCENT OF THE AVERAGE SELLING PRICE LUMBER
TALLY (SPLT) VALUE FOR THE SALE BEING APPRAISED.
ON THE EASTSIDE USE 2 PERCENT OF THE AVERAGE SPLT VALUE FOR THE SALE
BEING APPRAISED.
Example: Sale average SPLT on line 1 of TE 2400-17 = $240.72.
$240.72 x .015 = $3.61 per MBF.
Enter $3.61 in the "unusual adjustment" line of the TE
2400-17.
4. Horse Logging. Appraise the horse logging unit for tractor logging using the
appropriate zone costs and adjustments. If the average ground slope is less than 20
percent favorable, increase the tractor cost by 25 percent. If the ground slope is between
20-35 percent, increase the tractor cost by 33 percent. Make adjustment for specified
road R/W volume.
5. Groundlead Yarding Adjustment. Groundlead yarding costs and adjustments are
applicable in clearcuts for External Yarding Distances up to 900 feet; in seed tree cutting
of less than 10 seed trees per acre for EYD's of 600 feet; in shelterwood harvest of less
than 36 trees per acre for distances of less than 450 feet. In partial cuts that leave a
R1 AMENDMENT 2409.22-2012-1
EFFECTIVE DATE: 07/20/2012
DURATION: This amendment is effective until superseded or removed.
2409-22_ 20
Page 12 of 31
FSH 2409-22 – TIMBER APPRAISAL HANDBOOK
CHAPTER 20 – RESIDUAL VALUE APPRAISAL
greater number of trees per acre, design and appraise for skyline logging that provides
greater protection to the residual stand.
The zone operating cost includes all operation and depreciation costs. The Regional
Office will develop these each year by field sampling of production provided data for
regression equation adjustments. They apply to both appraisal zones. Use the following
formula to develop an "F" adjustment factor. The resulting "F" factor is then used in
second formula to adjust the zone average cost to a cost for the sale being appraised.
Adjustment factor F = 0.064 (gross logs/M) + 0.0034 (external yarding distance average
in feet) - 1.089.
Example: For a 3 MMBF West Side Zone sale with 8 percent scaling defect, 100 percent
cable yarding 14 gross logs per MBF, 2 years of cable operation, 40 miles round trip over
dimension and average external yarding distance of 500 feet the "F" factor would be:
F= 0.064(14) + 0.0034(500) - 1.089 = 1.507
(For adjustment factor less than .35 use .35).
(For adjustment factor greater than 2.25 use 2.25).
|
Sale
|
groundlead = |Adjustment X
cost
| Factor F
|
|
| Sale
|1 + scale
| defect
|
|
|
|
Zone Avg
| Move in
X Groundlead |+ and move
Cost
| out costs
|
|
6. Move In and Out Allowance for Cable Yarding. The groundlead and skyline cost
formulas require an estimate for move in and out costs using current year hourly transport
rates subject to a minimum charge.
In addition, an over-highway width charge of $0.25 per mile will be added for transport
widths over 10 feet. Logging conditions and system prescription will determine machine
size.
See section 21.1 for current hourly transport rates and minimum charge.
Allow move in and out costs for self-propelled yarders with road speeds less than 20
miles per hour and/or axle load limits in excess of limiting bridge capabilities. All track
type undercarriages require transport. To determine travel time, consider it the same as it
would take a logging truck located in the center of the sale area to be loaded, haul its load
to appraisal point, and return. Multiply hours by two to account for move out and
R1 AMENDMENT 2409.22-2012-1
EFFECTIVE DATE: 07/20/2012
DURATION: This amendment is effective until superseded or removed.
2409-22_ 20
Page 13 of 31
FSH 2409-22 – TIMBER APPRAISAL HANDBOOK
CHAPTER 20 – RESIDUAL VALUE APPRAISAL
multiply result by hourly rate for equipment. Include over-highway width charge if
transport width is over 10 feet.
Average production rates for small wood yarders is 37.4 logs (16.4') per hour while larger
yarders average about 2.53 MBF per hour. Determine the annual operating season in
months and production per month for the cable units considering all environmental
constraints. Multiply the annual operating months times the monthly production and
divide the result into the total volume to be cable yarded on the sale to determine how
many operating seasons will be required. The average operator will not leave his
equipment in place over winter so multiply the total move in amd out cost by the number
of seasons required to get total move in and out cost for the sale.
Make adjustments for specified road R/W volume if necessary.
Example: Assuming 3 hours move-in, 40 miles round trip over dimension charge, two
logging seasons of cable operation and using a midsize yarder, 75,000 pounds, the total
estimated move-in move-out cost would be:
3 hours (2) ($60.75/hr) + ($0.25/mile x 40 miles) = $0.12/MBF/year
3,000 MBF
$0.12/MBF/year x 2 years operation = $0.24/MBF
Groundlead cost = 1.507 x 1.08 x $22.44/M + $0.24/M = $36.76/M
a. Skyline Yarding. See section 21.1 for current costs.
Skyline systems have been divided into three classes for appraisal purposes:
-- Skylines 11/16" or less and small wood yarders
-- Skylines larger than 11/16" and EYD less than 2,000'
-- Skylines larger than 11/16" and EYD 2,000' and greater
For skyline systems less than 11/16": Operation and depreciation costs are combined into
one cost center. Multiply gross logs per M for the volume to be yarded by this system by
the small wood yarder cost times one plus sale scale defect. Add move in and out costs
as developed for groundlead yarding as a cost per thousand. Allow for purchase and
installation of man-made anchors if needed. Add amortization of additional rigging and
carriage if intermediate supports are necessary. Refer to Multi-Span writeup for
procedures.
R1 AMENDMENT 2409.22-2012-1
EFFECTIVE DATE: 07/20/2012
DURATION: This amendment is effective until superseded or removed.
2409-22_ 20
Page 14 of 31
FSH 2409-22 – TIMBER APPRAISAL HANDBOOK
CHAPTER 20 – RESIDUAL VALUE APPRAISAL
Refer to examples as part of Multi-Span Skyline Yarding for procedures to determine
move in and out costs, purchase and installation of man-made anchors and amortization
of additional rigging and carriage.
(1) Single Span. For all skyline systems greater than 11/16" and EYD's plus or
minus 2,000 feet use single span. The adjustments account for varying degrees of
harvest and log size and use constructed zone operating costs. Field sampling of
skyline operations provided data for the regression equation development. Use actual
sale characteristics to substitute in the regression equation to derive a factor "F " that
represents the effect of sale characteristics on production as follows:
F = 3.11 - (Gross logs/M) (.16) +
|
|cut trees/acre
|total merchantable
|tree/acre
|
|
| x (1.64)
|
|
|
There are no established minimum or maximum adjustment factor "F". The appraiser
needs to use professional judgement in cases where computed "F" factors generate very
high or low allowances.
Use the resulting "F" in the following equation. Use the scaling defect and zone skyline
yarding and depreciation costs for the sale being appraised.
Single
Span
Yarding =
Cost
|
|
| |2.53 - F|
||
|+1
| |2.53
|
|
|
|
|
| x
|
|
|
|
| Sale
|1+ scale
| defect
|
|
|
|
|
|
| Zone
| x | operating
|
|cost
|
|
|
|
|
|
|
|
| + |Depreciation
|
| cost
|
|
Add cable move in and out costs as developed for grounlead yarding as a cost per
thousand. Be sure and consider inclusion of allowance for over highway width charge
for transport widths over 10 feet.
If appropriate, add allowances for purchase and installation of man-made anchors.
Refer to examples as part of Multi-Span Skyline Yarding.
(2) Multi-Span. Where intermediate supports are used with the above skyline
systems except small wood yarders, add the cost developed through the following
procedure to the cost developed above for single span systems.
|
|
|
|
|
R1 AMENDMENT 2409.22-2012-1
EFFECTIVE DATE: 07/20/2012
DURATION: This amendment is effective until superseded or removed.
2409-22_ 20
Page 15 of 31
FSH 2409-22 – TIMBER APPRAISAL HANDBOOK
CHAPTER 20 – RESIDUAL VALUE APPRAISAL
(a) Determine the volume to be yarded on all multi-span settings. This data should
be available from your Logging Engineer.
(b) For the volume to be yarded by a multi-span system add l2 percent to cover
operating cost above the costs developed for a single span system.
(c) Add the additional costs of rigging hardware, jacks and carriages for the size
class being appraised divided by the volume to be yarded over multi-span settings.
This should be done until the Forest closes the first three sales designated and
appraised for multi-span logging. Thereafter, discontinue allowance for rigging
hardware, jacks and carriages.
(d) When situations require artificial anchors, prepare an engineering estimate of
purchase and installation cost and add as a cost per thousand for the appropriate
volume.
(e) Note in the prospectus that a portion of the sale may require multi-span skyline
logging.
(f) Indicate on the sale area map the location and direction of the multi-span setting.
Example: For a West Side sale with 8 percent scaling defect, two logging seasons
skyline operation using a standard skyline, 90,000 pounds, 14 gross logs per MBF,
60 merchantable cut trees per acre, and 40 merchantable leave trees per acre the "F"
factor would be:
F = 3.11 - (14) x (.16) + 60
60 + 40
|
|
| |2.53 - 1.85| +1 |
= | 2.53 |
|x
||
|
|
|
|
x (1.64) = 1.85
|
| Sale
|1+ scale
| defect
|
|
|
| | Zone size
| x | class
|
| operating
| | cost
|
|
|
|Deprecia| + |tion cost
|
|
| |
|
|
|
|
|
= 1.27 x 1.08 x 39.61/M + $15.50/M = $69.83/M
Add the move in and out cost as developed for groundlead yarding as a cost per
thousand. Be sure and consider inclusion of allowance for over-highway width
charges for transport widths over 10 feet.
3 hrs (2)($83.75/hr) + ($0.25/mile x 40 miles) = $0.03/MBF/year
20,000 M *
R1 AMENDMENT 2409.22-2012-1
EFFECTIVE DATE: 07/20/2012
DURATION: This amendment is effective until superseded or removed.
2409-22_ 20
Page 16 of 31
FSH 2409-22 – TIMBER APPRAISAL HANDBOOK
CHAPTER 20 – RESIDUAL VALUE APPRAISAL
$0.03/MBF/year x 2 years operation = $0.06/MBF.
* Total volume to be skyline yarded
For Multi-span situation:
Single span cost/M x 1.12 +
|Cost of additional
|rigging and carriage
|multi-span volume
|
|
| Cost of
| + | anchors
|
|multi-span
| | volume
1/
|
|
|
|
$69.83/M x 1.12 + $7,533 + $4,170
2,000M 2,000M
$78.21/M + $3.78/M + $2.09/M = $84.08/M of multi-span volume.
For a sale that is 90% single span and 10% multi-span:
$69.83/M x 90% + $84.08/M x 10% = $71.26/M
Total Skyline Cost/M:
$71.26/M + $0.06/M = $71.32/M
If the sale offering requires specified road construction, the road clearing cost
estimate includes an estimate for skidding. In order to avoid duplication of cost
allowance, the skidding cost estimate must be adjusted using the following method:
(Skidding
(Total sale volume - R/W volume)cost estimate) = Skidding cost/MBF
Total sale volume
Volumes used should exclude unsound sapwood, cedar products, and pulp.
If more than one skidding system is appraised for on the sale, develop the weighted
average cost considering all skidding systems and then make adjustment for
specified road right-of-way volume.
R1 AMENDMENT 2409.22-2012-1
EFFECTIVE DATE: 07/20/2012
DURATION: This amendment is effective until superseded or removed.
2409-22_ 20
Page 17 of 31
FSH 2409-22 – TIMBER APPRAISAL HANDBOOK
CHAPTER 20 – RESIDUAL VALUE APPRAISAL
1/ Discontinue inclusion following closure of the first 3 sales designated and appraised
for multi-span logging.
7. Skidding Cost Adjustment For Sales With More Than One Method of Skidding
Required. Timber sales may contain a mix of skyline, groundlead and tractor yarding.
This could mean three skyline systems. Insure that you program sufficient volume for
each system over a period of time to insure its use once it has been made available. This
aids in introducing and maintaining availability and usability for all equipment. The area
may include one or more Ranger Districts or portions of other National Forests.
Example: A timber sale has three cutting units - one to be yarded by tractor, the second
by a groundlead cable system, and the third by skyline. Each system is to be appraised
for by the volume, area and stand condition in which it will operate. Should a single
cutting unit require more than one yarding system, the area of each system is to be
appraised for separately and delineated both on the sale area map and on the ground.
Distinct topographic or man-made features will suffice for ground identification.
In adjusting skidding and yarding costs in sales that require more than one logging
system, first compute the cost for each method and weight them together by volume.
Then adjust the weighted average cost. Since it is likely there will be specified road
construction through skyline units as well as those to be tractor skidded, it is appropriate
to adjust the weighted average cost for all systems in order to prevent a duplication of
costs, as costs for R/W volume have been included in the road cost estimate.
8. Helicopter Yarding. For the Regional average helicopter costs see section 21.1 for
current costs.
Do not use R-1 cost adjustment tables to adjust any helicopter cost items. In order to
adjust the Regional average helicopter yarding and loading costs to a proposed offering, a
regression analysis was made on variables related to the collected cost data. In analyzing
the sales logged, the following formula was developed.
Average cost adjustment factor F =
Constant
15,405.2
Mean yarding distance
-(.22839 x sale mean yarding distance)
Elevation difference
+(.31056 x + elevation difference)
Sale elevation
-(1.4023 x mean sale elevation)
R1 AMENDMENT 2409.22-2012-1
EFFECTIVE DATE: 07/20/2012
DURATION: This amendment is effective until superseded or removed.
2409-22_ 20
Page 18 of 31
FSH 2409-22 – TIMBER APPRAISAL HANDBOOK
CHAPTER 20 – RESIDUAL VALUE APPRAISAL
Mean yarding distance
+
(1,942,500)
sale mean yarding distance
Applying this formula to the collected data resulted in a base adjustment figure of 10,326.7.
Definitions of the variables to be used are as follows:
Sale mean yarding distance = the weighted mean horizontal yarding distance for the sale as a
whole.
Elevation difference =
the vertical distance from the centroid of the unit to the landing.
Uphill is negative and requires a minus sign; downhill requires a
plus sign. Use the weighted mean of all the units for the sale
average.
Sale elevation =
the weighted mean sale elevation of all units.
The collected empirical data limit the use of the preceding formula to the following parameters:
1. Mean yarding distance
1,250 feet to 7,920 feet
2. Mean elevation difference
Downhill +1,200 feet to
uphill -1,033 feet
3. Sale elevation
2,000 feet to 5,300 feet
Should sale variables fall outside the stated limits, contact the Regional Office for appraisal
advice.
The collected costs and means of adjusting do not cover special situations such as commercial
thinnings or extremely long distances such as right-of-way clearings.
After deriving the adjustment figure for the proposed sale, use the following formula to adjust
the Regional average helicopter yarding costs:
Helicopter yarding costs
=
|_
_
| |10,326.7 - F|
| | 10,326.7 | + 1
| |_
_|
|
|
|
|
| Reg. Aver. Heli.
| x | Yarding Cost
|
| including deprec.
|
|
|
|
|
| Heli.
| + | Yarding
|
| Overhead
|
|
|
|
|
|
|
R1 AMENDMENT 2409.22-2012-1
EFFECTIVE DATE: 07/20/2012
DURATION: This amendment is effective until superseded or removed.
2409-22_ 20
Page 19 of 31
FSH 2409-22 – TIMBER APPRAISAL HANDBOOK
CHAPTER 20 – RESIDUAL VALUE APPRAISAL
For removal of cull logs or piling of unutilized material, use adjusted cost for green material.
Example:
A proposed sale has the following characteristics:
Sale elevation is 3,800 feet
Mean yarding distance is 4,000 feet
Elevation difference is -150 feet (the minus sign denotes
uphill yarding)
Average cost adjustment calculation:
Adjustment Factor F
=
Constant
=
+15,405.2
Yarding distance
=
-.22839 x 4,000'
=
-913.6
Elevation difference
=
.31056 x -150'
=
-46.6
Sale elevation
=
-1.4023 x 3,800'
=
-5,328.7
Yarding distance
=
+1,942,500
4,000'
=
+485.6
+ 9,601.9
Adjustment factor F = 9,601.9
Calculate adjusted cost for proposed sale:
|
= ||10,326.7 - 9,601.9|+1
|| 10,326.7
|
|
|
|
| x
|
|
|
|
|$110.95
|
|
|
|
| +
|
|
|
|
|
|$37.33|= 1.0702 x $148.28/M
|
|
|
|
|
|
= $158.69/MBF
Related Helicopter Yarding Costs in addition to above adjusted costs are:
Move in and out costs (helicopter side):
R1 AMENDMENT 2409.22-2012-1
EFFECTIVE DATE: 07/20/2012
DURATION: This amendment is effective until superseded or removed.
2409-22_ 20
Page 20 of 31
FSH 2409-22 – TIMBER APPRAISAL HANDBOOK
CHAPTER 20 – RESIDUAL VALUE APPRAISAL
For Idaho:
$6,500
estimated net volume
For Montana:
$7,500
estimated net volume
For each additional logging
season (6 MMBF):
$2,000
total estimated net volume
If the landings are of such size that engineering survey and design are necessary, or the
landing is specified as part of the road, use engineering estimates for landing construction
costs minus estimated net volume.
When landings are an integral part of a specified road, include cost in the Schedule of
Items.
Profit and risk: Use the high range P&R percent.
Slash disposal: The helicopter portion is limited to the removal of certain specified tops
whose numbers are equated to and appraised as unmerchantable green logs.
9. Loading. The adjustment combines zone collected cost data with a regression
equation developed from field sampling of production to arrive at loading cost estimate.
Use actual sale characteristics to substitute in the regression equation to derive an
adjustment factor "F", as follows:
F = 17.3 - (7.86) (1 + % of sale volume requiring hot loading, expressed as a decimal) + (0.02)
(ave. gross bd. ft. cut volume/ tree) + (0.05) (net MBF/acre)
Apply the factor "F" in the appropriate zone equation to determine loading adjustment.
There are no established minimum or maximum adjustment factor "F". The appraiser
needs to use professional judgement in cases where computed "F" factors generate very
high or low allowances.
1. Regional =
adjustment
|
||
|
| |12.1 - F|+ 1
| |12.1 |
||
|
|
|
|
|
|
| x | Sale
|
|1+ scale
|
| defect
|
|
|
|
| x
|
|
|
|
|Zone
|average
|loading
|cost
|
2. Limit the downward adjustment to 1/2 of the average cost
and the upward adjustment to two times the average cost.
|
|
|
|
|
|
R1 AMENDMENT 2409.22-2012-1
EFFECTIVE DATE: 07/20/2012
DURATION: This amendment is effective until superseded or removed.
2409-22_ 20
Page 21 of 31
FSH 2409-22 – TIMBER APPRAISAL HANDBOOK
CHAPTER 20 – RESIDUAL VALUE APPRAISAL
Example: For a West Side sale with an average gross cut volume per tree of 260 bd. ft., net
volume per acre of 15 MBF, 6 percent scaling defect and 20 percent hot loading, the calculation
would be:
F = 17.3 - (7.86) (1.20) + (0.02) (260) + (0.05) (15) = 13.82
Adjustment =
Loading cost =
|
| 12.1 - 13.82
| 12.1
|
|
|
|
|
+ 1 = .99
|
| .99 x 1.06 x $6.47/M
|
|
| = $5.90/M
|
If the sale offering requires specified road construction, the road clearing cost estimate may
include an estimate for loading. Occasionally there may be road building in terrain where
decking areas are not feasible, and the road cost estimates will also include loading. In order to
avoid duplication of cost allowances, the loading cost estimate must be adjusted using the
method as shown under felling and bucking.
21.3 - Transportation and Road Maintenance Costs
1. Log Hauling. Log hauling allowances will be determined using the following
formula:
Haul = Fixed Cost/MBF + Paved Miles x Paved Cost/Mile +
Allowance Unpaved Miles x Unpaved Cost/Mile
Regional average fixed, paved, and unpaved costs will be published in section 20.1 and updated
twice a year.
Example: For a sale with 25.9 miles of paved and 11.5 miles unpaved to center of the sale area:
Haul
Allowance/MBF = Fixed Costs + Paved Allowances + Unpaved Allowance
= 17.89 + (25.9 x .18) + (11.5 x .53)
= 17.89 + 4.66 + 6.10
= $28.65
R1 AMENDMENT 2409.22-2012-1
EFFECTIVE DATE: 07/20/2012
DURATION: This amendment is effective until superseded or removed.
2409-22_ 20
Page 22 of 31
FSH 2409-22 – TIMBER APPRAISAL HANDBOOK
CHAPTER 20 – RESIDUAL VALUE APPRAISAL
NOTE: Mileage of double lane gravel roads where log trucks can safely average 35 mph or
more should be considered as paved, and conversely, mileage of narrow, winding paved roads
where trucks cannot safely average 35 mph should be considered unpaved for purpose of haul
cost calculations.
2. Road Maintenance. Road maintenance cost should be developed locally based on
length of sale, miles of road, surface condition, estimated frequency of blading, and so
forth. Hourly rates for labor and equipment in Section 21.1 may be used to construct a
cost estimate for purchaser's performance, or local costs may be used if more appropriate.
Ideally, Forests should develop and publish costs on a rate per MBF per mile basis for
maintenance of paved and unpaved roads.
If normal road maintenance is to be done by the Forest Service through required deposits,
the amount of the required deposit will include overhead assessments and cost adjustment
indices.
a. Surface Rock Replacement. Rock replacement is required on existing rock
surfaced roads used by the purchaser. Roads which the purchaser constructs or
reconstructs will not require rock replacement by the purchaser.
If rock replacement is to be done by the Forest Service through required deposits, the
amount of the required deposit will be included in the appraisal under road
maintenance costs and will include Forest Service overhead assessment and cost
adjustment factor. Deferred road surface replacement costs should be estimated to
the midpoint of the haul time period.
A guide to rock replacement is shown in 21.3 - Exhibit 01. Care must be taken in
applying the rate of surface rock loss with snowplowing. Most of the loss of gravel is
not due to the snowplowing per se, but to the hauling on plowed roads before the
roads become frozen in the late fall or early winter and after the roadway has thawed
in spring.
b. Winter Operations. Unless the sale is set up specifically for winter operations,
there would probably be very little volume hauled over plowed roads during the
normal operating season. However, many purchasers will operate over plowed roads
outside the normal operating season. To assure sufficient rock replacement funds, the
surface rock loss will be based on weighting the anticipated (local experience)
volume hauled during snow-free months and periods of frozen road conditions, times
the rate of rock loss without snowplowing with the volume hauled during periods of
plowed snow on an unfrozen road, times the rate of rock loss with snowplowing.
R1 AMENDMENT 2409.22-2012-1
EFFECTIVE DATE: 07/20/2012
DURATION: This amendment is effective until superseded or removed.
2409-22_ 20
Page 23 of 31
FSH 2409-22 – TIMBER APPRAISAL HANDBOOK
CHAPTER 20 – RESIDUAL VALUE APPRAISAL
This computation will be based on past hauling and snowplowing practices
anticipated for the sale regardless of the normal operating season.
If local surface rock loss factors are available, they may be used in place of the guide
shown in 21.3 - Exhibit 01.
R1 AMENDMENT 2409.22-2012-1
EFFECTIVE DATE: 07/20/2012
DURATION: This amendment is effective until superseded or removed.
2409-22_ 20
Page 24 of 31
FSH 2409-22 – TIMBER APPRAISAL HANDBOOK
CHAPTER 20 – RESIDUAL VALUE APPRAISAL
21.3 - Exhibit 01
GUIDE TO ROCK REPLACEMENT COST
21.3 - EXHIBIT 01 IS A SEPARATE DOCUMENT
CAN BE VIEWED IN HARD COPY IN THE MASTER SET.
R1 AMENDMENT 2409.22-2012-1
EFFECTIVE DATE: 07/20/2012
DURATION: This amendment is effective until superseded or removed.
2409-22_ 20
Page 25 of 31
FSH 2409-22 – TIMBER APPRAISAL HANDBOOK
CHAPTER 20 – RESIDUAL VALUE APPRAISAL
3. Contributed Funds on Transaction Evidence Sales. National rules provide that FR&T
funds may be used to supplement specified road costs on deficit appraised timber sales.
Contributed funds are limited to an amount that would bring the sale up to 50 percent of
normal profit and risk, but limited to 40 percent of the engineers estimated cost of the
road. (Both percentages are subject to change in the annual budget advice.)
Profit and risk (P&R) is not identified in the TE appraisal system as it is in the residual
value appraisal. However, the average sale generates both profit to the purchaser and
stumpage to the Government. Both are included in the average bid and therefore
included in all TE values such as predicted and indicated rates.
For purposes of calculating the amount of contributed funds on sales with deficit TE
appraisals, use 15 percent of the average lumber SPLT on West Side Forests and 18.5
percent on East Side Forests as a measure of normal profit and risk. These percentages
approximate 11 percent P&R calculated on SPLS in the RV system.
If the TE predicted high bid equals or exceeds base rates plus specified road costs, the
sale should generate normal profit and is therefore not deficit.
If the TE predicted high bid is less than base rates plus specified road costs, the sale will
not generate a normal profit margin and is considered deficit. If the sale is deficit by
more than 50 percent of normal profit and risk the sale is eligible for contributed funds.
Examples showing how contributed funds are calculated are shown below:
1. Specified Road cost
2. Base Rate
3. Predicted High Bid
4. Amount deficit (3-2-1)
5. Lumber selling value (SPLT) 1/
6. Normal Profit & Risk
(15% x SPLT)
7. 50% of Normal Profit & Risk
8. Contribution limit due to
50% of Profit and Risk
9. Contribution limit due to
40% road cost
10. Contribution
Sale 1
$ 20.97
12.74
34.80
0.00
293.62
44.04
Sale 2
$ 50.00
3.00
49.10
3.90
200.10
30.02
Sale 3
$ 20.97
38.77
30.80
28.94
293.62
44.04
Sale 4
$ 50.00
38.77
10.05
78.72
200.10
30.02
22.02
0.00
15.01
0.00
22.02
6.92
15.01
63.71
8.39
20.00
8.39
20.00
0.00
0.00
6.92
20.00
Sale 1 is not deficit since the predicted high bid ($34.80) exceeds the base rate plus road
cost ($33.41).
R1 AMENDMENT 2409.22-2012-1
EFFECTIVE DATE: 07/20/2012
DURATION: This amendment is effective until superseded or removed.
2409-22_ 20
Page 26 of 31
FSH 2409-22 – TIMBER APPRAISAL HANDBOOK
CHAPTER 20 – RESIDUAL VALUE APPRAISAL
Sale 2 is deficit by $3.90 [Predicted high bid ($49.10) minus base rate ($3.00) minus road
cost ($50.00) = -3.90], but 50% of normal P&R is $15.01; therefore the sale is not
eligible for contributed funds.
1/ Use the sale average SPLT adjusted by WWPA indices; the same as used on line 1 on
the TE Appraisal forms.
Sale 3 is deficit by $28.94 [Predicted high bid ($30.80) minus base rate of $38.77 minus
the road cost ($20.97)]. Fifty percent of normal profit is $22.02. Contributed funds
could be up to the amount that would bring the sale up to 50 percent of normal profit
calculated as the amount deficit ($28.94) minus 50 percent normal profit ($22.02) or
($6.92).
Sale 4 is deficit by $78.72. [Predicted high bid ($10.05) minus base rate ($38.77) minus
road costs ($50.00)] The contribution needed to bring the sale up to 50 percent of normal
profit would be $63.71 (the amount deficit ($78.72) minus 50 percent of normal profit
($15.01) or ($63.71); however contribution is limited by 40 percent of road cost ($20.00).
Contributed funds after bidding can be calculated by subtracting the bid premium from
the amount of contribution available before bidding.
21.4 - Administrative Costs
1. General Logging Overhead. Appraisal estimates are listed with the other current
experienced costs for respective appraisal zones.
2. Logging Depreciation. Appraisal estimates for depreciation are included with the
respective stump-to-truck experienced costs to which they apply.
21.5 - Environmental Protection Costs
The calculation of required deposits for slash treatment work to be done by the Forest Service
will include overhead assessment and will be based upon the estimated costs of doing the work at
the time the work is planned for accomplishment. Use the cost adjustment indices included in
this section. Refer to FSH 1909.13, chapter 40 section 42, for established overhead (RO, SO,
and WO) rates.
Costs for purchaser's performance may be estimated using the hourly wage and equipment rates
see section 21.1, or locally experienced contract costs may be used. If contract costs are used,
they must be reduced for profit so that profit is not duplicated. If the profit level included in
contract costs is not known, the reduction should be for the same percentage of profit provided
for on line 37 of the appraisal summary.
R1 AMENDMENT 2409.22-2012-1
EFFECTIVE DATE: 07/20/2012
DURATION: This amendment is effective until superseded or removed.
2409-22_ 20
Page 27 of 31
FSH 2409-22 – TIMBER APPRAISAL HANDBOOK
CHAPTER 20 – RESIDUAL VALUE APPRAISAL
1. Snag Felling. The cost of felling hazardous snags and fire-dangerous trees as a fire
hazard reduction measure will depend on the size of snags and trees. Costs will be
determined from local information for each sale.
2. Felling Unmerchantable Trees. The cost for felling diseased trees to improve the
conditions of the stand or for site preparation will generally be greater than felling snags
when it is required that trees be opened up to determine whether or not they contain
merchantable material. Costs will vary with size of trees to be felled and the amount of
bucking needed to determine and recover merchantable material. Applicable costs can be
determined by a percentage for felling and bucking and converted to a per tree cost.
These costs will be included in the Sale Area Improvement (SAI) plan. If the purpose is
for site preparation, the cost will be included in base rates or slash disposal plan as a
purchaser requirement.
3. Soil Erosion Prevention. The cost of this work varies depending on soil stability,
terrain and other conditions.
4. Contractual Cost Estimates. The hourly equipment rates in 21.1 were compiled for
local application under average conditions. The rates include fixed, repair and
maintenance costs experienced by logging contractors. They do not include operator
wages or overhead costs. Add the paid rate of the operator to the equipment rate to arrive
at a "fully operated" cost per hour. If a helper is necessary, his wages should be added.
5. Cost Adjustment Indices for Forest Service Work. When calculating the amount of
current collections for work to be done in future years, use the following factors for the
number of years the costs are projected. Develop separate cost projections where
contractual provisions require the work to be done in different future years, except for
deferred road surface replacement costs which should be estimated to the midpoint of the
haul time period.
These factors are to be used in all cases where future costs must be estimated, including
reforestation, TSI, road maintenance, gravel replacement, temporary road closures, and
so forth for which contractual provisions require collections from the purchasers.
When, during the life of the sale, purchaser requests Forest Service work performance
under B(T)4.225 Cooperative Deposits, the Forest Service should enter into cooperative
agreements immediately before work performance, compute inclusive current costs, and
collect the amount. Use these tables only if the work extends into another year.
R1 AMENDMENT 2409.22-2012-1
EFFECTIVE DATE: 07/20/2012
DURATION: This amendment is effective until superseded or removed.
2409-22_ 20
Page 28 of 31
FSH 2409-22 – TIMBER APPRAISAL HANDBOOK
CHAPTER 20 – RESIDUAL VALUE APPRAISAL
Cost Adjustment Factors
Years from sale date
1
2
3
4
5
6
7
8
9
10
1.042
1.084
1.124
1.162
1.200
1.238
1.276
1.314
1.352
1.390
Example:
Project to be done 4 years in the future.
Current cost estimate = $5,000; $5,000 x 1.162 = $5,810 will be needed to
accomplish the project.
21.6 - Temporary and Specified Road Developments
Refer to "Cost Estimating Guide for Engineering and Road Construction" published periodically
by the RO Engineering for developing cost estimates for both temporary and specified roads.
Forest engineers will develop the specified and temporary road costs for each sale. See section
90.22 for procedure to compute profit adjustment.
21.7 - Manufacturing Costs
All manufacturing costs start when the logs reach the yard. The costs of unloading, decking,
sprinkling, rehandling, rerunning lumber to pattern and loading ready for shipment are included
in these manufacturing costs. Log acquisition costs are included.
To manufacturing cost LT, add appropriate chip and byproduct manufacturing cost see section
21.1 and adjust by recovery percent. Exclude chip and byproduct manufacturing cost estimates
when appraising cedar logs.
21.8 - Profit and Risk
Current profit and risk ratios are published periodically by Interim Directive and inserted in
section 21.11.
The normal profit ratio will be used in all sales except where the risk is determined to be less or
greater than under average conditions. As an example, the higher range is appropriate in sales
which include fire or insect-damaged timber where it is difficult to determine the timber quality
at time of cutting.
Also, the higher range is appropriate for sales with higher than average development costs,
unusually high defect, or other factors will increase the risk. The lower range is appropriate for
sales where little or no quality deterioration is expected during the period of the sale, where
development costs are low, defect lower than normal, or other conditions are such that the risk is
R1 AMENDMENT 2409.22-2012-1
EFFECTIVE DATE: 07/20/2012
DURATION: This amendment is effective until superseded or removed.
2409-22_ 20
Page 29 of 31
FSH 2409-22 – TIMBER APPRAISAL HANDBOOK
CHAPTER 20 – RESIDUAL VALUE APPRAISAL
determined to be lower than under the average conditions. Variance from the normal profit ratio
should be based upon specific risk abnormality and fully discussed in the timber sale report.
When western red cedar poles are identified in a sale with the cedar poles and saw logs
combined in pricing, see chapter 40, the cedar will be offered at flat rates. When the cedar pole
component is less than 50 percent of the total sale volume, the normal profit ratio shall be
increased 1 percent. When the cedar pole component makes up 50 percent or more of the total
sale volume, the profit ratio shall be increased 2 percent.
The sale profit and risk margin must be adjusted to avoid duplication of profit which is included
in the engineering cost estimates. The level of road profit and risk to be considered changes at
intervals, and is published currently in the Cost Estimating Guide for Engineering and Road
Construction. The November 1985 Cost Estimating Guide reflects a six percent profit level in
road costs.
The procedure for computing sale profit margins by species follows:
Species profit margin=(SVLS x selling value ratio)1/-road profit/M.
The following example assumes these conditions:
5% road profit
10% sale profit ratio (Line 37) (.091 profit ratio)1/
$100,000 total purchaser credit limit (PCL)
$300.00/M SVLS
5,000 MBF total sale volume2/
1/ See FSM 2422.52
2/ Includes dead volume, but not unsound sapwood, cedar products, pulp.
1. Compute the total road profit and the road profit/M
Total road profit = PCL -
PCL 3/
R1 AMENDMENT 2409.22-2012-1
EFFECTIVE DATE: 07/20/2012
DURATION: This amendment is effective until superseded or removed.
2409-22_ 20
Page 30 of 31
FSH 2409-22 – TIMBER APPRAISAL HANDBOOK
CHAPTER 20 – RESIDUAL VALUE APPRAISAL
1+ current engineering profit percent
= $100,000 - $100,000 = $4,762
1.05
Road profit/M = Total road profit = $4,762 = $0.95/M (Line 39a)
Total sale volume 2/ 5,000M
2. Compute the sale profit by species:
Species profit based on selling value = SVLS x SV ratio =
$300.00/M x .091 = $27.30/M
Species profit margin = $27.30/M-$0.95/M = $26.35/M (Line 38)
Form FS-2400-17, Appraisal Summary, for the sale in the above example would have an entry of
$4,762 in parentheses immediately above the purchaser credit limit in the upper right corner
(card type 5). In card type 6, the line 38 entry for the species would be $26.35; line 39a would
state, "Road profit/M = $0.95." For weighted averages, card type 7, on line 38, add the road
profit to the weighted average sale profit and to the computed advertised profit margin and enter
in the "N/Adv" spaces. If, in the example, $26.35 were the weighted average for all species, the
entry for average normal profit margin would be $27.30.
When funds or material are contributed to offset deficits, the purchaser credit limit to be entered
in fields 23-29 and to compute line 30 of the appraisal summary is the total PCL reduced by the
amount of contribution. The contribution, however, contains an allowance for profit. Therefore,
the dollar amount of profit to be shown in parentheses and the profit/M on line 39a will be
computed using the total PCL including contribution. This amount must also be considered
when adjusting to avoid duplication of profit.
In a sale with total road costs of $150,000 where there is to be a cash contribution of $50,000, the
advertised PCL in fields 23-29 is $100,000. The total roads costs are used in the profit
computation:
Total road profit = $150,000 - $150,000 = $7,142.86 (enter above
1.05
PCL in card
type 5)
Road profit/M = $7,142.86 = $1.43/M (enter on line 39a)
5,000M
R1 AMENDMENT 2409.22-2012-1
EFFECTIVE DATE: 07/20/2012
DURATION: This amendment is effective until superseded or removed.
2409-22_ 20
Page 31 of 31
FSH 2409-22 – TIMBER APPRAISAL HANDBOOK
CHAPTER 20 – RESIDUAL VALUE APPRAISAL
2/ Includes dead volume, but not unsound sapwood, cedar products, pulp.
3/ Includes contribution dollars if part of sale package.
Deduct $1.43 from the profit margin based on selling value for each species to compute the sale
profit margin. In the above example, the profit margin for the species in question is $27.3O/M $1.43/M = $25.87/M (line 38, card type 6). Add $1.43/M to weighted average normal profit
margin and the computed advertised profit margin for the entries on line 38 of card type 7.
In sales that develop a sale-as-a-whole normal profit margin but in which one or more species
may have a less than normal profit margin at base rates, adjustments to eliminate deficits will be
made by determining the proportionate ratio that each species above base rates is able to absorb
the deficit. Compute a factor by following the example in Chapter 90.22.