Equipment For Construction

EQUIPMENT MANAGEMENT IN
CONSTRUCTION PROJECTS
SEMINAR II
SEMINAR GUIDE: Prof (Dr) V Thiruvengdam
Prof. V D Deewan
SHISHUPAL SINGH, BEM/526
DEPARTMENT OF BUILDING ENGINEERING AND MANAGEMENT
SCHOOL OF PLANNING AND ARCHITECTURE, NEW DELHI
In case of huge construction projects, speedy work and timely completion are very vital.
Mechanization of the most of the work and timely completion are very vital due to this reason
mechanization of the most of the work has been done in which, equipment and machinery play a
vital role. Proper use of the appropriate equipment contributes to the economy, quality, safety,
speed and timely completion of the project.
EQUIPMENT MANAGEMENT IN CONSTRUCTION PROJECTS I
CERTIFICATE
Certified that the thesis work entitled “EQUIPMENT MANAGEMENT IN

CONSTRUCTION PROJECT”, which is being submitted by Shishupal Singh in partial
fulfilment for the award of the degree of the Masters in Building Engineering and Management
of the School of Planning and Architecture, New Delhi, is a record of the student’s own work
and carried out under our supervision and guidance. The matter embodied in this thesis has been
not submitted for the award of any other degree and diploma.
Dr. V. Thiruvengadam Prof. Y. K Jain
Thesis Guide Head of the Department
Department of Building Engineering and Management,
School of Planning and Architecture, New Delhi

EQUIPMENT MANAGEMENT IN CONSTRUCTION PROJECTS II
ACKNOWLEDGEMENT
I want to acknowledge with thanks the encouragement and generous help rendered by Dr. V.
Thiruvengadam and Prof. V D Deewan, my Thesis Guide and Professor of the Department of
Building Engineering and Management in selecting and guiding the work. It would have never
been possible for me to come to this stage without his Constructive Suggestions, Sustained
Interest and the Focused Guidance.
I also want to take this opportunity to express my gratitude towards Prof. Y K Jain, Professor and
presently the Head of the Department of Building Engineering and Management, School of
Planning and Architecture, New Delhi, for his valuable support.
Last but not the least; I want to thank my friends Princy Soni and Talha Khanfor the guidance,
help and materials they have given to me on the topic.
Shishupal Singh
Dec, 2012
EQUIPMENT MANAGEMENT IN CONSTRUCTION PROJECTS III
TABLE OF FIGURES:
Figure 3-1 Construction Equipment Classification...................................................................... 3-3

Figure 3-2 JCB-3D ....................................................................................................................... 3-6
Figure 3-3 Buckets (Source: www.onlinecranes.com) ............................................................. 3-8
Figure 3-4 Teeth Options ............................................................................................................. 3-8
Figure 3-5 Crawler Crane ............................................................................................................ 3-9
Figure 3-6 Lattice Boom Truck Mounted .................................................................................. 3-11
Figure 3-7 Lattice Truck Mounted Crane .................................................................................. 3-11
Figure 3-8 Parts of Lattice Boom Crane .................................................................................... 3-12
Figure 3-9 Tower Crane ............................................................................................................. 3-13
Figure 3-10 Fixed Base Tower Crane ........................................................................................ 3-14
Figure 3-11Travelling Tower Crane .......................................................................................... 3-15
Figure 3-12 Climbing Tower Crane ........................................................................................... 3-16
Figure 3-13 Drop Hammer......................................................................................................... 3-19
Figure 3-14 POWER AUGER (Source www.onlinecranes.com) ............................................. 3-19
Figure 3-15 Power Auger........................................................................................................... 3-20
Figure 3-16 Drilling Rod ........................................................................................................... 3-21
Figure 3-17 Carrier Tube ........................................................................................................... 3-21
Figure 4-1 Cash Flow Diagram.................................................................................................... 4-2
Figure 4-2 Comparison of Depreciation Rates by Straight Line Method, Sum of the Year Method
and Double- Declining Method ................................................................................................... 4-8
Figure 4-3 A TVM Approach for Estimating Owning Cost ...................................................... 4-13
Figure 4-4 Comparison of Owning and Operating Costs by Different Methods ....................... 4-41
Figure 5-1 Equipment Life replacements after Douglas .............................................................. 5-3
Figure 5-2 Economic Life of the Excavator 3X Site Master ..................................................... 5-16
Figure 5-3 Economic Life of the Tower Crane .......................................................................... 5-17
Figure 5-4 Economic Life of the Batching Plant ....................................................................... 5-18
Figure 5-5 Economic Life of the Dumper.................................................................................. 5-19
Figure 5-6 Comparison of different options Buying, Renting or Owning for Acquisition of
Equipment .................................................................................................................................. 5-26
EQUIPMENT MANAGEMENT IN CONSTRUCTION PROJECTS IV
Table of Contents
CHAPTER:1 INTRODUCTION .............................................................................................. 1-1
1.1 INTRODUCTION ......................................................................................................... 1-1
1.2 AIM ............................................................................................................................... 1-3
1.3 OBJECTIVE.................................................................................................................. 1-4
1.4 METHEDOLOGY ........................................................................................................ 1-4
1.5 CHAPTER STRUCTURE ............................................................................................ 1-6
CHAPTER:2 LITERATURE REVIEW ................................................................................... 2-1
2.1 INTENT OF THE CHAPTER ...................................................................................... 2-1
2.2 UNPUBLISHED SEMINAR AND THESIS WORKS - Dept. of BEM, SPA. .......... 2-1
2.2.1 MANAGEMENT OF CONSTRUCTION EQUIPMENTS IN BUILDING
PROJECTS .......................................................................................................................... 2-1
2.2.2 MECHANIZATION IN CONSTRUCTION AND ITS COST ANALYSIS ........ 2-2
2.3 PAPERS, JOURNALS AND ARTICLES .................................................................... 2-3
CHAPTER:3 CONSTRUCTION EQUIPMENT CLASSIFICATION ................................... 3-1
3.2 CONSTRUCTION EQUIPMENT SECTOR IN INDIA .............................................. 3-1
3.2.1 SECTOR COMPOSITION AND SIZE ................................................................. 3-1
3.3 CLASSIFICATION OF CONSTRUCTION EQUIPMENT ........................................ 3-2
3.3.1 CLASSIFICATION ON THE BASIS OF WORK ................................................ 3-2
3.3.2 CLASSIFICATION ON THE BASIS MANUFACTURING PROCESS ............. 3-4
3.4 CONSTRUCTION EQUIPMENT TO BE COVERED IN SEMINAR ...................... 3-5
3.4.1 EXCAVATORS ..................................................................................................... 3-5
3.4.2 LIFTING EQUIPMENT - CRANE ....................................................................... 3-8
3.4.3 PILLING EQUIPMENT ...................................................................................... 3-18
3.4.4 BATCHING PLANT ........................................................................................... 3-21
3.4.5 FORMING SYSTEM .......................................................................................... 3-23
CHAPTER:4 COST OF OWNING AND PURCHASING OF CONSTRUCTION
EQUIPMENT 4-1
4.1 INTENT OF CHAPTER ............................................................................................... 4-1
4.2 TIME VALUE OF MONEY ......................................................................................... 4-1
EQUIPMENT MANAGEMENT IN CONSTRUCTION PROJECTS V
4.3 EQUIPMENT COST..................................................................................................... 4-2

4.3.1 ELEMENTS OF EQUIPMENT COST ................................................................. 4-2
4.3.2 ELEMENTS OF EQUIPMENT OWNERSHIP COST ......................................... 4-3
4.3.3 ELEMENTS OF OPRETATING COST ............................................................... 4-9
4.4 METHODS OF ESTIMATING OWNERSHIP COST .............................................. 4-13
4.4.1 TIME VALUE METHOD ................................................................................... 4-13
4.4.2 AVERAGE ANNUAL INVESTMENT METHOD ............................................ 4-16
4.5 METHODS OF ESTIMATING OWNERSHIP AND OPERATING COST ............. 4-18
4.5.1 ESTIMATING OWNERSHIP AND OPERATING COST USING
CATERPILLAR METHOD .............................................................................................. 4-19
4.5.2 CATERPILLAR METHOD FOR ESTIMATING OWNERSHIP AND
OPERATING COST .......................................................................................................... 4-19
4.5.3 ESTIMATING: OWNERSHIP AND OPERATING COST BY USING
ASSOCIATED GENERAL CONTRACTORS OF AMERICA (AGC) METHOD ......... 4-25
4.5.4 ASSOCIATED GENERAL CONTRACTORS OF AMERICA (AGC) METHOD
4-25
4.5.5 ESTIMATING: OWNERSHIP AND OPERATING COST USING PEURIFOY/
SCHEXNAYDER METHOD ............................................................................................ 4-33
4.6 COMPARING THE COSTS....................................................................................... 4-39
4.6.1 COMPARISION OF OWNERSHIP COST ........................................................ 4-39
4.6.2 COMPARISION OF OWNERSHIP AND OPERATING COST ....................... 4-40
CHAPTER:5 FINANCIAL ANALYSIS FOR DECISION MAKING ON SELECTION OF
CONSTRUCTION EQUIPMENT`S ........................................................................................... 5-1
5.1 INTENT OF CHAPTER ............................................................................................... 5-1
5.2 EQUIPMENT LIFE AND REPLACEMENT PROCEDURE ...................................... 5-1
5.2.1 EQUIPMENT LIFE ............................................................................................... 5-2
5.2.2 ECONOMIC LIFE AND REPLACEMENT TIME FOR EQUIPMENT ............. 5-3
5.2.3 SUMMARY OF COSTS ..................................................................................... 5-15
5.2.4 REPLACEMENT ANALYSIS ............................................................................ 5-20
5.3 BUY, RENT OR LEASE CONSIDERATIONS ........................................................ 5-20
5.3.1 BUY ..................................................................................................................... 5-20
5.3.2 RENTAL .............................................................................................................. 5-21
EQUIPMENT MANAGEMENT IN CONSTRUCTION PROJECTS VI
5.3.3 LEASE ................................................................................................................. 5-21

CHAPTER:6 PRODUCTION COST AND RATE ANALYSIS OF CONSTRUCTION
EQUIPMENT, COMPARING WITH INDUSTRY RATES ...................................................... 6-1
6.2 PROCEDURE FOR EQUIPMENT DESIGN............................................................... 6-1
6.2.1 CYCLE TIME ........................................................................................................ 6-2
6.2.2 JOB AND MANAGEMENT FACTORS .............................................................. 6-2
6.2.3 RECOMMENDATIONS OF PLANT AND MACHINERY COMMITTEE ....... 6-3
6.3 PRODUCTION COST FOR EXCAVATING EQUIPMENTS ................................... 6-3
6.3.1 PRODUCTION RATES OF THE BACKHOE LOADERS ................................. 6-4
6.4 PRODUCTION COST FOR EARTHMOVING EQUIPMENT .................................. 6-4
6.4.1 PRODUCTION RATES OF TRUCK ................................................................... 6-5
6.5 PRODUCTION COST FOR CONCRETING EQUIPMENT ...................................... 6-6
6.5.1 PRODUCTION RATE OF BATCHING PLANT ................................................. 6-6
CHAPTER:7 CASE STUDY: PERFORMANCE ANALYSIS OF CONSTRUCTION
EQUIPMENT 7-1
7.1 INTRODUCTION ......................................................................................................... 7-1
7.2 INFORMATION ABOUT THE PROJECT ................................................................. 7-1
7.2.1 SITE ACCESS ....................................................................................................... 7-2
7.2.2 PROJECT FEATURES ......................................................................................... 7-2
7.2.3 EXCAVATION ..................................................................................................... 7-2
EQUIPMENT MANAGEMENT IN CONSTRUCTION PROJECTS 1-1
CHAPTER:1 INTRODUCTION
1.1 INTRODUCTION
Construction is the ultimate objective of a design, and the transformation of a design by
construction into a useful structure is accomplished by men and machines. Men and machines
transform a project plan into reality, and as machines evolve there is a continuing transformation
of how projects are constructed. This seminar report is explaining fundamental concepts of heavy
machine utilization, which economically match machine capability to specific project
construction requirements: The efforts of contractors and equipment manufacturers, daring to
develop new ideas, constantly push machine capabilities forward. As the array of useful
equipment expands, the importance of careful planning and execution of construction operations
increases.
In case of huge construction projects, speedy work and timely completion are very vital.
Mechanization of the most of the work and timely completion are very vital due to this reason
mechanization of the most of the work has been done in which, equipment and machinery play a
vital role. Proper use of the appropriate equipment contributes to the economy, quality, safety,
speed and timely completion of the project. A number of different types of equipment and
machinery are used in almost all types of the project such as highway projects, irrigation,
buildings, power projects etc. To obtain the best service and performance from the construction
industry, the Client should be closely involved at each step in the process. Successful
construction equipment procurement should result in a project delivered on time, to cost and to
the desired quality capable of performing the specific business function of that client. The
procurement process involves a wide range of skills for which training and development may be
required.
The main challenge in effective equipment management is the absence of linkages between the
stakeholders such as procurement, equipment department, accounts and project teams. Also, lack
of visibility on information related to equipment’s such as availability, productivity.
It has been estimated that about 15-30% of the project cost has been accounted towards
equipment and machinery. The financial aspects of the construction equipment are an important
matter particularly for construction firm.
When commercial manufacturing of heavy construction equipment began, the primary way to
acquire a new piece of equipment was outright purchase. Players in the construction industry
typically were wealthy and filled all of the primary roles — owner, designer, and contractor.
Without credit and financing, heavy equipment purchase probably would be limited today, much
like it was in the late 1800s. The proliferation of diverse equipment manufacturers around the
CHAPTER 2 LITERATURE REVIEW Page 1-1

world has spawned great competition, not just for the purchase price of the equipment, but
financing, terms of use, and method of payment.
In the current construction marketplace, equipment manufacturers, used equipment brokers, and
rental companies provide a means for a user with proper credentials and competence to acquire
just about any heavy construction machine available on a temporary or permanent basis. There
are numerous options to consider when deciding on heavy equipment acquisition and financing.
Traditionally, the equipment purchase process was complete when the contractor selected a
specific make and model of machine from a dealer. The buyer received financing with a down
payment, often the trade-in of an older piece of equipment. The new piece of equipment was the
loan security. If the contractor defaulted on loan, then the lender could repossess the equipment.
This acquisition process today includes numerous financing options and scenarios that banks,
finance companies, leasing agencies, and manufacturers offer. All major heavy construction
equipment manufacturers offer a number of creative leasing, renting, and installment loan
products.
The equipment rental industry has leveled the playing field for contractors by minimizing the
risk associated with equipment purchase and utilization. Renting or leasing appropriate
equipment greatly increases the type and size of the projects that contractors and subcontractor
scan bid and execute. Contractors bid jobs today knowing they will rent every piece of heavy
equipment used on the project or subcontract any work requiring heavy equipment.
There are many aspects to be considered before planning and procuring of construction
equipment for projects. There will be different department will be involved in this exercise: the
design, planning, construction, mechanical, operation, maintenance, stores, space, personnel and
the most important of them finance. A decision made by several groups of people would result in
lesser problem regarding availability, utilization and productivity of equipment.
Operation research offers alternative plans for a problem so as to facilitate the management to
take proper decision. OR uses the mathematical logic and helps the management to solve the
complex problems to find optimum solutions. Many giant projects connected with railways,
highways, irrigation, mining, airports etc.; involves huge quantities of the earthwork, concreting
work and handling millions of cubic meter of the minerals and rock. Hence deployment of large
fleet of the construction equipment becomes necessary. Selection and efficiency is a crucial
factor. In such situations OR provides the management with powerful tools to quantify the

results of the different alternatives and help the management to understand and assess the
complex situation. Some of the commonly used OR techniques in system analysis of the
equipment management are briefly outlined:
OR TECHNIQUES APPLICATION
NETWORK SYSTEMS Allocation of available equipment’s,
procurement schedule, site selection,
installation and organizing heavy equipment
repairs.
WAITING LINE MODELS Study of equipment performance and sizing
and in sizing and matching of equipment.
ASSIGNEMENT MODELS Allocation of construction equipment among a
number of requirements.
TRANSPORTATION MODEL In deciding a procurement policy for different
pieces of equipment for several competing
sources of supply.
REPLACEMENT, MAINTENACE AND Decision making in selecting a suitable
RELIABILITY MODELS preventive maintenance scheme or replacement
policy
GAMING MODEL Helps to overcome unexpected occurrence
such as a major breakdown of the equipment
SIMULATION MODEL Helps in equipment matching
1.2 AIM
The aim of the seminar is to study different types of construction equipment, operations of
various construction equipment and fundamentals of equipment selection, cycle times,
production rates and costs.
The quality of performance is measured by matching the equipment spread's production against
its cost. Production is work done; it can be the volume or weight of material moved the number
of pieces of material cut, the distance traveled, or any similar measurement of progress. To
estimate the equipment component of project cost it is necessary to first determine machine

productivity. Productivity is governed by engineering fundamentals and management ability.

Each level of productivity has a corresponding cost associated with the effort expended.
EQUIPMENT
COMPONENT OF
• Equipment Spreads PROJECT COST • Classify the
performance against equipment's.
its cost • Determining the
Productivity • Selecting heavy
• Production is Work equipments for the
Done • Different costs study.
associated with
productivity
MEASURE QUALITY PRACTICAL
PERFORMANCE APPLICATION
1.3 OBJECTIVE
 Classify the construction equipment according to their use and understand operations of
various construction equipment.
 Understanding of construction equipment selection, cycle times, production rates and
costs.
 Estimate and Perform the analysis needed to determine costs and productions of given
construction equipment.
 Enable selection of right equipment for a job with minimum cost.
1.4 METHEDOLOGY

FORMULATION OF THE SCOPE AND • CHAPTER 1 INTRODUCTION MANAGEMENT OF

METHODOLOGY FOR THE WORK CONSTRUCTION EQUIPMENT
STUDYING THE PREVIOUSLY WORK

DONE SEMINAR/ THESIS • CHAPTER 2 LITERATURE REVIEW
STUDYING BOOKS/ PAPERS/ CODES
CLASSIFYING THE CONSTRUCTION

EQUIPMENT USED IN THE • CHAPTER 3 :CLASSIFYING THE CONSTRUCTION
CONSTRUCTION INDUSTRY THEIR EQUIPMENT
SUPPLIER
EQUIPMENT ECONOMICS, TIME

VALUE OF MONEY, METHODS OF • CHAPTER 4 : COST OF OWNING AND
COMPARING ALTERNATIVES, SINGLE PURCHASING OF CONSTRUCTION EQUIPMENT
PAYMENT OR SERIES PAYMENT
STUDYING THE IMPACT OF THE

COST OF EQUIPMENT ON FINANCE • CHAPTER 5: : FINANCIAL ANALYSIS FOR
OF THE PROJECT. FORMULATING
METHOD FOR DECISION FOR DECISION MAKING ON SELECTION OF
HIRING OR LEASE, OWN CONSTRUCTION EQUIPMENT`S
EQUIPMENT
STUDYING THE CRITERIA FOR

SELECTION OF HEAVY EQUIPMENTS • CHAPTER 6: : PRODUCTION COST 'S & RATE
LIKE CRANE, EARTHMOVING, ANALYSIS , COMPARING WITH INDUSTRY RATES
EXCAVATING EQUPIMENT
STUDYING THE DIFFERENT METHOD

OF MONITORING AND • CHAPTER 7: CASE STUDY
CONSTROLLING OF EQUIPMENT
IMPLEMENTING THE
METHODOLOGY DEVELOPED ON • CHAPTER 8: MONITORING AND CONTROLLING
THE EXISTING PROJECT AND
ANALYSING THE IMPACT ON THE OF CONSTRUCTION EQUIPMENT
FINACE OF THE PROJECT
CONCLUSION OF THE WORK AND

FUTURE SCOPE OF THE STUDY • CHAPTER 9 : CONCLUSION

1.5 CHAPTER STRUCTURE

CHAPTER 1 INTRODUCTION MANAGEMENT OF CONSTRUCTION
EQUIPMENT
CHAPTER 2: LITERATURE REVIEW
CHAPTER 3 :CLASSIFYING THE CONSTRUCTION EQUIPMENT
CHAPTER 4 : COST OF ANALYSIS OF EQUIPMENTS : OWNING AND

OPERATION MAINTENANCE
CHAPTER 5: FINANCIAL ANALYSIS FOR DECISION MAKING ON

SELECTION OF CONSTRUCTION EQUIPMENT`S
CHAPTER 6: PRODUCTION COST 'S & RATE ANALYSIS ,

COMPARING WITH INDUSTRY RATES
CHAPTER 7:CASE STUDY
CHAPTER 8: MONITORING AND CONTROLLING OF

CONSTRUCTION EQUIPMENT
CHAPTER 9 : CONCLUSION

CHAPTER:2 LITERATURE REVIEW

2.1 INTENT OF THE CHAPTER
In order to have a reasonable understanding of the topic, a comprehensive study has been carried
out to get the basic data, keywords, earlier records and information regarding works done. This
creates a base and builds a clear image of what has to be done further more in this subject.
2.2 UNPUBLISHED SEMINAR AND THESIS WORKS - Dept.

of BEM, SPA.
2.2.1 MANAGEMENT OF CONSTRUCTION EQUIPMENTS IN BUILDING PROJECTS
Name of Work Management of Construction Equipment’s in Building Projects
Author Binod Kumar Sahu
Year 2002
The present seminar work highlights the different management
aspects of the construction equipment, which deal with planning,
selection criteria and decision making on sourcing of equipment,
productivity estimation, economics, maintenance and site
management of construction equipment. The study also deals with
some of analytical techniques and their application in construction
equipment management.
 Study covers the different aspects of equipment management
Broad Content of the
Work regarding :
a) Equipment Planning.
b) Selection of Equipment.
c) Sourcing of Equipment.
 Different approaches of equipment planning and planning
which, include:
a) Network System.
b) Waiting Line Model.

c) Allocation Model.
d) Regression Model.
 Study deals with the production estimate of equipment in a
particular condition for power shovel, back hoe, loader, and
dumper, batching plant and concrete pumps.
 Study covers maintenance planning and maintenance program
for preventive maintenance.
 The study includes the management aspects of construction
equipment regarding:
a) Layout of batching plant.
b) Operational Requirements.
c) Safety Considerations.
Outcome of the Work Recommendations for construction equipment planning for the
construction project to be considered were proposed.
Proposing points for selection of construction equipment.
Decision making on sourcing of the construction equipment.
Methods for productivity estimation of construction equipment.
Relevance to Current Methodology for estimation of productivity of construction
Work equipment.
2.2.2 MECHANIZATION IN CONSTRUCTION AND ITS COST ANALYSIS

Name of Work Mechanization in Construction and its Cost Analysis
Author Shishupal Singh
Year 2010
The objective of the project is to make the cost analysis for the
mechanized construction in the construction activities, improve the
productivity, complete the project in time within the construction
period, and achieve the quality in the project for long life and safety
Broad Content of the
Work of the construction equipment in different construction activities.
 Study classify the construction equipment on the basis of their

use

 Study identifies the area of mechanization in these

construction activities
 Study suggest a best procurement plan for the different
equipment brought to the site governing by the different
financial methods like buy, lease or rent decision.
 Study describes the owning and operating cost of the
equipment’s environmental which include the economy life of
the equipment, initial cost and many for the operating cost
which will be given by maintenance cost, fuel cost and
lubricant cost and to present different methods of calculating
the owning and operating cost.
 Equipment’s safety, security and maintenance is discussed in
detail to avoid the unseen expenditure that might come into
picture if some precautions will not be taken and these
precautions are suggested in the report.
Outcome of the Work Factors which govern the analysis of cost for the activity process, like
in concreting the decision to come over a conclusion of concreting
method.
Cost being the most important factor in deciding the method of
concreting so the cost analysis is being done for the different
concreting method
Relevance to Current Classification of construction equipment.
Work Procurement of Construction of construction equipment.
Cost analysis of construction equipment.
2.3 PAPERS, JOURNALS AND ARTICLES

CHAPTER:3 CONSTRUCTION EQUIPMENT

CLASSIFICATION

Intent of this chapter is to classify different construction equipment’s on different parameters.
Choose selected construction equipment for further study for this seminar.
3.2 CONSTRUCTION EQUIPMENT SECTOR IN INDIA

The Indian Construction Equipment sector has an estimated market size of US$ 2.4 – 2.6 billion
for the year 2007. The industry has been growing due to the large investments made by the
Government and the private sector infrastructure developments. The prospects of the
construction equipment industry look attractive with a projected investment of US$ 320 billion
in the infrastructure sector over the next few years. The Indian market is catered by about 200
domestic manufacturers (small, medium & large). Though the Indian construction equipment
industry is a fraction of the global market, whose size is over US$ 75 billion, it has been growing
at an average of 30 per cent annually compared to the global growth of 5 per cent. India is one
among the top 10 markets for construction equipment and is one of the key international market.
The growth in this industry is expected to be primarily due to investments in infrastructure,

investments by the Government in the form of external borrowings and internal accruals by
Public-Private-Partnerships (PPP) model. Indian firms are strengthening their existing operations
for catering to the growing domestic demand and are also planning to expand to tap overseas
markets. At the same time international majors have ambitious plans for India.
3.2.1 SECTOR COMPOSITION AND SIZE

Product consumption constitutes the bulk of the segment with around 56 per cent while the
unorganized sector contributes to around 15 per cent. Unorganised players are more prevalent in
the relatively less technology intensive material handling, material preparation and concrete
equipment segments. The imports market is estimated around US$ 375 million. Of these, the
earthmoving, excavation and hauling equipment categories command around 25 per cent.
Imported used equipments, which include highend hydraulic mobile cranes, excavators, motor
graders, vibratory compactors comprise a negligible 0.4 per cent of the total construction
equipment market. The exports of Indian construction equipment industry were estimated at US$
35 million in 2004-05. The growth in exports in the period 2000-01 to 2004-05 was around 30
per cent. The potential exports market for construction equipment from India is projected to be
around US$ 100-120 million by 2010. Spare parts revenues range anywhere from
CHAPTER 3 CONSTRUCTION EQUIPMENT CLASSIFICATION

20–29 per cent of the total sales for representative companies and is predominant in tunneling
and drilling equipment’s. Services revenues have been higher for global players at around 11–20
per cent in comparison to 2–8 per cent of Indian players. The construction equipment industry in
India has more than 200 players; however, the top 6 players occupy about 60 per cent of the
market. The following are players and their contribution to the Indian construction equipment
industry.
Table 3-1Key Players of Construction Equipment Industry in India
3.3 CLASSIFICATION OF CONSTRUCTION EQUIPMENT

3.3.1 CLASSIFICATION ON THE BASIS OF WORK
India produces the entire range of construction equipment for different applications. The industry
can be broadly classified under the following categories:
• Earthmoving equipment
• Road construction equipment
• Material handling equipment
• Tunneling and Drilling equipment
• Construction vehicles
The following is the industry structure and the categories involved in the construction equipment
industry:

Figure 3-1 Construction Equipment Classification
In terms of size, earthmoving equipment constitutes the biggest segment, accounting for nearly
57 per cent of the overall equipment market. Material Handling equipment and tunneling and
drilling equipment follow with 13 per cent and 12 per cent respectively.
Table 3-2 Construction Equipment Industry Structure
Construction Equipment Industry Structure
Earth Moving Equipment 57%
Material handling 13%

Tunneling & Drilling for Mining 12%
Road Construction Equipment 7%
Concrete Equipment 6%
Concrete Preparation 5%

3.3.2 CLASSIFICATION ON THE BASIS MANUFACTURING PROCESS
Construction equipment which is commonly manufactured and available to prospective

purchasers with readily accessible spare parts.
I Earth moving equipment

Earth moving equipment excavation is the main function of earth moving equipment. It not
only consists of excavation but also the allied works such as dozing, grading, compacting etc. In
the excavation of earth, digging and placement of earth are two main operations. As machine
performing both these operations is called a s 'excavating and moving' type machines. But a
machine may perform these two operations with the help of other machines, in that case digging
done by one machine is called "excavating machine' and the placement of earth is done by the
other machines called 'carriers'.
II Hauling equipment
Hauling equipment: Transportation of materials by mobile units over highways or over project
roads is known as 'hauling'. The hauling is confined to movement of materials on roads or rails
only, such as with trucks, trailers or wagons.
III Hoisting Equipment

Hoisting equipment: Lifting of materials against gravity is called 'hoisting'. It may be done by
wide range of equipment from the small, hand operated, simple screw or hydraulic jack to
modern high powered cranes and elevators. Common equipment’s used are derricks, gantry
cranes and other stationary and mobile cranes.
IV Conveying Equipment
Conveying equipment: This involves moving the materials like loose and granular dug earth,
aggregates, sand concrete etc. along a stationary structure. It consists mainly of belt conveyor,
bucket conveyor, scrapper and screw conveyors, pneumatic conveyors etc. conveying is also
done by means of Ariel transportation through tramways, cable ways etc. the conventional
method of conveying is not only time consuming but also costly as compared to the use of
conveying equipment. The system solves the problem of manpower as it works automatically
and is even reliable.

V Pneumatic equipment
Pneumatic equipment’s: These equipment’s are very much useful for tunnelling and rock
excavation. They work on compressed air. Another use of air is done for the air motor used
for drill feed and hoisting. Compressed air acts like a motive force and important works like
driving of piles, power medium concrete vibrators, opening and closing of gates of aggregate
bins, sand blasting etc. are done.
VI Aggregate and concrete preparation

Aggregate and concrete preparation: The important things involved in the preparation are
procurement of aggregate from natural sources or a stone quarry, transportation of same to
the processing plant and finally processing it. A power shovel can be used for recovery of
aggregate and carrier units for its transportation to the plant. Sometimes use of conveyor belt
is found more convenient. The main components or units of the processing plant are crushing
plant are crushing unit, screening of the raw aggregates in case of primary and secondary
crushers, belt conveyors, sizing screens, sand mills, classifiers, washers and sand screens.
Large storage bins are to be constructed for the different materials to be used for concrete
preparation, such as sand, aggregates of different sizes; cement etc. and batchers to weigh
these qualities for mixing and dumping in to the mixer.
VII Pile and pile driving equipment

Pile and pile driving equipment: Pile driving though not a new technique, now a day is
used for foundation work on many big and important construction projects. Driving of piles
is an important operation for the two main type of piles namely sheet piles which provide
barrier to the water or earth and load bearing piles. The selection of piles driving equipment
depends upon the type of pile and the nature of foundation strata, through which it is to be
driven.
3.4 CONSTRUCTION EQUIPMENT TO BE COVERED IN

SEMINAR
3.4.1 EXCAVATORS
Hydraulic power is the key to the versatility of many excavators. Hydraulic front shovels are
used predominantly for hard digging above track level and for loading haul units. Hydraulic hoe-

type excavators are used primarily to excavate below the natural surface of the ground on which
the machine rests. The loader is a versatile piece of equipment designed to excavate at or above
wheel/track level. Unlike a shovel or hoe, a loader must maneuver and. Travel to position the
Figure 3-2 JCB-3D
(Source: www.onlinecranes.com)
bucket to load or dump. Additionally, there are a variety of excavators available for specialty
applications.
The basic production formula is: Material carried per load X cycles per hour.
In the case of excavators, this formula can be refined and written as
Production =3,600 sec*Q*F*(AS:D)*60-min hr *volume correction , Where
Q = Heaped bucket capacity (Icy)
F = bucket fill factor
AS:D = angle of swing and depth (height) of cut correction
t = cycle time in seconds

E = efficiency (min per hour)
Volume correction for loose volume to bank volume,1 + swell factor'
Table 3-3 Output and Capacity of Various Excavators
Excavators Capacity in cum Output /hr
JCB 4D 0.5 37
POCLAIN 90 CK 0.83 61
HIND MOTORS H 121 7.5 551
TELCO UH 501 4.9 360
(Source: www.onlinecranes.com)
BUCKETS
Buckets come in many shapes and sizes. Most can be easily replaced or changed quickly ‘‘on the
fly.’’ The shape of the bucket and the teeth or penetration edge is very much influenced by the
material that is to be excavated or moved. A bucket designed for moving loose gravel should not
be used to dig into hard material. As the material to be worked becomes harder, typically buckets
become slimmer and more elongated. Loaders, backhoes, and excavators typically have standard
buckets that can be used for a wide range of material types and uses. Buckets can have jaws or
apparatus for grasping irregularly shaped loads such as concrete chunks with rebar protruding or
jaws that can be used to cut structural members for demo. The size of the bucket and ultimate
payload must be matched to the power of the equipment. Buckets vary in width, depth, and
structure depending on the match to the power of the machine and the type of material that is
excavated or moved. Narrow sleek buckets with teeth are designed for penetration of a hard
digging surface. Narrow sleek buckets with teeth are designed for penetration of a hard digging
surface. The buckets used for moving material are typically wider and may not have teeth.

Figure 3-3 Buckets (Source: www.onlinecranes.com)
Figure 3-4 Teeth Options
(Source: www.machineryjunctions.com)
3.4.2 LIFTING EQUIPMENT - CRANE

Crane is generally employed the basic lifting equipment. Cranes are a broad class of construction
equipment used to hoist and place loads. They are the dominant piece of equipment the world
over for construction of both building projects and heavy civil projects. Cranes are the epitome

of the growing construction industrialization witnessed in the last decades. Each type of crane is
designed and manufactured to work economically in specific site situations; modern-day sites
often employ more than one type of crane and more than one crane of the same type.
Construction cranes are generally classified into two major families:
(1) Mobile cranes and (2) Tower cranes.
As the name suggests mobile cranes are movable (transportable) and tower crane are fixed on
ground.
I Mobile Cranes
They are further categorized into these group
 Crawler
 Telescoping-boom truck-mounted
 Lattice-boom truck-mounted
 Rough-terrain
 All-terrain
 Modified cranes for heavy lifting
CRAWLER CRANE
The full revolving superstructure of this type of unit
is mounted on a pair of continuous, parallel crawler
tracks. Units in the low to middle range of lift
capacity have good lifting characteristics and are
capable of duty cycle work such as handling a
concrete bucket. Machines of 100-short-ton capacity
and above are built for lift capability and do not have
the heavier components required for duty-cycle
work. The universal machines incorporate heavier
frames, have heavy-duty or multiple clutches and
brakes, and have more powerful swing systems. The Figure 3-5 Crawler Crane
Source: www. Bomag Equipments.com

crawlers provide the crane with good travel capability around the job site. The crawler tracks
provide such a large ground contact area that soil failure under these machines is only a problem
when operating on soils having a low bearing capacity. Before hoisting a load, the machine must
be leveled and ground settlement considered. If soil failure or ground settlement is possible, the
machine can be positioned and leveled on mats. When there are good supporting ground
conditions, a crawler crane can move with the hoisted load. This ability to carry a hoisted load
along with the crane's capacity to travel and work even in poor underfoot conditions is the main
advantage a crawler crane has over a wheeled (truck) crane. The distance between crawler tracks
affects stability and lift capacity. Some machines have the feature whereby the crawlers can be
extended.
TELESCOPING-BOOM TRUCK-MOUNTED
These are truck cranes that have a self-contained telescoping boom. Most of these units can
travel on public highways between projects under their own power with a minimum of
dismantling. Once the crane is leveled at the new worksite, it is ready to work without setup
delays. These machines, however, have higher initial cost per rated lift capability. If a job
requires crane utilization for a few hours to a couple of days, a telescoping truck crane should be
given first consideration because of its ease of movement and setup.
Telescoping-boom truck cranes have extendable outriggers for stability. In fact, many units
cannot be operated safely with a full reach of boom unless the outriggers are fully extended and
the machine is raised so that the tires are clear of the ground. Some models can operate on their
tires when there is firm, leveled ground, but their lifting capacity is markedly reduced (by 50%
and more, for 3° off level, depending on working radius) compared to working on outriggers. In
the case of the larger machines, the width of the outrigger vehicle may reach 40 ft, which
necessitates careful planning of the operation area. Additionally, these heavy machines transfer,
through the outriggers, extremely high loads to the ground. This high ground loading must be
considered vis-a-vis the soil-bearing capacity. Large-size timber or steel mats that are used to
spread the load over a larger ground area further increase the overall vehicle width. These
outrigger space considerations are also a concern when using large lattice-boom truck cranes.

LATTICE-BOOM TRUCK-MOUNTED
With the telescoping-boom truck crane, the lattice-boom truck crane has a fully revolving
superstructure mounted on a multi-axial truck/carder. The advantage of this machine is the lattice
boom. The lattice-boom structure is lightweight. This reduction in boom weight means additional
lift capacity, as the machine
predominately handles hoist load and
less weight of boom. The lattice boom
does take longer to assemble. The
lightweight boom will give a less
expensive lattice-boom machine the
same hoisting capacity as a larger
telescoping-boom unit.
Figure 3-6 Lattice Boom Truck Mounted
The disadvantage of these units is the time and effort required to disassemble them for transport.
In the case of the larger units, it may be necessary to remove the entire superstructure.
Additionally, a second crane is often required for this task. Some newer models are designed so
that the machine can separate itself without the aid of another crane.
Figure 3-7 Lattice Truck Mounted Crane

Figure 3-8 Parts of Lattice Boom Crane
Source: Construction Equipment for Engineers, Estimators and Owners
ROUGH-TERRAIN:
These cranes are mounted on two-axle carriers. The operator's cab may be mounted in the upper
works, enabling the operator to swing with the load. However, on many models, the cab is
located on the carrier. These units are equipped with unusually large wheels and closely spaced
axles to improve maneuverability at the job site. their high ground clearance, as well as the
ability of some models to move on slopes of up to 70%. Most units can travel on the highway but
have maximum speeds of only about 30 mph. In the case of long moves between projects, they
should be transported on low-bed trailers. Many units now have joystick controls. A joystick
enables the operator to manipulate four functions simultaneously. The most common models are
in the 20- to 50-ton capacity range and typically they are employed as utility cranes. They are
primarily lift machines but are capable of light, intermittent duty-cycle work.
ALL-TERRAIN CRANE:
This is designed with an undercarriage capable of long-distance highway travel. Yet the carrier
has all-axle drive and all-wheel steering, crab steering, large tires, and high ground clearance.
All-terrain cranes have dual cabs, a lower cab for fast highway travel, and a superstructure cab

that has both drive and crane controls. The machine can, therefore, be used for limited pick-and-
carry work. Because this crane
has both job-site mobility and
transit capability, it is an
appropriate machine when
multiple lifts are required at
scattered project sites or at
multiple work locations on a
single project. Because this
machine is a combination of two
features, it has a higher cost than
an equivalent capacity
telescoping truck crane or
rough-terrain crane. But an all-
terrain machine can be
positioned on the project without
the necessity of having other
construction equipment prepare
a smooth travel way as truck Figure 3-9 Tower Crane
cranes would require. Source: Construction Equipment for Engineers, Estimators and Owners
Additionally, the all-terrain crane

does not need a lowboy to haul it between distant project sites, as would a rough-terrain crane.
The concept of the all-terrain crane—relatively new (since the 1980s)—is rapidly gaining
popularity both in Europe and North America; consequently manufacturers have gradually been
abandoning the manufacture of telescoping boom truck cranes in favor of all-terrain cranes, as
can also be witnessed by the diminishing number of truck crane models available on the market.
II TOWER CRANE:
Tower cranes provide high lifting height and good working radius, while taking up a very limited
area. These advantages are achieved at the expense of low lifting capacity and limited mobility,
as compared to mobile cranes. The three common tower crane configurations are

(1) A special vertical boom arrangement ("tower attachment") on a mobile crane
(2) A mobile crane superstructure mounted atop a tower
(3) A vertical tower with a jib
Vertical tower with a jib kind of tower crane is the most commonly employed type. Tower
cranes of this type usually fall within one of two categories.
1. Top-slewing (fixed tower) tower cranes have a fixed tower and a swing circle ("slewing ring"
or "crown") mounted at the top, allowing only the jibs (main-jib and counter-jib), tower top, and
operator cab to rotate. The tower is assembled from modular sections, and hence the term
"sectional tower crane," often used in reference to this type of crane. The crane is stabilized
partly at its base (by ballasts or
other means of ground anchoring)
and partly by ballasts on the
counter-jib.
2. Bottom-slewing (slewing tower)

tower cranes have the swing circle
located under a slewing platform,
and both the tower and jib assembly Figure 3-10 Fixed Base Tower Crane
rotate relative to the base chassis. Source: www.onlinecranes.com
The tower is essentially a

telescoping mast, and hence the term "telescopic tower crane" is often applied to this type of
crane. The mast is usually a lattice-boom type (always for the midsize and larger cranes), but
smaller cranes of this type may have a hollow-section mast similar to the telescopic boom of a
mobile crane. The entire ballast is placed on the revolving base platform.
The main differences between these two categories are reflected in setup and dismantling
procedures and in lifting height.
Operational categorizations of tower crane are

 Fixed-Base Tower Cranes
 Travelling Tower Cranes
 Climbing Tower Crane
III FIXED-BASE TOWER CRANES:

The fixed-base-type crane, commonly of the top-
slewing configuration, typically has its tower
mounted on an engineered concrete mass
foundation, either on fixing angles sunk in the base or Figure 3-11Travelling Tower Crane
on its ballasted chassis, which is bolted to the Source: www.onlinecranes.com
concrete base. On occasion, the tower may be
mounted on a ballasted static rail-mounted undercarriage. Usually, at the beginning of the
project, a large crawler or mobile crane is used to erect the tower crane to its full height;
however, many of these tower cranes have the capability to independently increase their tower
height by means of a climbing mechanism. For cranes with this ability, a smaller-size mobile
crane could be used as it is not necessary to initially erect the tower to its full height, because
additional tower sections (height) can be added later as the work progresses. There is a vertical
limit known as the maximum .free-standing height to which fixed-base cranes can safely rise
above a base, typically 200 ft for average-size top-slewing cranes, and up to 400 ft for the larger-
size cranes. If it is necessary to raise the tower above this limiting height, lateral bracing must be
provided. Guy ropes may be used to brace tower cranes, but in the majority of cases the towers
are tied to the structure being constructed using engineered steel brackets (anchorage frames).
The cost of bracing a crane to the structure rises sharply with the distance between them, which
must be taken into account when planning the exact location of the crane. Even when bracing is
provided, there is a maximum-braced height tower limit (although 1,000-ft-high top-slewing
cranes are not a particular exception). These limits are dictated by the structural capacity of the
tower frame and are machine-specific.

IV TRAVELLING TOWER CRANES:

The ballasted base of this type of tower crane is set on a pair of fixed rails. This enables the crane
to move along the rails with a load. The advantage is the increased coverage of the work area
that can be achieved. There are, however, cases in which the crane is set on rails not for routine
travelling but merely to enable its relocation with the progress of the project, as a more economic
option compared to crane dismantling and reassembly. Maximum grade for travelling crane rails
is model-specific, but is usually not greater than 1%.
Travelling tower cranes can be either of the top-slewing or
bottom-slewing type, with heights commonly not
exceeding 230 ft for the former and 100 ft for the latter.
Maximum travelling speed for both types is 65 to 100
ft/min. When a rail-mounted crane option is considered,
the entailed costs of railway procurement and construction
(including necessary earthworks over a relatively large
area) should be taken into account. The tracks, typically of
the width of 13 to 27 ft, may also obstruct the free
movement of other equipment and vehicles on the job site.
A rail-mounted crane, however, is a likely solution for
spread-out projects, in which the construction method Figure 3-12 Climbing Tower Crane
does not require extensive crane services in any given zone Source: www.onlinecranes.com
of the building, or in the case of linear projects such as lock construction.
CLIMBING TOWER CRANE:

Along with the externally braced tower crane, the climbing tower crane is a common choice of
crane for high-rise building construction, and is a lifting mechanism solution for buildings
exceeding the maximum-braced height tower crane limit. Structurally supported by the floors of
the building that is being constructed, the crane climbs on special climbing collars that are fitted
to the building's completed structural floors. The weight of both the crane and the loads lifted is
transmitted to the structure of the host building. The crane will have only a relatively short mast
because it moves upward with vertical construction progress. This climbing movement, which
causes work interruptions, is done incrementally, every few floors, depending on the height of

the mast employed. Taller the mast, the less frequent the climbing procedure. Vertical movement
of the climbing-type tower crane is by a system of hydraulically activated rams and latchings.
Normally, the crane is initially mounted on a fixed base, and as the work .progresses, it is
detached from its chassis and transfered to a climbing frame mounted on the structure. A typical
floor section cannot safely support the load imposed by the operating crane; therefore, it is
imperative for the structural designer to consider the loads imposed by the crane in the area of
this opening. If consideration for the crane loads is also taken into account in the building design,
it will usually be necessary to use shoring for several floors below the tower crane frame. To
avoid the pre-strengthening of the host building and the use of temporary shoring, the crane is
often placed for climbing inside the elevator shaft commonly serving as the building's structural
core. This location also has an advantage in that no openings are left in the floors for completion
after the crane has been raised. On the other hand, use of the elevator shaft for this purpose may
cause delays in elevator assembly, which is commonly on the critical Path of die project's
progress schedule. Additionally, it may limit the choice of the forming system for the concrete
shaft walls. At the end of construction, there will be a tower crane at the top of the structure with
no means of lowering itself. Removal must be by external methods, such as a mobile crane or by
use of a derrick. The mobile crane option may be limited by the height of the tower crane and the
confined access area next to the building. With a derrick, the tower crane to be dismantled first
lifts the derrick to the top of the building. The derrick is placed on the roof such that it can
dismantle the tower crane, and then it is dismantled itself with the use of hand tools, and its parts
are taken down in the building's elevator. Because of the heights involved and the possible
physical interference of the completed structure, the dismantling operation must be carefully
planned and given consideration as early as when project equipment is initially selected. If two
or more tower cranes were used on the project and there is overlapping hook coverage, it may be
possible to use the crane with the higher hook height to dismantle the lower crane. Under
circumstances where none of these techniques can be employed, an expensive solution is to use a
helicopter.

3.4.3 PILLING EQUIPMENT

I EQUIPMENT USED IN PILED FOUNDATION CLASSIFIED
1. End Bearing pile or Friction pile (or of combined nature)
2. Piles formed by manual or mechanical methods
3. Percussion Piles (driven by hammer) or Non-percussion Piles (form by augering, boring or

drilling)
4. Displacement or replacement piles
Foundation using bored piles
Principle of bored piles
Usually bored piles are of replacement nature, formed in-situ using a non-percussion approach.
The consideration when forming a list of equipment to used in bored piles involves 3 main
factors:
1. How to form the bore (using what kind of machine and method to drill a hole in the ground)
2. How to protect the soil from collapsing into the bore hole during drilling (usually by inserting
a steel casing or using a drilling fluid)
3. How to take the spoil out from the bore hole during drilling (by a grasp, drilling fluid, or
compressor air)
Foundation using bored piles
Using small to medium sized in-situ concrete pile(Generally refers to piles ranging in size from
300mm to 900mm in diameter)
The use of drilling rigs of an appropriate capacity is required. Due to the possible collapse of
subsoil during drilling, the forming process usually required temporary protection by the use of
steel casings or some kind of drilling fluid such as bentonite slurry.

Due to the rapid development of a wide range of

highly effective mechanical drilling equipment, this
foundation method is becoming quite popular for
the construction of medium to high-rise buildings
Crane supported (hanging) leaders:

• Leaders are suspended from standard crane
crawler.
• Leader linked to head of crane jib
• Verticality or backward or forward rake is

maintained by adjustable stays near foot of
the leaders.
• Height ranges from 19m to 34m. Figure 3-13 Drop Hammer
Source: www.onlinecranes.com
• Can carry a combined pile and hammer
mass of 19 T.
Piling Hammers: Drop hammers

• This hammer is easily adopted to drive any of the pile sections for all ground conditions.
A ratio of ram weight to weight of pile plus cap of 1:2 to 2:1 is recommended.
• The hammer controls are precise and used correctly this

hammer can achieve 75-80% of rated output energy.
• The weight of the hammer is lifted by cable operation, by

steam or by hydraulic pressure.
Power augur:
• Used for installing bored piles in clay soils
• Diameter up to 1.5m
• Most commonly used equipment.

Figure 3-14 POWER AUGER
(Source www.onlinecranes.com)

• The hydraulic power pack drives 4 motors arranged around the ring gear. The latter can
be moved up and down a vertical guide frame mounted on the base machine.
• This is advantageous when drilling through a casing since the level of top of the casing be
allowed to vary.
• The augur is rotated at high rpm, hole is drilled and soil is removed by spinning them,
after withdrawal from the hole
Drilling Rig
Drilling rigs are able to adapt various boring arrangement.
 Bucket Barrel.
 Flight Auger
 Drilling Shaft with drill bit
Figure 3-15 Power Auger

Source: www.onlinecranes.com
Various forms of the drilling rig for pile max up to 900mm dia.
Steel Casing
Steel Casing as temporary support during the boring process purpose of the casing serves also to
give the direction to the rig.

Carrier Tube
Carrier tube to take the mud out from the bore hole using drilling fluid (bentonite) Using of
drilling fluid to remove mud from bore hole.
Figure 3-16 Drilling Rod
Source www.onlinecranes.com
Figure 3-17 Carrier Tube
Source www.onlinecranes.com
3.4.4 BATCHING PLANT

These plants have all arrangements for receiving all new material for concreting from storage
bins, for weighing out each ingredient, mixing the ingredient thoroughly to form a concrete of
required specification.
Batchers: Batching is nothing but proportioning the ingredients of concrete such as cement, sand
aggregate and water for a particular mix of concrete by weighing each item separately. A batcher
shall consist of a suitable container for weighing an ingredient for concrete. A combination of
aggregates or a combination of cements (or cement and other cementitious materials) may each
be considered as a single ingredient. Aggregates and cement or cementitious materials shall not
be weighed in the same batcher. Each batcher shall be equipped with a scale and also with the
necessary mechanisms for its operation. The charging device shall be capable of stopping the
flow of material within the weighing tolerances specified in these Standards. Charging and
discharging devices shall not permit loss of materials when closed. The discharge device shall be
capable of controlling the rate of flow of the material. When furnished, vibrators, or other aids to
charging and discharging, shall be attached in such a manner that they will not affect accuracy of
weighing. The batcher shall be so designed and of such capacity that it will receive its rated load
without the weighed materials being in contact with the charging mechanism. The criteria to
qualify batchers for rating plates are based on minimum volumetric capacities. Volumetric
capacities may exceed the minimum requirements. In use, the rated batcher capacity may be
exceeded providing the load does not:
 exceed the scale capacity,

 overflow the batcher,

 Affect the scale by the closing of the charging device.
Concrete Mixers: The concrete mixers are used to mix all the ingredients of concrete to make
mix of specified consistency. The advantage of using concrete mixer fast mixing and also mixing
will be done properly. The important factors which govern the production from mixer are:
 Correct setting of machine

 Proper cleaning of the blades and inner surface of the drum
 The sequence of the material charged into the drum
 Timely supply of the water and its direction of in-flow
 Time of mixing and speed of mixing drum etc.
There are two main types of concrete mixers (i) Drum Type (ii) Pan Type
I. Drum Type. There are two main types of mixers a) tilting, b) non-tilting
(a) Tilting Mixer: Tilting mixers are useful for large construction works. Mixing of concrete in
tilting mixer occurs through rolling of material from end to center and upon itself. The tilting
mixers are easy to clean and can discharge the mix quickly and with minimum of the
segregation. Tilting mixers consist of a drum with a cast base and steel plate top, rotating on
tapered roller bearings through a driving opinion meshing with a large ring gear around the
periphery.
(b) Non-Tilting Mixer: The non-tilting mixers are useful for aggregate size upto 80mm. Mixing
of the concrete in non-tilting mixer occurs through both rolling as well as falling from the
buckets fitted inside the mixing drum. The non-tilting mixer consists of a drum rotating
about the horizontal axis. The drum is supported on rollers and is commonly driven by a
pinion meshing with a ring gear on the drum periphery.
II. Pan Type. The pan type mixers consists of an open pan with a rotating star of blades
moving in the direction opposite to that of the star and with lesser speed. These mixers
are very efficient in working especially with stiff mixes but due to its huge construction,
it is difficult to maintain and transport. In some models the pan may be stationary and
only the blades moving.
III. Truck Mixer. These are used to supply the freshly mixed concrete to the required places
from the site of batching and mixing the plant. Fully or partly mixed concrete are
transported in the truck and mixing may takes place also during the transportation. The
mixed concrete is kept in plastic state and saved from segregation through continuous
agitation of the drum.
IV. Transfer of Concrete. The transfer of mixed concrete from the mixing plant to the site
of placement is usually done in buckets usually carried on trucks or rail- road cars or
dump trucks and even belt conveyors.
V. Concrete Pumps. Concrete pumps are heavy direct acting pumps which act both as a
transfer agent as well as a placing unit for plastic concrete. These are used where the

concrete is to be placed in sites which are not readily accessible. Concrete pumps may be
mounted on trucks or trailers. The truck mounted pump and boom combination is
particularly efficient and cost effective in saving labour and eliminating the need for
pipelines to carry the concrete.
VI. Pneumatic Concrete Placer. It is done using compressed air to push the concrete
through a pipeline and can be used for placing concrete in inaccessible places. It consists
of a pressure vessel with opening at top and a conical bottom. The bottom has opening on
both the sides which are connected to the discharge pipe and the other to compressed air
pipe. When concrete is placed in the vessel by closing the air gate valve, the air pressure
is applied by opening the gate valve. Before this operation, the chamber has to be closed
totally by pulling the cone upwards. So, when the air pressure is applied, the concrete
moves through the discharge pipeline and discharge at the required place.
VII. Concrete Vibrator. Compacting of concrete is important to improve the characteristics
of concrete. Vibrators are used for compaction of concrete after placement. There are two
types of vibrator:
a) Internal Vibrator
b) External Vibrator
Internal vibrator is used in freshly placed concrete, while the external vibrator is used on the
formwork or the surface of the concrete, through which the vibrations are conveyed to the
interior of the mass. Internal vibrators are more efficient, easier to handle and manipulate in
difficult positions and used for mass concreting works, while external vibrators are used only for
construction of pavements, precast work or canal lining.
3.4.5 FORMING SYSTEM

Formwork accounts for 25 to 30% of the construction cost for concrete framed buildings, hence
its importance as a major component of the equipment array used on such construction projects.
In order to reduce this expenditure, it is necessary to design economical types of formwork and
to mechanize its construction. The selection and use of forming systems are inseparable from the
selection and operation of the on-site cranes and other lifting and concrete placing equipment.
Forming systems-for slabs, walls, columns, and other repetitious concrete elements of the
structure-are designed and fabricated for many reuses.

CHAPTER:4 COST OF OWNING AND PURCHASING OF

CONSTRUCTION EQUIPMENT
4.1 INTENT OF CHAPTER

The purpose of this chapter is to introduce the terminology and basic principles involved in
determining the owning and operating costs of construction plant and equipment, analyzing the
feasibility of renting or leasing rather than purchasing equipment, and the financial management
of construction projects.
4.2 TIME VALUE OF MONEY

Everyone is aware that the amount of money held in a savings account will increase with time if
interest payments are allowed to remain on deposit (compound) in the account. The value of a
sum of money left on deposit after any period of time may be calculated using for
(Equation for Single Payments)
F = value at end of n periods (future value)
F =P (1 + i) ^n or P=F/(1 + i)^n, where
P = present value
i = interest rate per period
n = number of periods
The expression (1 + i)^n is often called the single-payment compound interest factor. The
expression (1 + i)^n is called the single-payment present worth factor. Expressions have also
been developed that yield the value of a series of equal periodic payments at the end of any
number of periods (uniform series compound amount factor), the present worth of such a series
(uniform series present worth factor), the periodic payment required to accumulate a desired
amount at some future date (sinking fund factor), and the annual cost to recover an investment,
including the payment of interest, over a given period of time (capital recovery factor). Other
expressions have been developed to find the present and future worth of gradient (non-uniform)
series of payments.
Formulas for a Uniform Series of Payments
Often payments or receipts occur at regular intervals, and such uniform values can be handled by
use of additional formulas
CHAPTER 4 COST OF OWNING AND PURCHASING OF CONSTRUCTION EQUIPMENT

F=A*[(1+i)n-1+(1+i)n-2+(1+i)n-3+......(1+i)+1]
Or F=A*[(1+i)n-1]/i
Or A=F*[i/{(1+i)n-1}]where,
A=uniform end-of-period payments or receipts continuing for a duration of n periods
The relationship i/{(1+i)n-1}] is known as the uniform series sinking fund factor (USSFF)
because it determines the uniform end-of-period investment A that must be made to provide an
amount F at the end of n periods. To determine the equivalent uniform period series required to
replace a present value of P,
P=A*[{(1+i)n-1}/{i*(1+i)n}] Uniform series present worth factor (USPWF)
Or A=P*{i*(1+i)n}/{(1+i)n-1} Uniform series capital recovery factor(USCRF)
Cash-flow diagram of above equation is shown below. Cash flow diagrams are drawings where
the horizontal line represents time and the vertical arrows represent cash flows at specific times
Figure 4-1 Cash Flow Diagram
4.3 EQUIPMENT COST

4.3.1 ELEMENTS OF EQUIPMENT COST
In following section, it will be explained that it is necessary to estimate many factors, such as
fuel consumption, tire life, and so on. The best basis for estimating such factors is the use of
historical data, preferably those recorded by the construction company operating similar
equipment under similar conditions.
In order to determine the most economical time to replace equipment, accurate records of
maintenance and repair costs and downtime must be kept for each machine. The owner must
consider all costs related to ownership and operation of the equipment. Also consider the impact
of continuous use of the machine on these costs. Hourly working rate of construction equipment
comprises of the following components:

 Owning Cost.
 Operating Cost.
4.3.2 ELEMENTS OF EQUIPMENT OWNERSHIP COST

Ownership cost is the cumulative result of those cash flows an owner experiences whether or not
the machine is productively employed on a job. It is a cost related to finance and accounting
exclusively, and it does not include the wrenches, nuts and bolts, and consumables necessary to
keep the machine operating. Most of ownership cash flows are expenses (outflows), but a few
are cash inflows. The most significant cash flows affecting ownership cost are
 Investment Cost
 Depreciation
 Salvage value
 Major repairs and overhauls
 Taxes
 Insurance'
 Storage and miscellaneous
I INVESTMENT
Investment cost (or interest) represents the annual cost (converted to an hourly cost) of the capital
invested in equipment is purchased from company assets, an interest rate should be charged
equal to the rate of return on company investments. Thus investment cost is computed as the
product of an interest rate multiplied by the value of the equipment machine. If borrowed funds
are utilized, it is simply the interest charge on these funds. However, if the item of, then
converted to cost per hour. The true investment cost for a specific year of ownership is properly
calculated using the average value of the equipment during that year. However, the average
hourly investment cost may be more easily calculated using
𝐼𝑛𝑖𝑡𝑖𝑎𝑙 𝐶𝑜𝑠𝑡 + 𝑠𝑎𝑙𝑣𝑎𝑔𝑒 𝑣𝑎𝑙𝑢𝑒

𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝐼𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡 =
2
The average investment is considered because the capital cost does not remain same the same
due to depreciation.
1+𝑛
𝐼𝑓 𝑆 = 0; 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑖𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡 = ×𝑃
2𝑛
𝑆(𝑛 − 1) + 𝑃(𝑛 + 1)
𝐼𝑓 𝑆 ≠ 0 ; 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑖𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡 =
2𝑛
Where, S= Salvage Value
n= useful life in years
P= capital cost

II DEPRICIATION
Depreciation represents the decline in market value of an item of equipment due to age, wear,
deterioration, and obsolescence. In accounting for equipment costs, however, depreciation is
used for two separate purposes: (1) evaluating tax liability, and (2) determining the depreciation
component of the hourly equipment cost. Note that it is possible (and legal) to use different
depreciation schedules for these two purposes. For tax purposes many equipment owners
depreciate equipment as rapidly as possible to obtain the maximum reduction in tax liability
during the first few years of equipment life. However, the result is simply the shifting of tax
liability between tax years, because current tax rules of the U.S. Internal Revenue Service (IRS)
treat any gain (amount received in excess of the equipment's depreciated or book value) on the
sale of equipment as ordinary income. The depreciation methods explained in the following
pages are those commonly used in the construction equipment industry. When the methods of
engineering economics are used, the depreciation and investment components of equipment
owning costs will be calculated together as a single cost factor. In calculating depreciation, the
initial cost of an item of equipment should be the full delivered price, including transportation,
taxes, and initial assembly and servicing. For rubber-tired equipment, the value of tires should be
subtracted from the amount to be depreciated because tire cost will be computed separately as an
element of operating cost. Equipment salvage value should be estimated as realistically as
possible based on historical data. The equipment life used in calculating depreciation should
correspond to the equipment's expected economic or useful life. The IRS guideline life for
general construction equipment is currently 5 years, so this depreciation period is widely used by
the construction industry. The most commonly used depreciation methods are the straight-line
method, the sum-of-the-years'-digits method, the double-declining balance method, and IRS-
prescribed methods. Procedures for applying each of these methods are explained below.
Straight-Line Method
The straight-line method of depreciation produces a uniform depreciation for each year of
equipment life. Annual depreciation is thus calculated as the amount to be depreciated divided by
the equipment life in years. The amount to be depreciated consists of the equipment's initial cost
less salvage value (and less tire cost for rubber-tired equipment).
𝐶𝑜𝑠𝑡 − 𝑆𝑎𝑙𝑣𝑎𝑔𝑒(−𝑇𝑖𝑟𝑒)
𝐷𝑛 =
𝑁
Where, Dn= Depreciation
n= year of life
N= Life of Equipment
Sum of the Years Digit Method

The sum-of-the-years'-digits method of depreciation produces a non-uniform depreciation which
is the highest in the first year of life and gradually decreases thereafter. The amount to be
depreciated is the same as that used in the straight-line method. The depreciation for a particular
year is calculated by multiplying the amount to be depreciated by a depreciation factor. The

denominator of the depreciation factor is the sum of the years' digits for the depreciation period.
The numerator of the depreciation factor is simply the particular year digit taken in inverse order.
Thus for the first year of a 5-year life, 5 would be used as numerator.
𝑌𝑒𝑎𝑟 𝐷𝑖𝑔𝑖𝑡
𝐷𝑛 = × 𝐴𝑚𝑜𝑢𝑛𝑡 𝑡𝑜 𝑏𝑒 𝐷𝑒𝑝𝑟𝑖𝑐𝑖𝑎𝑡𝑒𝑑
𝑆𝑢𝑚 𝑜𝑓 𝑌𝑒𝑎𝑟 ′ 𝑠 𝐷𝑖𝑔𝑖𝑡
Where, Dn= Depreciation
Double- Declining Balance Method

The double-declining-balance method of depreciation, like the sum-of-the-years' -digits method,
produces its maximum depreciation in the first year of life, However, in using the double
declining- balance method, the depreciation for a particular year is found by multiplying a
depreciation factor by the equipment's book value at the beginning of the year. The annual
depreciation factor is found by dividing 2 (or 200%) by the equipment life in years. Thus for a 5-
year life, the annual depreciation factor is 0.40 (or 40%). Unlike the other two depreciation
methods, the double-declining-balance method does not automatically reduce the equipment's
book value to its salvage value at the end of the depreciation period. Since the book value of
equipment is not permitted to go below the equipment's salvage value, care must be taken when
performing the depreciation calculations to stop depreciation when the salvage value is reached.
2
𝐷𝑛 = × 𝐵𝑜𝑜𝑘 𝑉𝑎𝑙𝑢𝑒 𝑎𝑡 𝑡ℎ𝑒 𝑏𝑒𝑔𝑖𝑛𝑖𝑛𝑔 𝑜𝑓 𝑡ℎ𝑒 𝑦𝑒𝑎𝑟
𝑁
IRS- Prescribed Method
Since the Internal Revenue Service tax rules change frequently, always consult the latest IRS
regulations for the current method of calculating depreciation for tax purposes. The Modified
Accelerated Cost Recovery System (MACRS) has been adopted by the Internal Revenue Service
for the depreciation of most equipment placed in service after 1986. This depreciation method is
also referred to as the General Depreciation System (GDS) by the IRS. Under the MACRS
system, depreciation for all property except real property is spread over a 3-year, 5-year, 7-year,
or 10-year period. Most vehicles and equipment, including automobiles, trucks, and general
construction equipment, are classified as 5-year property. The yearly deduction for depreciation
is calculated as a prescribed percentage of initial cost (cost basis) for each year of tax life without
considering salvage value. For 5-year property, annual depreciation percentages are 20%, 32%,
19.2%, 11.52%, 11.52%, and 5.76% for years 1 through 6, respectively. Notice that regardless of
the month of purchase; only one-half of the normal double-declining-balance depreciation is
taken in the year of purchase. The remaining cost basis is spread over a period extending through
the year following the recovery life. Thus, depreciation for 5-year property actually extends over
a 6-year period. This procedure is referred to by the IRS as using the "half-year convention."

Comparing the depreciation rates of the equipment’s by different methods:
EQUIPMENT SCRAPER
SPECIFICATIONS
Power KW (HP) 150 (201)
Investment (Cost) Rs 2,200,000.00
Useful Life years 6
Tyre Cost Rs 250,000.00
Life of Tyre
Working Hrs/ Years 2000
Information about the project
Repair cost of Tractor 72% of initial cost Rs 1,584,000.00
Salvage Value of Tractor 10% of initial cost Rs 220,000.00
Scrap Value of Tractor 10% of initial cost Rs 220,000.00
DEPRECIATION: STRAIGHT LIME METHOD
DEPRECIATION SCRAPER
Method Straight Line Method

DEPRECIATION Rs 288,333.33
END OF YEAR DEPRECIATION PER TOTAL BOOK VALUE
YEAR DEPRECIATION
0 Rs 2,200,000.00
1 Rs 288,333.3 Rs 288,333.3 Rs 1,911,666.7
2 Rs 288,333.3 Rs 576,666.7 Rs 1,623,333.3
3 Rs 288,333.3 Rs 865,000.0 Rs 1,335,000.0
4 Rs 288,333.3 Rs 1,153,333.3 Rs 1,046,666.7
5 Rs 288,333.3 Rs 1,441,666.7 Rs 758,333.3
6 Rs 288,333.3 Rs 1,730,000.0 Rs 470,000.0
Total Book Value Rs 9,345,000.00

DEPRECIATION: SUM OF YEARS DIGIT

METHOD
Method Sum of years digit method

DEPRECIATION
YEAR DEPRECIATION
0 Rs 2,200,000.00
1 Rs 494,285.7 Rs 494,285.7 Rs 1,705,714.3
2 Rs 411,904.8 Rs 906,190.5 Rs 1,293,809.5
3 Rs 329,523.8 Rs 1,235,714.3 Rs 964,285.7
4 Rs 247,142.9 Rs 1,482,857.1 Rs 717,142.9
5 Rs 164,761.9 Rs 1,647,619.0 Rs 552,381.0
6 Rs 82,381.0 Rs 1,730,000.0 Rs 470,000.0
DEPRECIATION: DOUBLE DECLINING BALANCE METHOD

METHOD
Method Double Decline Balance

DEPRECIATION
END OF YEAR DEPRECIATION PER YEAR TOTAL DEPRECIATION BOOK VALUE
0 Rs 2,200,000.00
1 Rs 650,000.0 Rs 650,000.0 Rs 1,550,000.0
2 Rs 433,333.3 Rs 1,083,333.3 Rs 1,116,666.7
3 Rs 288,888.9 Rs 1,372,222.2 Rs 827,777.8
4 Rs 192,592.6 Rs 1,564,814.8 Rs 635,185.2
5 Rs 128,395.1 Rs 1,693,209.9 Rs 506,790.1
6 Rs 85,596.7 Rs 1,778,806.6 Rs 421,193.4
From graph it can be clearly seen from the graph that in case of double declining balance method
depreciation in early years is higher in comparison to other two methods and then goes on
decreasing in the coming years. Similarly, in case of the sum of years digit method depreciation

decreases with time but the depreciation is less as compared to the double decline balance
method. Straight line method is represented by a straight line showing the same rate of
depreciation every year.
Rs1,600,000.0
Rs1,400,000.0
Rs1,200,000.0
Double Decline
Rs1,000,000.0
Balance
Rs800,000.0 Sum of years digit
method
Rs600,000.0
Straight Line Method
Rs400,000.0
Rs200,000.0
Rs-
1 2 3 4 5 6
Figure 4-2 Comparison of Depreciation Rates by Straight Line Method, Sum of the Year Method and Double- Declining
Method
III SALAVAGE VALUE

Salvage value is the cash inflow a firm receives if a machine still has value at the time of its
disposal. This revenue will occur at a future date. Used equipment prices are difficult to predict.
Machine condition, the movement of new machine prices and the machine's possible secondary
service applications affect the amount an owner can expect to receive. A machine having a
diverse and layered service potential will command a higher resale value. Medium-size dozers,
which often exhibit rising salvage values in later years, can have as many as seven different
levels of useful life. Historical resale data can provide some guidance in making salvage value
predictions and can be fairly easily accessed from auction price books. By studying such
historical data and recognizing the effects of the economic environment, the magnitude of
salvage' value prediction errors can be minimized and the accuracy of an ownership cost analysis
improved.
IV MAJOR REPAIR AND OVERHAUL CHARGES

Major repairs and overhauls are included under ownership cost because they result in an
extension of a machine's service life. They can be considered as an investment in a new machine.
Because a machine commonly works on many different projects, considering major repairs as an
ownership cost prorates these expenses to all jobs. These costs should be added to the basis of
the machine and depreciated.

V TAXES
In this context, taxes refer to those equipment ownership taxes that are charged by any
government subdivision, They are commonly assessed at a percentage rate applied against the
book value of the machine, Depending on location, property taxes can range up to about 4.5% of
assessed machine value. In many locations, there will be no property tax on equipment. Over the
service life of the machine, they will decrease in magnitude as the book value decreases.
VI INSURANCE
Insurance, as considered here, includes the cost to cover fire, theft, and damage to the equipment.
Annual rates can range from I to 3%. This cost can be actual premium payments to insurance
companies, or it can represent allocations to a self-insurance fund maintained by the equipment
owner.
VII STORAGE AND MISCELLANEOUS

Between jobs or during bad weather, a company will require storage facilities for its equipment.
The cost of maintaining storage yards and facilities should be prorated to those machines that
require such harborage. Typical expenses include space rental, utilities, and the wages for
laborers or watchmen. Usually these expenses are all combined in an overhead account and then
allocated on a proportional basis to the individual machines. The rate may range from nothing to
perhaps 5%.
4.3.3 ELEMENTS OF OPRETATING COST

Operating costs are incurred only when equipment is operated. Therefore, costs vary with the
amount of equipment use and job operating conditions. Operating costs include operators' wages,
which are usually added as a separate item after other operating costs have been calculated. The
major elements of operating cost include:
 Fuel Cost
 Service Cost
 Repair Cost
 Tire Cost
 Special Item
 Operator
I FUEL COST
The hourly cost of fuel is simply fuel consumption per hour multiplied by the cost per unit of fuel
(gallon or liter). Actual measurement of fuel consumption under similar job conditions provides
the best estimate of fuel consumption. However, when historical data are not available, fuel
consumption may be estimated from manufacturer's data or by the use of Table 4-l. Table.4-1

provides approximate fuel consumption factors in liters per horsepower per hour for major types
of equipment under light, average, and severe load conditions.
Table 4-1 Fuel Consumption Factors (litre/HP/hr)
Type of Equipment Low Average Severe

Clamshell and dragline 0.10910616 0.1363827 0.16365924
Compactor, self-propelled 0.17275142 0.23639668 0.2727654
Crane 0.08182962 0.10910616 0.1363827
Excavator, hoe, or shovel 0.15911315 0.1818436 0.21821232
Loader
Track 0.1363827 0.19093578 0.23185059
Wheel 0.10910616 0.16365924 0.21366623
Motor Grader
Scraper 0.11365225 0.15911315 0.21366623
Tracktor 0.11819834 0.15911315 0.20002796
Crwaler 0.12729052 0.16820533 0.20912014
Wheel 0.12729052 0.17275142 0.23639668
The usually adopted engines are of either petrol or diesel types.
Quantity of diesel =0.27X ηX litres/ HP/ hr
Quantity of diesel =0.27X ηX litres/ HP/ hr

𝐻𝑃×η×0.0027 𝐶
Quantity of Lubricating oil = + 5𝑡
0.74
Where, HP= the rated horse power,

C= capacity of crankcase in liters,
t= the no of hours between the change of oil
η= operating factor= 0.6
0.5×𝐵𝐻𝑃×𝐶``×4.5
Optimum fuel consumption = 𝑖𝑛 𝑙𝑖𝑡𝑟𝑒𝑠/ ℎ𝑟
8.26
0.5= the specified fuel consumption

C``= Load factor
II SERVICE COST
Service cost represents the cost of oil, hydraulic fluids, grease, and filters as well as the labor
required to perform routine maintenance service. Equipment manufacturers publish consumption
data or average cost factors for oil, lubricants, and filters for their equipment under average
conditions. Using such consumption data, multiply hourly consumption (adjusted for operating
conditions) by cost per unit to obtain the hourly cost of consumable items. Service labor cost
may be estimated based on prevailing wage rates and the planned maintenance program.

Since service cost is related to equipment size and severity of operating conditions, a rough
estimate of service cost may be made based on the equipment’s fuel cost
Table 4-2 Service Cost Factors (% of hourly fuel consumption)
Operating Condition Service Cost Factor

Favorable 20
Average 33
Severe 50
III REPAIR COST

Repair cost represents the cost of all equipment repair and maintenance except for tire repair and
replacement, routine service, and the replacement of high-wear items, such as ripper teeth. It
should be noted that repair cost usually constitutes the largest item of operating expense for
construction equipment. Lifetime repair cost is usually estimated as a percentage of the
equipment's initial cost less tires (Table 4-3). It is then necessary to convert lifetime repair cost to
an hourly repair cost. This may be done simply by dividing lifetime repair cost by the expected
equipment life in hours to yield an average hourly repair cost. Although this method is adequate
for lifetime cost estimates, it is not valid for a particular year of equipment life. As you might
expect, repair costs are typically low for new machines and rise as the equipment ages.
Following equation be used to obtain a more accurate estimate of repair cost during a particular
year of equipment life.
𝑌𝑒𝑎𝑟 𝐷𝑖𝑔𝑖𝑡 𝐿𝑖𝑓𝑒 𝑇𝑖𝑚𝑒 𝑅𝑒𝑝𝑎𝑖𝑟 𝐶𝑜𝑠𝑡

𝐻𝑜𝑢𝑟𝑙𝑦 𝑅𝑒𝑝𝑎𝑖𝑟 𝐶𝑜𝑠𝑡 = 𝑋
𝑆𝑢𝑚 𝑜𝑓 𝑌𝑒𝑎𝑟 𝐷𝑖𝑔𝑖𝑡 𝐻𝑜𝑢𝑟𝑠 𝑜𝑝𝑒𝑟𝑎𝑡𝑒𝑑
This method of prorating repair costs is essentially the reverse of the sum-of the- years'-digits
method of depreciation explained earlier, because the year digit used in the numerator of the
equation is now used in a normal sequence (i.e., 1 for the first year, 2 for the second year, etc.)

Table 4-3 Typical Life Time Repair Cost (% initial cost less tire cost)
Type of Equipment Favorable Average Severe

Clamshell and dragline 40 60 80
Compactor, self-propelled 60 70 90
Crane 40 50 60
Excavator, hoe, or shovel 50 70 90
Loader
Track 85 90 105
Wheel 45 60 50
Motor Grader 50 50 75
Scraper 85 90 105
Tracktor
Crwaler 85 90 95
Wheel 50 60 75
IV TIRE COST
Tire cost represents the cost of tire repair and replacement. Among operating costs for rubber-
tired equipment, tire cost is usually exceeded only by repair cost. Tire cost is difficult to estimate
because of the difficulty in estimating tire life. As always, historical data obtained under similar
operating conditions provide the best basis for estimating tire life. However, Table 4-4 may be
used as a guide to approximate tire life. Tire repair will add about 15% to tire replacement cost.
Following equation may be used to estimate tire repair and replacement cost.
𝐶𝑜𝑠𝑡 𝑜𝑓 𝑆𝑒𝑡 𝑜𝑓 𝑇𝑖𝑟𝑒𝑠(𝑅𝑠)
Tire cost = 1.15 × 𝐸𝑥𝑝𝑒𝑐𝑡𝑒𝑑 𝑇𝑖𝑟𝑒 𝐿𝑖𝑓𝑒 (𝐻𝑟)
Table 4-4 Typical Tire Life (hours)
Operating Condition
Type of Equipment Favorable Average Severe
Dozers and loaders 3200 2100 1300
Motor Grader 5000 3200 1900
Scraper
Conventional 4600 3300 2500
Twin Engine 4000 3000 2300
Push-Pull and Elevating 3600 2700 2100
Trucks and Wagon 3500 2100 1100
V SPECIAL ITEMS
The cost of replacing high-wear items such as dozer, grader, and scraper blade cutting edges and
end bits, as well as ripper tips, shanks, and shank protectors, should be calculated as a separate
item of operating expense. As usual, unit cost is divided by expected life to yield cost per hour.

VI OPERATOR
The final item making up equipment operating cost is the operator's wage. Care must be taken to
include all costs, such as worker's compensation insurance, Social Security taxes, overtime or
premium pay, and fringe benefits in the hourly wage figure. The crew charges are worked as per
actual annual cost over the operational hours during the year. The crew charges could be worked
out for various categories as follows:
𝑚𝑜𝑛𝑡ℎ𝑙𝑦 𝑠𝑎𝑙𝑎𝑟𝑦 ×12
Hourly Cost Worker= 𝐴𝑛𝑛𝑢𝑎𝑙 𝑜𝑝𝑒𝑟𝑎𝑡𝑖𝑜𝑛𝑎𝑙 𝑐𝑜𝑛𝑠𝑡𝑟𝑢𝑐𝑡𝑖𝑜𝑛 ℎ𝑜𝑢𝑟𝑠 𝑜𝑓 𝑡ℎ𝑒 𝑚𝑎𝑐ℎ𝑖𝑛𝑒
4.4 METHODS OF ESTIMATING OWNERSHIP COST

Following are methods of estimating the ownership cost of the equipment
A. Time Value Method

B. Average Annual Investment Method
4.4.1 TIME VALUE METHOD

Flow chart of the TVM approach in estimating the ownership approach of construction
equipment.
Estimate Estimate Estimate probable

purchase expected salvage
price of the useful life value for the
Select appropriate interest

rate for the money (MARR)
Estimate cost of: Estimate

Taxes, Insurance, Storage uniform
annual cost
of ownership
Convert cost into equivalent using time-
interest rate based on the value-of-
value of equipment at any money
given time approach
Add interest rates
Figure 4-3 A TVM Approach for Estimating Owning Cost

I EXCAVATORS: Adopting a Time Value Approach for Calculating the Ownership Cost
The cost of a back hoe excavator-JCB is Rs 2400000/- and to have useful life of 7 years and have
salvage value of 10% of the cost of the equipment. Taking rate of interest 12%. Taxes, insurance,
and storage should amount to an additional 8%, which results in an overall cost of money of 12 +
8, or 20%. What are the uniform annual equivalents of estimated ownership costs?
II TOWER CRANE: Adopting a Time Value Approach for Calculating the Ownership
Cost
The cost of a tower crane is Rs 80000000/- and to have useful life of 7 years and have salvage
value of 10% of the cost of the equipment. Taking rate of interest 12%. Taxes, insurance, and

storage should amount to an additional 8%, which results in an overall cost of money of 12 + 8,
or 20%. What are the uniform annual equivalents of estimated ownership costs?
Cost Rs 8,000,000.00
Rate of Interest 20%
Salvage Value Rs 800,000.00
Useful Life (years) 7
Use Rate (hr/year) 1000
uniform annual equivalents of estimated ownership cost
Amount FV of Investment + PV of Salvage Value
FV of Investment P((i(1+i)^n)/((1+i)^n)-1) Rs (2,219,391.41)

PV of Investment A(i/((i+1)^n-1) Rs 61,939.14
Uniform Equivalent/ year Rs (2,157,452.27)
Total Rs (15,102,165.89)
Operator Charges Rs 11,000.00 per month
To recover equipment cost appropriate amount should be charged
Charge per hr use Rs 2,157.45
Operator Charges/ hr Rs 42.31
Total Charge/ hr Rs 2,199.76
III BATCHING PLANT: : Adopting a Time Value Approach for Calculating the Ownership
Cost
Determining the ownership cost of the batching plant of capacity 20.0 m³ which is electrically
operated. Initial cost of the batching plant Rs 30,00,000.00 which includes erection of the
batching plant at the site
Cost of Equipment Rs 3,000,000.00

Use Rate hr/year 1500

Plant Capacity (cum/day) 120

S.NO LABOUR No RATE Rs/DAY COST Rs/DAY COST Rs/CUM
1 Supervisor 1 Rs 300.0 Rs 300.0 Rs 2.50
2 Batching Plant Operator 1 Rs 200.0 Rs 200.0 Rs 1.67
3 Helper 1 Rs 150.0 Rs 150.0 Rs 1.25
4 Pump Operator 1 Rs 200.0 Rs 200.0 Rs 1.67
5 Vibrator 3 Rs 150.0 Rs 450.0 Rs 3.75
6 Mason 2 Rs 150.0 Rs 300.0 Rs 2.50
7 Mazdoor 6 Rs 100.0 Rs 600.0 Rs 5.00
Total Cost Rs 18.3
FV of Investment P((i(1+i)^n)/((1+i)^n)-1) Rs (715,568.27)

PV of Salvage Value A(i/((i+1)^n-1) Rs 11,556.83
Uniform Equivalent/ Year' Rs (704,011.44)
Total Rs 7,040,114.44
Owning Cost/hr Rs 469.34
Batching Plant work hrs 120 14400 cum
Labour Charges/ hr Rs 2,200.00
Total Owning Cost / Hour Rs 2,669.34
4.4.2 AVERAGE ANNUAL INVESTMENT METHOD
Investment cost is computed as the product of the interest rate multiplied by the value of the
equipment, which is then converted into cost per hour of operation. The average annual cost of
interest should be based on the average value of the equipment during its life. The average value
of the equipment may be determined from the following equation:

𝐼𝐶(𝑛 + 1)
𝑃=
2
Where, P= the average value, IC = investment cost, n= number of use life of the equipment
If salvage value is included (S)
𝐼𝐶(𝑛 + 1) + 𝑆(𝑛 − 1)
𝑃=
2𝑛
I EXCAVATOR: Using Average Annual Invest Method for Calculating the Ownership
Cost
The cost of a back hoe excavator-JCB is Rs 2400000/- and to have useful life of 7 years and have
salvage value of 10% of the cost of the equipment. Taking rate of interest 12%. Taxes, insurance,
and storage should amount to an additional 8%, which results in an overall cost of money of 12 +
8, or 20%. What are the uniform annual equivalents of estimated ownership costs?
Use Rate hr/ year 1000
AAI
AAI Rs 1,428,000.00
Investment Cost/ hr Rs 285.60
Depriciation/ hr Rs 216.00
Operator Charges/hr Rs 100.00
Owning Cost/ hr Rs 601.60
II TOWER CRANE: Using Average Annual Invest Method for Calculating the Ownership
Cost
The cost of a tower crane is Rs 1800000/- and to have useful life of 7 years and have salvage
value of 10% of the cost of the equipment. Taking rate of interest 12%. Taxes, insurance, and
storage should amount to an additional 8%, which results in an overall cost of money of 12 + 8,
or 20%. What are the uniform annual equivalents of estimated ownership costs?
AVERAGE ANNUAL INVESTMENT METHOD



AAI
AAI Rs 4,760,000.00
Operator Charges/hr Rs 42.31
Owning Cost/ hr Rs 1,714.31
III BATCHING PLANT: Using Average Annual Invest Method for Calculating the
Ownership Cost
Determining the ownership cost of the batching plant of capacity 20.0 m³ which is electrically
operated. Initial cost of the batching plant Rs 30,00,000.00 which includes erection of the
batching plant at the site
AVERAGE ANNUAL INVESTMENT METHOD

Salavage Value Rs 300,000.00
AAI
AAI Rs 1,785,000.00
Labour Charges/hr Rs 2,200.00
Owning Cost/ hr Rs 2,827.00
4.5 METHODS OF ESTIMATING OWNERSHIP AND

OPERATING COST
The most common methods available are the caterpillar method, Associated General Contractor
of America (AGC) method, the Equipment Guide Book (EGB) method, the data quest method,

the Corps of Engineers method and Peurifoy method. Three methods are described below which
are generally used:
 Caterpillar Method
 Associated General Contractor of America (AGC) Method
 Peurifoy/ Schexnayder Method
4.5.1 ESTIMATING OWNERSHIP AND OPERATING COST USING CATERPILLAR

METHOD
The Caterpillar method is based on the following principles:
1. No prices for any item are provided. For reliable estimates these must be obtained locally.
2. Calculations are based on complete machine. Separate estimate are not necessary for the
basic machine like dozer, control, etc.
3. The multiplier factor will work equally well in any currency expressed in decimals.
4. Because of the standards of comparison, what may seem to sever application to one
machine owner may appear only average to another. Therefore, in order to better describe
machine use, the operating condition and applications are defined in zones.
Ownership costs are calculated as a sum of costs incurred due to depreciation, interest, insurance
and taxes. Usually depreciation is done to zero value with straight line method, which is not
based on tax consideration but resale or residual value at replacement may be included for
depreciation or tax incentive purposes
Operating cost includes the following elements:
 Fuel Cost
 Filter, Oil, and grease Cost
 Repair Cost
 Tire Cost
 Special Item
 Operator
4.5.2 CATERPILLAR METHOD FOR ESTIMATING OWNERSHIP AND OPERATING COST

I EXCAVATOR: OWNING AND OPERATING COST BY CATERPILLAR METHOD
Problem: Determining the hourly cost of owning and operating for the scraper and dumper and
unit cost of the earthwork.
EQUIPMENT EXCAVATOR 3CX

SPECIFICATIONS
Power KW (HP) 68.6 (92)
Useful Life Hrs 14,000


Life of Tyre (years) 3
Working Hrs/ year 2000
Life(years) 7
Salvage Value of Excavator 10% of initial cost Rs 220,000.00
Repair Cost of Excavator 70% of initial cost Rs 1,540,000.00
Scrap Value of Excavator 10% of initial cost Rs 220,000.00
Depreciation method adopted here is straight line method
DEPRECIATION EXCAVATOR 3CX

DEPRECIATION Rs 282,857.14
YEAR DEPRECIATION
0 Rs 2,200,000.00
1 Rs 282,857.1 Rs 282,857.1 Rs 1,917,142.9
2 Rs 282,857.1 Rs 565,714.3 Rs 1,634,285.7
3 Rs 282,857.1 Rs 848,571.4 Rs 1,351,428.6
4 Rs 282,857.1 Rs 1,131,428.6 Rs 1,068,571.4
5 Rs 282,857.1 Rs 1,414,285.7 Rs 785,714.3
6 Rs 282,857.1 Rs 1,697,142.9 Rs 502,857.1
7 Rs 282,857.1 Rs 1,980,000.0 Rs -
COMPONENT OF COST EXCAVATOR 3CX

DETAILS HOURLY COST
(A) OWNING COST
Capital Cost Rs 2,200,000.00
Useful Life -
DEPRECIATION per hour Rs 141.43 Rs 141.43
Average Investment Cost/ Yr Rs 1,351,428.57
Investment Cost/ hr (Rate of Interest = 12%) 12% of Rs 1,351,428/2000 Rs 81.09
(B) OPERATING COST

Fuel Cost

Quantity of Fuel (litres) (0.5XHpXLoad FactorX4.5)/8.26 Rs15.04

Cost of Fuel @ Rs. 60/Lit Rs 60 X 39.042 Rs 902.18
Service Cost 50% of hourly fuel consumption Rs 451.09
Repair Cost
Life Time Repair Cost Factor X Initial Cost
Rs 8,041,000.00 Rs 574.36
Tyres Cost 1.15X(Cost Set for Tyres/Expected Life In Rs 47.92
hours)
Operator Cost 12 X monthly Salary / Operational Hr Rs 150.00
Operator @ Rs 25000/month
HOURLY OWNING COST Rs 222.51
HOURLY OPERATING COST Rs2,140.58
TOTAL HOURLY COST Rs 2,363.09
II TOWER CRANE: OWNING AND OPERATING COST BY CATERPILLAR METHOD

The cost of a tower crane is Rs 80,00,000/- and to have useful life of 8 years and have salvage
value of 10% of the cost of the equipment. Taking rate of interest 12%. Calculate hourly owning
and operating cost.
EQUIPMENT CRANE
SPECIFICATIONS Tower Crane
Power KW (HP) 150 (201)
Cost Rs 8,000,000.00
Working Hrs 1,000
Useful Life (Years) 8

Repair Value 50% of initial cost Rs 4,000,000.00
Salvage Value 10% of initial cost Rs 800,000.00
Scrap Value 10% of initial cost Rs 800,000.00
DEPRICIATION Crane

Depreciation Rs 900,000
END OF YEAR DEPRICIATION PER YEAR TOTAL DEPRICIATION BOOK VALUE
0 Rs 8,000,000.00

1 Rs 900,000.0 Rs 900,000.0 Rs 7,100,000.0

2 Rs 900,000.0 Rs 1,800,000.0 Rs 6,200,000.0
3 Rs 900,000.0 Rs 2,700,000.0 Rs 5,300,000.0
4 Rs 900,000.0 Rs 3,600,000.0 Rs 4,400,000.0
5 Rs 900,000.0 Rs 4,500,000.0 Rs 3,500,000.0
6 Rs 900,000.0 Rs 5,400,000.0 Rs 2,600,000.0
7 Rs 900,000.0 Rs 6,300,000.0 Rs 1,700,000.0
8 Rs 900,000.0 Rs 7,200,000.0 Rs 800,000.0
COMPONENT OF COST CRANE

DETAILS HOURLY COST
(A) OWNING COST
Useful Life -
Depriciation per hour Rs 900.00 Rs 900.00
Investment Cost/ hr (Rate of Interest Rs 594.00
= 12%) 12% of Rs 7,734,000/1000
(B) OPERATING COST

Fuel Cost
Quntity of Fuel (per litres) (0.5XHpXLoad FactorX4.5)/8.26 32.85
Cost of Fuel @ Rs. 60/Lit Rs 60 X 32.85 Rs 1,971.07
Service Cost 50% of hourly fuel consumption Rs 985.53
Repair Cost
Rs 1,300,000.00 Rs 162.50
Operator Cost 12 X monthly Salary / Operational Hr Rs 132.00
Operator @ Rs 11000/month
HOURLY OWNING COST Rs 1,494.00
HOURLY OPERATING COST Rs 3,283.95

III BATCHING PLANT: OWNING AND OPERATING COST BY CATERPILLAR METHOD

Calculating hourly owning and operating cost of the batching plant of capacity 20 cum/ hr. Initial
cost of the batching plant is Rs 20,00,000.00/-
EQUIPMENT BATCHING PLANT

SPECIFICATIONS
Power KW (HP) 45 (61)
Cost Rs 2,000,000.00
Working Hrs 1,500
Capacity cum/hr 20
Operating Hours (day) 6
DEPRICIATION Batching Plant

Depriciation / year Rs 100,000
END OF YEAR DEPRICIATION PER YEAR TOTAL DEPRICIATION BOOK VALUE
0 Rs 2,000,000.00
1 Rs 100,000.0 Rs 100,000.0 Rs 1,900,000.0
2 Rs 100,000.0 Rs 200,000.0 Rs 1,800,000.0
3 Rs 100,000.0 Rs 300,000.0 Rs 1,700,000.0
4 Rs 100,000.0 Rs 400,000.0 Rs 1,600,000.0
5 Rs 100,000.0 Rs 500,000.0 Rs 1,500,000.0
6 Rs 100,000.0 Rs 600,000.0 Rs 1,400,000.0
7 Rs 100,000.0 Rs 700,000.0 Rs 1,300,000.0
8 Rs 100,000.0 Rs 800,000.0 Rs 1,200,000.0
9 Rs 100,000.0 Rs 900,000.0 Rs 1,100,000.0
10 Rs 100,000.0 Rs 1,000,000.0 Rs 1,000,000.0
11 Rs 100,000.0 Rs 1,100,000.0 Rs 900,000.0

12 Rs 100,000.0 Rs 1,200,000.0 Rs 800,000.0

13 Rs 100,000.0 Rs 1,300,000.0 Rs 700,000.0
14 Rs 100,000.0 Rs 1,400,000.0 Rs 600,000.0
15 Rs 100,000.0 Rs 1,500,000.0 Rs 500,000.0
16 Rs 100,000.0 Rs 1,600,000.0 Rs 400,000.0
17 Rs 100,000.0 Rs 1,700,000.0 Rs 300,000.0
18 Rs 100,000.0 Rs 1,800,000.0 Rs 200,000.0
LABOUR COST

3 Helper 1 Rs 150.0 Rs 150.0 Rs 1.25
5 Vibrator 3 Rs 150.0 Rs 450.0 Rs 3.75
6 Mason 2 Rs 150.0 Rs 300.0 Rs 2.50
7 Mazdoor 6 Rs 100.0 Rs 600.0 Rs 5.00
Total Cost Rs 18.3
COMPONENT OF COST BATCHING PLANT

DETAILS HOURLY COST
(A) OWNING COST
Useful Life -
Depriciation per hour Rs 66.67 Rs 66.67
Investment Cost/ hr (Rate of Interest = 12% Rs 92.89
12% of Rs 1,161,111.11/1600
(B) OPERATING COST

Fuel Cost
Quntity of Fuel (per litres) (0.5XHpXLoad FactorX4.5)/8.26 9.97
Repair Cost
Rs 10,450,000.00 Rs 387.04

Labour Cost Rs 18.33

HOURLY OPERATING COST Rs 415.34
TOTAL HOURLY COST Rs 574.90
4.5.3 ESTIMATING: OWNERSHIP AND OPERATING COST BY USING ASSOCIATED

GENERAL CONTRACTORS OF AMERICA (AGC) METHOD
This method enables the owner to calculate the ownership and operating cost to determine the
capital recovery. Rather than dealing with the specific makes and models of the machines,
equipment is classified according to capacity or size. This method compares the average annual
ownership expense and average hourly repair and maintenance expense as a percentage of the
acquisition of the costs.
Ownership Cost
The ownership cost considered in this method is the same as described in the Caterpillar method:
however, replacement cost of escalation is also considered. Depreciation is calculated by the
straight line method and includes the purchase price, sales tax, freight and erection cost with an
assumed salvage value of 10% Average economic life in hours and average annual operating
hours are shown for each size range. Replacement cost escalation of 7% is designed to augment
the capital recovery and to offset the inflation and machine price increase. Interest on the
investment is assumed to be 7%, where taxes and insurance, and storage is taken as 4.5%.
Operating Cost
Maintenance and repair costs are calculated based on hourly percentage rate times the acquisition
cost. It is a level regardless of the age of the machine. This method includes field and shop
repairs, overhaul, and replacement of tires and tracks, etc. Fuel, oil and grease costs are not
included in this method
4.5.4 ASSOCIATED GENERAL CONTRACTORS OF AMERICA (AGC) METHOD

I EXCAVATOR: OWNERSHIP AND OPERATING COST BY AGC METHOD

SPECIFICATIONS
Power KW (HP) 68.6 (92)


Life(years) 7
FACTORS FOR CALCULATION
Depreciation 15%
Replacement cost Escalation 7%
Interest on Investment 7%
Taxes, Insurance & Storage 4.50%
Ownership Expense 33.5%
Repair & Maintenance 19.40%
Salvage Value 10%

DETAILS HOURLY COST
(A) OWNING COST
Acquisition Cost Rs 1,755,000.00
Useful Life 14,000
Ownership Expense total ownership/ annual use Rs 293.96
(B) OPERATING COST
Fuel Cost NA
Quntity of Fuel (per litres) NA 0.00
Cost of Fuel @ Rs. 60/Lit NA Rs -
Repair & Maintenance Cost 19.40% of Initial cost/ annual use Rs 170.24
II TOWER CRANE: OWNERSHIP AND OPERATING COST BY AGC METHOD

EQUIPMENT TOWER CRANE
SPECIFICATIONS
Power KW (HP) 150 (201)

Useful Life Hrs 8000

Working Hrs/ year 1,000
Life(years) 8
Depreciation 15%
Replacement cost Escalation 7%
Interest on Investment 7%
Ownership Expense 33.5%
Salvage Value 10%
COMPONENT OF COST TOWER CRANE

DETAILS HOURLY COST
(A) OWNING COST
Acquisition Cost Rs 11,250,000.00
Useful Life 8,000
Ownership Expense total ownership/ annual use Rs 3,768.75
(B) OPERATING COST
Fuel Cost NA
Repair & Maintenance Cost 19.40% of Initial cost/ annual use Rs 2,182.50

III BATCHING PLANT: OWNERSHIP AND OPERATING COST BY AGC METHOD

Determining the owning and operating cost of the batching plant of the capacity 20 m³ which is
electrically operated particulars are given below:

SPECIFICATIONS
Cost Rs 2,000,000.00
Useful Life Yrs 27,000
Working Hrs 1,500
Capacity cum/hr
Operation Hr/Day 6
LABOUR COST Batching Plant Capacity (cum/day) 120

3 Helper 1 Rs 150.0 Rs 150.0 Rs 1.25
5 Vibrator 3 Rs 150.0 Rs 450.0 Rs 3.75
6 Mason 2 Rs 150.0 Rs 300.0 Rs 2.50
7 Mazdoor 6 Rs 100.0 Rs 600.0 Rs 5.00
Total Cost Rs 18.3
Depreciation of the batching plant is calculated by using straight line method:
𝐼𝑛𝑖𝑡𝑖𝑎𝑙 𝐶𝑜𝑠𝑡−𝑆𝑐𝑟𝑎𝑝 𝑣𝑎𝑙𝑢𝑒
Depreciation Dn= 𝑇𝑜𝑡𝑎𝑙 𝑢𝑠𝑒𝑓𝑢𝑙 𝑙𝑖𝑓𝑒 𝑜𝑓 𝑡ℎ 𝑒𝑞𝑢𝑖𝑝𝑚𝑒𝑛𝑡
DEPRICIATION Batching Plant

END OF YEAR DEPRICIATION PER YEAR TOTAL BOOK VALUE

DEPRICIATION
0 Rs 2,000,000.00
1 Rs 100,000.0 Rs 100,000.0 Rs 1,900,000.0
2 Rs 100,000.0 Rs 200,000.0 Rs 1,800,000.0

3 Rs 100,000.0 Rs 300,000.0 Rs 1,700,000.0

4 Rs 100,000.0 Rs 400,000.0 Rs 1,600,000.0
5 Rs 100,000.0 Rs 500,000.0 Rs 1,500,000.0
6 Rs 100,000.0 Rs 600,000.0 Rs 1,400,000.0
7 Rs 100,000.0 Rs 700,000.0 Rs 1,300,000.0
8 Rs 100,000.0 Rs 800,000.0 Rs 1,200,000.0
9 Rs 100,000.0 Rs 900,000.0 Rs 1,100,000.0
10 Rs 100,000.0 Rs 1,000,000.0 Rs 1,000,000.0
11 Rs 100,000.0 Rs 1,100,000.0 Rs 900,000.0
12 Rs 100,000.0 Rs 1,200,000.0 Rs 800,000.0
13 Rs 100,000.0 Rs 1,300,000.0 Rs 700,000.0
14 Rs 100,000.0 Rs 1,400,000.0 Rs 600,000.0
15 Rs 100,000.0 Rs 1,500,000.0 Rs 500,000.0
16 Rs 100,000.0 Rs 1,600,000.0 Rs 400,000.0
17 Rs 100,000.0 Rs 1,700,000.0 Rs 300,000.0
18 Rs 100,000.0 Rs 1,800,000.0 Rs 200,000.0
Estimating ownership and operating cost of the batching plant

DETAILS HOURLY COST
(A) OWNING COST
Useful Life 27,000
Ownership Expense total ownership/ annual use Rs 402.00
(B) OPERATING COST
Fuel Cost NA
Repair & Maintenance Cost 19.40% of Initial cost/ annual use Rs 232.80
Determining the owning and operating cost of the batching plant of the capacity 30 m³/hr and 45
m³/hr, those are electrically operated particulars are given below:


SPECIFICATIONS AP-30(Inline) AP-45(Inline)
Power KW (HP) 62 (83) 72 (105)
Cost Rs 3,000,000.00 Rs 3,500,000.00
Useful Life Hrs 36,000 36,000
Working Hrs 2,000 2,000
Useful Life (Years) 18 18
Capacity cum/hr 30 45
Operating Hrs/Day 8 8
Capacity cum/day 240 360

Information about the project AP-30(Inline) AP-45(Inline)
Repair Value 50% of initial cost Rs 1,500,000.00 Rs 1,750,000.00
Salvage Value 10% of initial cost Rs 300,000.00 Rs 350,000.00
Scrap Value 10% of initial cost Rs 300,000.00 Rs 350,000.00
Depreciation of the batching plant is calculated by using straight line method:

𝐼𝑛𝑖𝑡𝑖𝑎𝑙 𝐶𝑜𝑠𝑡−𝑆𝑐𝑟𝑎𝑝 𝑣𝑎𝑙𝑢𝑒
Depreciation Dn= 𝑇𝑜𝑡𝑎𝑙 𝑢𝑠𝑒𝑓𝑢𝑙 𝑙𝑖𝑓𝑒 𝑜𝑓 𝑡ℎ 𝑒𝑞𝑢𝑖𝑝𝑚𝑒𝑛𝑡
DEPRICIATION Batching Plant AP-30(Inline)

END OF YEAR DEPRICIATION PER TOTAL BOOK VALUE

YEAR DEPRICIATION
0 Rs 3,000,000.00
1 Rs 100,000.0 Rs 100,000.0 Rs 2,900,000.0
2 Rs 100,000.0 Rs 200,000.0 Rs 2,800,000.0
3 Rs 100,000.0 Rs 300,000.0 Rs 2,700,000.0
4 Rs 100,000.0 Rs 400,000.0 Rs 2,600,000.0
5 Rs 100,000.0 Rs 500,000.0 Rs 2,500,000.0
6 Rs 100,000.0 Rs 600,000.0 Rs 2,400,000.0
7 Rs 100,000.0 Rs 700,000.0 Rs 2,300,000.0
8 Rs 100,000.0 Rs 800,000.0 Rs 2,200,000.0
9 Rs 100,000.0 Rs 900,000.0 Rs 2,100,000.0
10 Rs 100,000.0 Rs 1,000,000.0 Rs 2,000,000.0
11 Rs 100,000.0 Rs 1,100,000.0 Rs 1,900,000.0

12 Rs 100,000.0 Rs 1,200,000.0 Rs 1,800,000.0

13 Rs 100,000.0 Rs 1,300,000.0 Rs 1,700,000.0
14 Rs 100,000.0 Rs 1,400,000.0 Rs 1,600,000.0
15 Rs 100,000.0 Rs 1,500,000.0 Rs 1,500,000.0
16 Rs 100,000.0 Rs 1,600,000.0 Rs 1,400,000.0
17 Rs 100,000.0 Rs 1,700,000.0 Rs 1,300,000.0
18 Rs 100,000.0 Rs 1,800,000.0 Rs 1,200,000.0
DEPRICIATION Batching Plant AP-45(Inline)

END OF YEAR DEPRICIATION PER TOTAL DEPRICIATION BOOK VALUE

YEAR
0 Rs 3,500,000.00
1 Rs 175,000.0 Rs 175,000.0 Rs 3,325,000.0
2 Rs 175,000.0 Rs 350,000.0 Rs 3,150,000.0
3 Rs 175,000.0 Rs 525,000.0 Rs 2,975,000.0
4 Rs 175,000.0 Rs 700,000.0 Rs 2,800,000.0
5 Rs 175,000.0 Rs 875,000.0 Rs 2,625,000.0
6 Rs 175,000.0 Rs 1,050,000.0 Rs 2,450,000.0
7 Rs 175,000.0 Rs 1,225,000.0 Rs 2,275,000.0
8 Rs 175,000.0 Rs 1,400,000.0 Rs 2,100,000.0
9 Rs 175,000.0 Rs 1,575,000.0 Rs 1,925,000.0
10 Rs 175,000.0 Rs 1,750,000.0 Rs 1,750,000.0
11 Rs 175,000.0 Rs 1,925,000.0 Rs 1,575,000.0
12 Rs 175,000.0 Rs 2,100,000.0 Rs 1,400,000.0
13 Rs 175,000.0 Rs 2,275,000.0 Rs 1,225,000.0
14 Rs 175,000.0 Rs 2,450,000.0 Rs 1,050,000.0
15 Rs 175,000.0 Rs 2,625,000.0 Rs 875,000.0
16 Rs 175,000.0 Rs 2,800,000.0 Rs 700,000.0
17 Rs 175,000.0 Rs 2,975,000.0 Rs 525,000.0
18 Rs 175,000.0 Rs 3,150,000.0 Rs 350,000.0
LABOUR COST


3 Helper 1 Rs 150.0 Rs 150.0 Rs 1.25
5 Vibrator 3 Rs 150.0 Rs 450.0 Rs 3.75
6 Mason 2 Rs 150.0 Rs 300.0 Rs 2.50
7 Mazdoor 6 Rs 100.0 Rs 600.0 Rs 5.00
Total Cost Rs 18.3
LABOUR COST


3 Helper 1 Rs 150.0 Rs 150.0 Rs 1.25
5 Vibrator 5 Rs 150.0 Rs 750.0 Rs 6.25
6 Mason 2 Rs 150.0 Rs 300.0 Rs 2.50
7 Mazdoor 6 Rs 100.0 Rs 600.0 Rs 5.00
Total Cost Rs 20.8
COMPONENT OF
COST BATCHING PLANT AP-30 (Inline) BATCHING PLANT AP-45 (Inline)
DETAILS HOURLY COST DETAILS HOURLY COST
(A) OWNING COST
Rs Rs
Capital Cost
2,700,000.00 3,150,000.00
Useful Life
3,000,000 -
Ownership Expense total ownership/ annual Rs 452.25 total ownership/ Rs 527.63

use annual use

(B) OPERATING
COST
Fuel Cost NA NA
Quntity of Fuel (per
NA 0.00 NA 0.00
litres)
Cost of Fuel @ Rs.
NA Rs - NA Rs -
60/Lit
Repair & 19.40% of Initial cost/ 19.40% of Initial
Rs 261.90 Rs 305.55
Maintenance Cost annual use cost/ annual use
Labour Cost Rs 40.00 Rs 166.67
Life Time Repair
Factor X Initial Cost Factor X Initial Cost
Cost
HOURLY OWNING
Rs 452.25 Rs 527.63
COST
HOURLY
Rs 301.90 Rs 472.22
OPERATING COST
TOTAL HOURLY
Rs 1,206.40 Rs 1,527.47
COST
4.5.5 ESTIMATING: OWNERSHIP AND OPERATING COST USING PEURIFOY/

SCHEXNAYDER METHOD
Ownership Cost
This method assumes the straight-line method for depreciation. The value of equipment is
depreciated to be zero at the end of useful life of the equipment. The ownership cost is based on
an average investment cost that is taken as 60% of the initial cost of the equipment. Usually
equipment owners charge an annual fixed rate of interest against the full purchase of the
equipment. This gives an annual interest cost which is higher than the normal. As the cost of
depreciation has already been claimed, it’s more realistic to base the annual cost of investment
on the average value of equipment during its life. This value can be obtained by taking an
average values at the beginning of each year that the equipment will be used. The cost of
investment is taken as 15% of the average investment.
Operating Cost
As the tire life is different from that of the equipment, its costs are treated differently. The
maintenance cost is taken as 50% of the annual depreciation, the fuel and the FOG costs
included, whereas the operator wages are no included.

I EXCAVATOR: OWNING AND OPERATING COST BY PEURIFOY / SCHEXNAYDER

METHOD

SPECIFICATIONS
Power KW (HP) 68.6 (92)
Life(years) 7
Repair cost of Scrapper 15.00% of initial cost Rs 330,000.00
Salvage Value of Excavator 20.00% of initial cost Rs 440,000.00
Scrap Value of Excavator 10.00% of initial cost Rs 220,000.00
Depreciation 15.00%
Interest on Investment 6.75%
Salvage Value 20.00%
Tire Repair cost 16.00%
Equipment under load 30% of the operating time
Carrier under load 10% of the operating time
Use 50-min productive hour
Calculating Load Time & Carrier Factor

Load Factor(operating power)
Push Load 1X0.3 0.3
Travel & Position 0.75X0.7 0.525 0.83
Time Factor (operating efficiency)
50 min hour 50/60 0.8333333
Combined Factor 0.69
Fuel Consumption(lit/HP/h) 0.16
FOG lit/ metric HP / hr 0.23

Carrier Load Factor

Running 1X0.1 1*0.1
Idle 0.5X0.9 0.45 0.45
COMPONENT OF COST EXCAVATOR 3CX

DETAILS HOURLY COST
(A) OWNING COST
Initial Cost list price- tire cost-salvage value Rs 1,510,000.00
Equivalent Uniform annual cost of Initial Cost IC(i(1+i)^n/((1+i)^n-1)))
Rs
Rs 138.87
277,748.08
Equivalent Uniform annual cost of Salvage
SV(i(1+i)^n/((1+i)^n-1)))
Value
Rs
Rs 40.47
80,933.21
Taxes, Insurance & Storage 3.75% of Initial Cost Rs 28.31
(B) OPERATING COST
Fuel Cost combined factorxqtyxhpxcost
Quantity of Fuel (per litres) (0.5XHpXLoad FactorX4.5)/8.26 15.04
Cost of Fuel @ Rs. 60/Lit 0.69x0.16x92x60 Rs 607.20
Repair & Maintenance Cost 37% of depreciation cost Rs 36.41

FOG factorXfuel costX Labour
FOG cost Rs 11.88
Fac
Tire use Tire Cost/Life of Tire Cost Rs 41.67
Tire Repair Cost 16% of Hourly Tire Use Cost Rs 6.67
II TOWER CRANE: OWNING AND OPERATING COST BY PEURIFOY / SCHEXNAYDER

METHOD
EQUIPMENT TOWER CRANE

SPECIFICATIONS
Power KW (HP) 150 (201)


Tyre Cost Rs -
Life(years) 8
Repair cost of Scrapper 15.00% of initial cost Rs 1,875,000.00
Salvage Value of Excavator 20.00% of initial cost Rs 2,500,000.00
Scrap Value of Excavator 10.00% of initial cost Rs 1,250,000.00
Depreciation 15.00%
Taxes,Insurance & Storage 3.75%

Push Load 1X0.3 0.3
Time Factor (operating efficiency)
50 min hour 50/60 0.833333
Carrier Load Factor
Running 1X0.1 1*0.1
Idle 0.5X0.9 0.45 0.45
COMPONENT OF COST TOWER CRANE

DETAILS HOURLY COST
(A) OWNING COST

Initial Cost list price- tire cost-salvage value Rs 10,000,000.00

Rs
Rs 1,658.49
1,658,489.11
SV(i(1+i)^n/((1+i)^n-1)))
Value
Rs
Rs 414.62
414,622.28
Taxes,Insurance & Storage 3.75% of Initial Cost Rs 375.00
(B) OPERATING COST
Cost of Fuel @ Rs. 60/Lit 0.69x0.16x92x60 Rs 607.20

FOG cost FOG factorXfuel costX Labour Fac Rs 11.88
Tire use Tire Cost/Life of Tire Cost Rs -
Tire Repair Cost 16% of Hourly Tire Use Cost Rs -
III BATCHING PLANT: OWNERSHIP AND OPERATING COST BY AGC METHOD

Determining the owning and operating cost of the batching plant of the capacity 20 m³ which is
electrically operated particulars are given below:

SPECIFICATIONS
Cost Rs 2,000,000.00
Working Hrs 1,500
Capacity cum/hr 20
Operating Hours /day 6


Repair Value
Depreciation 15.00%

Push Load 1X0.3 0.3
Time Factor (operating
efficiency)
50 min hour 50/60 0.833333333
Carrier Load Factor
Running 1X0.1 1*0.1
Idle 0.5X0.9 0.45 0.45
LABOUR COST

3 Helper 1 Rs 150.0 Rs 150.0 Rs 1.25


5 Vibrator 3 Rs 150.0 Rs 450.0 Rs 3.75
6 Mason 2 Rs 150.0 Rs 300.0 Rs 2.50
7 Mazdoor 6 Rs 100.0 Rs 600.0 Rs 5.00
Total Cost Rs 18.3

DETAILS HOURLY COST
(A) OWNING COST
Initial Cost list price- tire cost Rs 1,600,000.00
Rs 156,201.94 Rs 104.13
SV(i(1+i)^n/((1+i)^n-1)))
Value
Rs 39,050.48 Rs 26.03
Taxes,Insurance & Storage 3.75% of Initial Cost Rs 40.00
(B) OPERATING COST
0.69X0.16x61x60 Rs 404.06
FOG cost FOG factorXfuel costX Labour Fac Rs 11.88
4.6 COMPARING THE COSTS

4.6.1 COMPARISION OF OWNERSHIP COST

4.6.2 COMPARISION OF OWNERSHIP AND OPERATING COST

It can be seen that the rates of hourly owning and operating cost of the construction equipment is
varying in every method. It is totally dependent upon the policies of the company to adopt the
method for estimation of the cost of the equipment. Following a comparison of the costs is given:

Figure 4-4 Comparison of Owning and Operating Costs by Different Methods

CHAPTER:5 FINANCIAL ANALYSIS FOR DECISION

MAKING ON SELECTION OF CONSTRUCTION
EQUIPMENT`S
5.1 INTENT OF CHAPTER
The intent of the chapter is to study the financial aspects of construction equipment. Two
important aspects of construction equipment financing will be focused in this chapter these are:
 Buy, rent or lease Decision

 Economic Life of the equipment
Buy, rent or lease decision is the way of procurement of construction equipment. This is a
financial investment decision and also a matter of concern to how to use the equipment to make
out of it as much as possible. Second aspect is the replacement of the construction equipment. It
is very necessary to do the accurate calculation for finding the economic life of the equipment.
This is necessary to find because one might replace equipment before the actual replacement life
of the equipment and lose the benefits on the other hand if equipment is used beyond the
economic life owner of the equipment will lose money as well as time. Loss will occur due to the
increased maintenance cost, repair charges and reduction in the productivity which will lead to
an increase in the time for completing the work.
5.2 EQUIPMENT LIFE AND REPLACEMENT PROCEDURE

Equipment starts to wear out and suffers mechanical problem as the use of the equipment starts.
In due course of time equipment reaches its useful life and must be replaced. Thus, a major
element of profitable equipment fleet management is the process of making the equipment
replacement decision. This decision essentially involves determining when it is no longer
economically feasible to repair a broken piece of machinery. There are three components of the
economics of equipment management decision making:
 Equipment Life: Determining the economic useful life for a given piece of equipment.
 Replacement Analysis: Analytical tools to compare alternatives to replace a piece of
equipment that has reached the end of its useful life.
 Replacement Equipment Selection: Methods to make a logical decision as to which
alternative furnishes the most promising solution to the equipment replacement decision.
Equipment life can be mathematically defined in three different ways: physical life, profit life
and economic life. All three aspects are defined and calculated when considering equipment life
because they furnish three important means to approach replacement analysis and ultimately to
CHAPTER 5 FINANCIAL ANALYSIS ON DECISION MAKING ON SELECTION OF CONSTRUCTION

EQUIPMENT
make an equipment replacement decision. The concepts of depreciation, inflation, investment,

maintenance and repairs, downtime, and obsolescence are all integral to replacement analysis.
5.2.1 EQUIPMENT LIFE

Construction equipment life can be defined in three ways: physical life, profit life and economic
life. Figure 5.1 shows how these three different definitions are related to typical piece of
equipment.
Physical Life
Physical life is the age at which machine is worn out and is no longer reliably produce. At this
point, it usually be abandoned or scrapped. As construction equipment ages, maintenance and
operating costs increases.
Profit Life
Profit life is the life over which the equipment can earn the profit. Retention beyond that point
will create an operating loss. This essentially is the point where machine seemingly spends more
time in the workshop than on the project site.
Economic Life
Economic life equates to the time period that maximizes profits over equipment’s life. It is prime
objective to maximize production and minimize the operating cost.

EQUIPMENT
Figure 5-1 Equipment Life replacements after Douglas
Source: J. Douglas Construction Equipment Policy , New York: McGraw Hill
5.2.2 ECONOMIC LIFE AND REPLACEMENT TIME FOR EQUIPMENT

Determination of appropriate timing to replace a piece of equipment requires that its owner
include not only ownership cost and operating costs, but also other costs that are associated
costs. These include depreciation, inflation, investment, maintenance, repair, and downtime and
obsolescence costs.
I DEPRECIATION COSTS AND REPLACEMENT

The dictionary defines depreciation as “a decrease in the value of property through wear,
deterioration, or obsolescence”. In terms of equipment, the depreciation is the loss in the value of
the equipment from time it is purchased to the time it is out of service or replaced. Following
tables will show hourly cost resulting from depreciation and need for replacement. In this case,
the book value is the actual amount to be realized on trade-in and assumes the annual increase in
of the average cost of construction equipment is approximately 5% per year.
EXCAVATOR: DEPRECIATION AND REPLACEMENT COST

The cost of the excavator is Rs 22,00,000/- having life of 7 years and operating hours per year is
2000 hours. Here determining the depreciation and replacement cost of the excavator.
Depreciation method adopted here is sum of year’s digit method. Book value is obtained from
depreciation table is added to the loss which occurred due to new equipment. This loss is equal to

EQUIPMENT
the accelerated cost of the equipment minus the depreciation occurred in that year. Considering
the salvage is 10% of the initial cost of the equipment.

SPECIFICATIONS
Power KW (HP) 68.6 (92)
Life(years) 7
Repair cost of Scrapper 70% of initial cost Rs 1,540,000.00

Salvage Value of Excavator 10% of initial cost Rs 220,000.00
Scrap Value of Excavator 10% of initial cost Rs 220,000.00
Table 5-1EXCAVATOR: Depreciation and Replacement Cost
EXCAVATOR 3CX
END OF YEAR REPLACEMENT COST BOOK VALUE LOSS ON REPLACEMENT CUMULATIVE USE (h) CUMULATIVE COST /Hour
0 Rs 2,200,000.00 Rs 2,200,000.00 Rs - 0
1 Rs 2,310,000.00 Rs 1,767,500.00 Rs 542,500.00 2000 Rs 271.25
2 Rs 2,420,000.00 Rs 1,396,785.71 Rs 1,023,214.29 4000 Rs 255.80
3 Rs 2,530,000.00 Rs 1,087,857.14 Rs 1,442,142.86 6000 Rs 240.36
4 Rs 2,640,000.00 Rs 840,714.29 Rs 1,799,285.71 8000 Rs 224.91
5 Rs 2,750,000.00 Rs 655,357.14 Rs 2,094,642.86 10000 Rs 209.46
6 Rs 2,860,000.00 Rs 531,785.71 Rs 2,328,214.29 12000 Rs 194.02
7 Rs 2,970,000.00 Rs 470,000.00 Rs 2,500,000.00 14000 Rs 178.57
TOWER CRANE: DEPRECIATION AND REPLACEMENT COST

The cost of the tower crane is Rs 22,00,000/- having life of 8 years and operating hours per year
is 1000 hours. Here determining the depreciation and replacement cost of the excavator.
EQUIPMENT CRANE
SPECIFICATIONS Tower Crane
Power KW (HP) 150 (201)
Cost Rs 8,000,000.00

EQUIPMENT
Working Hrs 1,000


Table 5-2TOWER CRANE: Depreciation and Replacement Cost
TOWER CRANE TFC 5040
0 Rs 8,000,000.00 Rs 8,000,000.00 Rs - 0
1 Rs 8,400,000.00 Rs 6,400,000.00 Rs 2,000,000.00 1000 Rs 2,000.00
2 Rs 8,800,000.00 Rs 5,000,000.00 Rs 3,800,000.00 2000 Rs 1,900.00
3 Rs 9,200,000.00 Rs 3,800,000.00 Rs 5,400,000.00 3000 Rs 1,800.00
4 Rs 9,600,000.00 Rs 2,800,000.00 Rs 6,800,000.00 4000 Rs 1,700.00
5 Rs 10,000,000.00 Rs 2,000,000.00 Rs 8,000,000.00 5000 Rs 1,600.00
6 Rs 10,400,000.00 Rs 1,400,000.00 Rs 9,000,000.00 6000 Rs 1,500.00
7 Rs 10,800,000.00 Rs 1,000,000.00 Rs 9,800,000.00 7000 Rs 1,400.00
8 Rs 11,200,000.00 Rs 800,000.00 Rs 10,400,000.00 8000 Rs 1,300.00
BATCHING PLANT: DEPRECIATION AND REPLACEMENT COST

The cost of the batching plant is Rs 20,00,000/- having life of 18 years and operating hours per
year is 2000 hours. Here determining the depreciation and replacement cost of the excavator.

SPECIFICATIONS
Cost Rs 2,000,000.00
Working Hrs 1,500
Capacity cum/hr 20
Operating Hours /day 6

EQUIPMENT

Table 5-3 BATCHING PLANT: Depreciation and Replacement Cost
BATCHING PLANT
0 Rs 2,000,000.00 Rs 2,000,000.00 Rs - 0
1 Rs 2,100,000.00 Rs 1,810,526.32 Rs 289,473.68 1000 Rs 289.47
2 Rs 2,200,000.00 Rs 1,631,578.95 Rs 568,421.05 2000 Rs 284.21
3 Rs 2,300,000.00 Rs 1,463,157.89 Rs 836,842.11 3000 Rs 278.95
4 Rs 2,400,000.00 Rs 1,305,263.16 Rs 1,094,736.84 4000 Rs 273.68
5 Rs 2,500,000.00 Rs 1,157,894.74 Rs 1,342,105.26 5000 Rs 268.42
6 Rs 2,600,000.00 Rs 1,021,052.63 Rs 1,578,947.37 6000 Rs 263.16
7 Rs 2,700,000.00 Rs 894,736.84 Rs 1,805,263.16 7000 Rs 257.89
8 Rs 2,800,000.00 Rs 778,947.37 Rs 2,021,052.63 8000 Rs 252.63
9 Rs 2,900,000.00 Rs 673,684.21 Rs 2,226,315.79 9000 Rs 247.37
10 Rs 3,000,000.00 Rs 578,947.37 Rs 2,421,052.63 10000 Rs 242.11
11 Rs 3,100,000.00 Rs 494,736.84 Rs 2,605,263.16 11000 Rs 236.84
12 Rs 3,200,000.00 Rs 421,052.63 Rs 2,778,947.37 12000 Rs 231.58
13 Rs 3,300,000.00 Rs 357,894.74 Rs 2,942,105.26 13000 Rs 226.32
14 Rs 3,400,000.00 Rs 305,263.16 Rs 3,094,736.84 14000 Rs 221.05
15 Rs 3,500,000.00 Rs 263,157.89 Rs 3,236,842.11 15000 Rs 215.79
16 Rs 3,600,000.00 Rs 231,578.95 Rs 3,368,421.05 16000 Rs 210.53
17 Rs 3,700,000.00 Rs 210,526.32 Rs 3,489,473.68 17000 Rs 205.26
18 Rs 3,800,000.00 Rs 200,000.00 Rs 3,600,000.00 18000 Rs 200.00
DUMPER: DEPRECIATION AND REPLACEMENT COST

The cost of the dumper is Rs 12,00,000/- having life of 10 years and operating hours per year is
2000 hours. Here determining the depreciation and replacement cost of the excavator.
Depreciation method adopted here is double declining balance method. Book value is obtained
from depreciation table is added to the loss which occurred due to new equipment. This loss is
equal to the accelerated cost of the equipment minus the depreciation occurred in that year.
Considering the salvage is 10% of the initial cost of the equipment.
Table 5-4 DUMPER: Depreciation and Replacement Cost
DUMPER
0 Rs 1,200,000.00 Rs 1,200,000.00 Rs - 0
1 Rs 1,260,000.00 Rs 1,010,000.00 Rs 250,000.00 2000 Rs 125.00
2 Rs 1,320,000.00 Rs 858,000.00 Rs 462,000.00 4000 Rs 115.50
3 Rs 1,380,000.00 Rs 736,400.00 Rs 643,600.00 6000 Rs 107.27
4 Rs 1,440,000.00 Rs 639,120.00 Rs 800,880.00 8000 Rs 100.11
5 Rs 1,500,000.00 Rs 561,296.00 Rs 938,704.00 10000 Rs 93.87
6 Rs 1,560,000.00 Rs 499,036.80 Rs 1,060,963.20 12000 Rs 88.41
7 Rs 1,620,000.00 Rs 449,229.44 Rs 1,170,770.56 14000 Rs 83.63
8 Rs 1,680,000.00 Rs 409,383.55 Rs 1,270,616.45 16000 Rs 79.41
9 Rs 1,740,000.00 Rs 377,506.84 Rs 1,362,493.16 18000 Rs 75.69
10 Rs 1,800,000.00 Rs 352,005.47 Rs 1,447,994.53 20000 Rs 72.40

EQUIPMENT
II INFLATION
Like every product, equipment replacement costs are affected by economic and industrial
inflation. Economic inflation is defined as the loss in buying power of the national currency, and
industrial inflation is the change in construction costs due to long- and short-term fluctuations in
commodity pricing. While the inflation should always be considered in equipment replacement
decision making, its effect can be ignored because inflation will equally affect rest of the
alternatives.
III INVESTMENT COSTS

Investment costs include interest, insurance, taxes, and license fees beyond the initial acquisition
cost of equipment. Investment cost can be reduced to a percentage of initial equipment cost.
Assuming investment cost per year to be 15% of initial cost of the equipment.
EXCAVATOR: INVESTMENT COST

Investment cost for the excavator is assumed to increase by 15% of the initial cost every year.
Cumulative investment is divided by the cumulative use of the equipment to get cumulative
investment per hour.
Table 5-5 EXCAVATOR: Investment Cost
EXCAVATOR 3CX
YEAR INVESTMENT START DEPRECIATION INVESTMENT END OF YEAR INVESTMENT COST CUMULATIVE INVESTMENT CUMULATIVE USE (h) CUMULATIVE COST /Hour
1 Rs 2,200,000.00 Rs 432,500.00 Rs 1,767,500.00 Rs 330,000.00 Rs 330,000.00 2000 Rs 165.00
2 Rs 1,767,500.00 Rs 370,714.29 Rs 1,396,785.71 Rs 265,125.00 Rs 595,125.00 4000 Rs 148.78
3 Rs 1,396,785.71 Rs 308,928.57 Rs 1,087,857.14 Rs 209,517.86 Rs 804,642.86 6000 Rs 134.11
4 Rs 1,087,857.14 Rs 247,142.86 Rs 840,714.29 Rs 163,178.57 Rs 967,821.43 8000 Rs 120.98
5 Rs 840,714.29 Rs 185,357.14 Rs 655,357.14 Rs 126,107.14 Rs 1,093,928.57 10000 Rs 109.39
6 Rs 655,357.14 Rs 123,571.43 Rs 531,785.71 Rs 98,303.57 Rs 1,192,232.14 12000 Rs 99.35
7 Rs 531,785.71 Rs 61,785.71 Rs 470,000.00 Rs 79,767.86 Rs 1,272,000.00 14000 Rs 90.86
TOWER CRANE: INVESTMENT COST

Table 5-6 TOWER CRANE: Investment Cost

YEAR INVESTMENT START DEPRECIATION INVESTMENT END INVESTMENT CUMULATIVE CUMULATIVE CUMULATIVE
OF YEAR COST INVESTMENT USE (h) COST /Hour
1 Rs 8,000,000.00 Rs 1,600,000.00 Rs 6,400,000.00 Rs 800,000.00 Rs 800,000.00 1000 Rs 800.00
2 Rs 6,400,000.00 Rs 1,400,000.00 Rs 5,000,000.00 Rs 640,000.00 Rs 1,440,000.00 2000 Rs 720.00
3 Rs 5,000,000.00 Rs 1,200,000.00 Rs 3,800,000.00 Rs 500,000.00 Rs 1,940,000.00 3000 Rs 646.67
4 Rs 3,800,000.00 Rs 1,000,000.00 Rs 2,800,000.00 Rs 380,000.00 Rs 2,320,000.00 4000 Rs 580.00
5 Rs 2,800,000.00 Rs 800,000.00 Rs 2,000,000.00 Rs 280,000.00 Rs 2,600,000.00 5000 Rs 520.00
6 Rs 2,000,000.00 Rs 600,000.00 Rs 1,400,000.00 Rs 200,000.00 Rs 2,800,000.00 6000 Rs 466.67
7 Rs 1,400,000.00 Rs 400,000.00 Rs 1,000,000.00 Rs 140,000.00 Rs 2,940,000.00 7000 Rs 420.00
8 Rs 1,000,000.00 Rs 200,000.00 Rs 800,000.00 Rs 100,000.00 Rs 3,040,000.00 8000 Rs 380.00

EQUIPMENT
Investment cost for the tower crane is assumed to increase by 15% of the initial cost every year.
Cumulative investment is divided by the cumulative use of the equipment to get cumulative
BATCHING PLANT: INVESTMENT COST

Investment cost for the batching plant is assumed to increase by 15% of the initial cost every
year. Cumulative investment is divided by the cumulative use of the equipment to get cumulative
Table 5-7 BATCHING PLANT: Investment Cost
BATCHING PLANT
YEAR INVESTMENT START DEPRECIATION INVESTMENT END INVESTMENT CUMULATIVE CUMULATIVE CUMULATIVE
OF YEAR COST INVESTMENT USE (h) COST /Hour
1 Rs 2,000,000.00 Rs 189,473.68 Rs 1,810,526.32 Rs 300,000.00 Rs 300,000.00 1000 Rs 300.00
2 Rs 1,810,526.32 Rs 178,947.37 Rs 1,631,578.95 Rs 271,578.95 Rs 571,578.95 2000 Rs 285.79
3 Rs 1,631,578.95 Rs 168,421.05 Rs 1,463,157.89 Rs 244,736.84 Rs 816,315.79 3000 Rs 272.11
4 Rs 1,463,157.89 Rs 157,894.74 Rs 1,305,263.16 Rs 219,473.68 Rs 1,035,789.47 4000 Rs 258.95
5 Rs 1,305,263.16 Rs 147,368.42 Rs 1,157,894.74 Rs 195,789.47 Rs 1,231,578.95 5000 Rs 246.32
6 Rs 1,157,894.74 Rs 136,842.11 Rs 1,021,052.63 Rs 173,684.21 Rs 1,405,263.16 6000 Rs 234.21
7 Rs 1,021,052.63 Rs 126,315.79 Rs 894,736.84 Rs 153,157.89 Rs 1,558,421.05 7000 Rs 222.63
8 Rs 894,736.84 Rs 115,789.47 Rs 778,947.37 Rs 134,210.53 Rs 1,692,631.58 8000 Rs 211.58
9 Rs 778,947.37 Rs 105,263.16 Rs 673,684.21 Rs 116,842.11 Rs 1,809,473.68 9000 Rs 201.05
10 Rs 673,684.21 Rs 94,736.84 Rs 578,947.37 Rs 67,368.42 Rs 1,876,842.11 10000 Rs 187.68
11 Rs 578,947.37 Rs 84,210.53 Rs 494,736.84 Rs 57,894.74 Rs 1,934,736.84 11000 Rs 175.89
12 Rs 494,736.84 Rs 73,684.21 Rs 421,052.63 Rs 49,473.68 Rs 1,984,210.53 12000 Rs 165.35
13 Rs 421,052.63 Rs 63,157.89 Rs 357,894.74 Rs 42,105.26 Rs 2,026,315.79 13000 Rs 155.87
14 Rs 357,894.74 Rs 52,631.58 Rs 305,263.16 Rs 35,789.47 Rs 2,062,105.26 14000 Rs 147.29
15 Rs 305,263.16 Rs 42,105.26 Rs 263,157.89 Rs 30,526.32 Rs 2,092,631.58 15000 Rs 139.51
16 Rs 263,157.89 Rs 31,578.95 Rs 231,578.95 Rs 26,315.79 Rs 2,118,947.37 16000 Rs 132.43
17 Rs 231,578.95 Rs 21,052.63 Rs 210,526.32 Rs 23,157.89 Rs 2,142,105.26 17000 Rs 126.01
18 Rs 210,526.32 Rs 10,526.32 Rs 200,000.00 Rs 21,052.63 Rs 2,163,157.89 18000 Rs 120.18
DUMPER: INVESTMENT COST

Investment cost for the dumper/ tipper is assumed to increase by 20% of the initial cost every
year. Cumulative investment is divided by the cumulative use of the equipment to get cumulative
Table 5-8 DUMPER: Investment Cost
DUMPER
END OF LOSS ON CUMULATIVE USE CUMULATIVE COST
REPLACEMENT COST BOOK VALUE
YEAR REPLACEMENT (h) /Hour
Rs
0 Rs 1,200,000.00 Rs 1,200,000.00 0
-
1 Rs 1,260,000.00 Rs 1,010,000.00 Rs 250,000.00 2000 Rs 125.00
2 Rs 1,320,000.00 Rs 858,000.00 Rs 462,000.00 4000 Rs 115.50

3 Rs 1,380,000.00 Rs 736,400.00 Rs 643,600.00 6000 Rs 107.27
4 Rs 1,440,000.00 Rs 639,120.00 Rs 800,880.00 8000 Rs 100.11
5 Rs 1,500,000.00 Rs 561,296.00 Rs 938,704.00 10000 Rs 93.87

EQUIPMENT
6 Rs 1,560,000.00 Rs 499,036.80 Rs 1,060,963.20 12000 Rs 88.41

7 Rs 1,620,000.00 Rs 449,229.44 Rs 1,170,770.56 14000 Rs 83.63
8 Rs 1,680,000.00 Rs 409,383.55 Rs 1,270,616.45 16000 Rs 79.41
9 Rs 1,740,000.00 Rs 377,506.84 Rs 1,362,493.16 18000 Rs 75.69
10 Rs 1,800,000.00 Rs 352,005.47 Rs 1,447,994.53 20000 Rs 72.40
IV MAINTENANCE AND REPAIR COST

Maintenance and repair costs are the crux of the equipment replacement decision and results
from the costs of the labour and parts used to maintain and repair the given piece of equipment.
This is an incredibly dynamic system and can be affected by the following factors:
 Type of equipment
 Age of equipment
 Operating Conditions
 Daily care by the operator
 Maintenance department
 Frequency and level of maintenance
EXCAVATOR: MAINTENANCE AND REPAIR COST

Maintenance and repair cost of the excavator is dependent on the type of soil in which it is being
used. In soil having boulders in the soil their productivity will decrease and on the other hand if
the excavator is used in normal soil it provides the same productivity as mentioned by the
manufacturer. Productivity of the equipment id dependent on the age factor also.
Table 5-9 EXCAVATOR: Maintenance and Repair Cost
ANNUAL MAINTENANCE AND CUMULATIVE COST

CUMULATIVE COST PER
YEAR REPAIR COST CUMULATIVE USE (h)
HOUR
1 Rs 70,714.29 Rs 70,714.29 2000 Rs 35.36
2 Rs 73,542.86 Rs 144,257.14 4000 Rs 36.06
3 Rs 76,371.43 Rs 220,628.57 6000 Rs 36.77
4 Rs 79,200.00 Rs 299,828.57 8000 Rs 37.48
5 Rs 82,028.57 Rs 381,857.14 10000 Rs 38.19
6 Rs 84,857.14 Rs 466,714.29 12000 Rs 38.89
7 Rs 87,685.71 Rs 554,400.00 14000 Rs 39.60
TOWER CRANE: MAINTENANCE AND REPAIR COST

Maintenance and repair cost of the tower crane is dependent on the working hours of the crane.
There are different types of the crane and their maintenance is majorly affected by the type work

EQUIPMENT
crane perform also, on the policies of the company. Here example of the tower crane is
explained.
Table 5-10 TOWER CRANE: Maintenance and Repair Cost

REPAIR COST CUMULATIVE USE CUMULATIVE COST PER
YEAR
(h) HOUR
1 Rs 200,000.00 Rs 200,000.00 1000 Rs 200.00

2 Rs 400,000.00 Rs 600,000.00 2000 Rs 300.00
3 Rs 600,000.00 Rs 1,200,000.00 3000 Rs 400.00
4 Rs 800,000.00 Rs 2,000,000.00 4000 Rs 500.00
5 Rs 1,000,000.00 Rs 3,000,000.00 5000 Rs 600.00
6 Rs 1,200,000.00 Rs 4,200,000.00 6000 Rs 700.00
7 Rs 1,400,000.00 Rs 5,600,000.00 7000 Rs 800.00
8 Rs 1,600,000.00 Rs 7,200,000.00 8000 Rs 900.00
BATCHING PLANT: MAINTENANCE AND REPAIR COST

Maintenance and repair cost of the batching plant is dependent on the working hours of the plant.
Preventive maintenance of the batching plant is often done on the basis of the selected numbers
of the working hours.
Table 5-11 BATCHING PLANT: Maintenance and Repair Cost
BATCHING PLANT
CUMULATIVE COST PER
YEAR REPAIR COST CUMULATIVE USE (h)
HOUR
1 Rs 10,526.32 Rs 10,526.32 1000 Rs 10.53
2 Rs 21,052.63 Rs 31,578.95 2000 Rs 15.79
3 Rs 31,578.95 Rs 63,157.89 3000 Rs 21.05
4 Rs 42,105.26 Rs 105,263.16 4000 Rs 26.32
5 Rs 52,631.58 Rs 157,894.74 5000 Rs 31.58
6 Rs 63,157.89 Rs 221,052.63 6000 Rs 36.84
7 Rs 73,684.21 Rs 294,736.84 7000 Rs 42.11
8 Rs 84,210.53 Rs 378,947.37 8000 Rs 47.37
9 Rs 94,736.84 Rs 473,684.21 9000 Rs 52.63
10 Rs 105,263.16 Rs 578,947.37 10000 Rs 57.89
11 Rs 115,789.47 Rs 694,736.84 11000 Rs 63.16
12 Rs 126,315.79 Rs 821,052.63 12000 Rs 68.42
13 Rs 136,842.11 Rs 957,894.74 13000 Rs 73.68
14 Rs 147,368.42 Rs 1,105,263.16 14000 Rs 78.95
15 Rs 157,894.74 Rs 1,263,157.89 15000 Rs 84.21

EQUIPMENT
16 Rs 168,421.05 Rs 1,431,578.95 16000 Rs 89.47

17 Rs 178,947.37 Rs 1,610,526.32 17000 Rs 94.74
18 Rs 189,473.68 Rs 1,800,000.00 18000 Rs 100.00
DUMPER: MAINTENANCE AND REPAIR COST

Maintenance and repair cost of the dumper’s/ tipper are dependent upon the material to be
carried by them. Generally maintenance cost of the tipper would increase if it carries boulders in
comparison to the sands. A major over haul repair is required when half-life of the dumper/
tippers are completed.
Table 5-12 DUMPER: Maintenance and repair cost
DUMPER
REPAIR COST CUMULATIVE COST PER
YEAR CUMULATIVE USE (h)
HOUR
1 Rs 15,090.91 Rs 15,090.91 2000 Rs 7.55

2 Rs 30,181.82 Rs 45,272.73 4000 Rs 11.32
3 Rs 45,272.73 Rs 90,545.45 6000 Rs 15.09
4 Rs 60,363.64 Rs 150,909.09 8000 Rs 18.86
5 Rs 75,454.55 Rs 226,363.64 10000 Rs 22.64
6 Rs 90,545.45 Rs 316,909.09 12000 Rs 26.41
7 Rs 105,636.36 Rs 422,545.45 14000 Rs 30.18
8 Rs 120,727.27 Rs 543,272.73 16000 Rs 33.95
9 Rs 135,818.18 Rs 679,090.91 18000 Rs 37.73
10 Rs 150,909.09 Rs 830,000.00 20000 Rs 41.50
V DOWNTIME
Downtime is the time when equipment does not work due to repairs or mechanical adjustments.
Downtime tends to increase as equipment usage increases. Availability, the portion of the time
equipment is actually available for the production or is in actual production, is the opposite of
downtime. For example, if the equipment’s downtime is 10% then its availability is 90%. The
downtime cost includes the ownership cost, operating cost, operator cost, and productivity loss
caused by the loss of equipment availability. In availability affects the productivity and increases
the cost of the operation.
EXCAVTOR: DOWNTIME COST

Downtime cost of the excavator increases with the increase in the age of the excavator. Here
assuming the downtime factors. Table 5.13 shows a method to calculate the hourly downtime
cost. Productivity cost loss is described as a weigh factor where maximum availability is held at
equal to 1.0 and proportionate loss in availability carries weightage less than 1.0. Productivity is
the measurement of the equipment ability to produce at the original rate.

EQUIPMENT
Table 5-13 EXCAVATOR: Downtime Cost
OPERATING DOWNTIME COST DOWNTIME COST CUMULATIVE CUMULATIVE CUMULATIVE PRODUCTIVITY PRODUCTIVITY ADJUSTED
YEAR DOWNTIME
COST PER HOUR PER YEAR DOWNTIME COST USE (h) COST PER HOUR FACTOR CUMULATIVE COST / HOUR
1 3% Rs 703.82 Rs 21.11 Rs 42,229.20 Rs 42,229.20 2000 Rs 21.11 1 Rs 21.11
2 6% Rs 703.82 Rs 42.23 Rs 84,458.40 Rs 126,687.60 4000 Rs 31.67 0.99 Rs 31.36
3 9% Rs 703.82 Rs 63.34 Rs 126,687.60 Rs 253,375.20 6000 Rs 42.23 0.98 Rs 41.38
4 11% Rs 703.82 Rs 77.42 Rs 154,840.40 Rs 408,215.60 8000 Rs 51.03 0.96 Rs 48.99
5 13% Rs 703.82 Rs 91.50 Rs 182,993.20 Rs 591,208.80 10000 Rs 59.12 0.95 Rs 56.16
6 15% Rs 703.82 Rs 105.57 Rs 211,146.00 Rs 802,354.80 12000 Rs 66.86 0.94 Rs 62.85
7 17% Rs 703.82 Rs 119.65 Rs 239,298.80 Rs 1,041,653.60 14000 Rs 74.40 0.93 Rs 69.20
TOWER CRANE: DOWNTIME COST

Downtime cost of the tower crane increases with the increase in the age of the tower crane. Here
assuming the downtime factors. Table 5.14 shows a method to calculate the hourly downtime
cost. Productivity cost loss is described as a weigh factor where maximum availability is held at
equal to 1.0 and proportionate loss in availability carries weightage less than 1.0. Productivity is
the measurement of the equipment ability to produce at the original rate.
Table 5-14 TOWER CRANE: Downtime Cost

YEAR DOWNTIME
1 3% Rs 1,079.31 Rs 32.38 Rs 32,379.30 Rs 32,379.30 1000 Rs 32.38 1 Rs 32.38
2 6% Rs 1,079.31 Rs 64.76 Rs 64,758.60 Rs 97,137.90 2000 Rs 48.57 0.99 Rs 48.08
3 9% Rs 1,079.31 Rs 97.14 Rs 97,137.90 Rs 194,275.80 3000 Rs 64.76 0.98 Rs 63.46
4 11% Rs 1,079.31 Rs 118.72 Rs 118,724.10 Rs 312,999.90 4000 Rs 78.25 0.96 Rs 75.12
5 13% Rs 1,079.31 Rs 140.31 Rs 140,310.30 Rs 453,310.20 5000 Rs 90.66 0.95 Rs 86.13
6 15% Rs 1,079.31 Rs 161.90 Rs 161,896.50 Rs 615,206.70 6000 Rs 102.53 0.94 Rs 96.38
7 17% Rs 1,079.31 Rs 183.48 Rs 183,482.70 Rs 798,689.40 7000 Rs 114.10 0.93 Rs 106.11
8 20% Rs 1,079.31 Rs 215.86 Rs 215,862.00 Rs 1,014,551.40 8000 Rs 126.82 0.9 Rs 114.14
BATCHING PLANT: DOWNTIME COST

Downtime cost of the batching plant increases with the increase in the age of the batching plant.
Here assuming the downtime factors. Table 5.15 shows a method to calculate the hourly
downtime cost. Productivity cost loss is described as a weigh factor where maximum availability
is held at equal to 1.0 and proportionate loss in availability carries weightage less than 1.0.
Productivity is the measurement of the equipment ability to produce at the original rate.

EQUIPMENT
Table 5-15 BATCHING PLANT: Downtime Cost
BATCHING PLANT
YEAR DOWNTIME
1 3% Rs 388.52 Rs 11.66 Rs 11,655.60 Rs 11,655.60 1000 Rs 11.66 1 Rs 11.66
2 5% Rs 388.52 Rs 19.43 Rs 19,426.00 Rs 31,081.60 2000 Rs 15.54 0.99 Rs 15.39
3 6% Rs 388.52 Rs 23.31 Rs 23,311.20 Rs 54,392.80 3000 Rs 18.13 0.98 Rs 17.77
4 8% Rs 388.52 Rs 31.08 Rs 31,081.60 Rs 85,474.40 4000 Rs 21.37 0.96 Rs 20.51
5 9% Rs 388.52 Rs 34.97 Rs 34,966.80 Rs 120,441.20 5000 Rs 24.09 0.95 Rs 22.88
6 10% Rs 388.52 Rs 38.85 Rs 38,852.00 Rs 159,293.20 6000 Rs 26.55 0.94 Rs 24.96
7 11% Rs 388.52 Rs 42.74 Rs 42,737.20 Rs 202,030.40 7000 Rs 28.86 0.93 Rs 26.84
8 12% Rs 388.52 Rs 46.62 Rs 46,622.40 Rs 248,652.80 8000 Rs 31.08 0.92 Rs 28.60
9 14% Rs 388.52 Rs 54.39 Rs 54,392.80 Rs 303,045.60 9000 Rs 33.67 0.9 Rs 30.30
10 16% Rs 388.52 Rs 62.16 Rs 62,163.20 Rs 365,208.80 10000 Rs 36.52 0.89 Rs 32.50
11 18% Rs 388.52 Rs 69.93 Rs 69,933.60 Rs 435,142.40 11000 Rs 39.56 0.88 Rs 34.81
12 20% Rs 388.52 Rs 77.70 Rs 77,704.00 Rs 512,846.40 12000 Rs 42.74 0.87 Rs 37.18
13 23% Rs 388.52 Rs 89.36 Rs 89,359.60 Rs 602,206.00 13000 Rs 46.32 0.86 Rs 39.84
14 24% Rs 388.52 Rs 93.24 Rs 93,244.80 Rs 695,450.80 14000 Rs 49.68 0.85 Rs 42.22
15 25% Rs 388.52 Rs 97.13 Rs 97,130.00 Rs 792,580.80 15000 Rs 52.84 0.84 Rs 44.38
16 26% Rs 388.52 Rs 101.02 Rs 101,015.20 Rs 893,596.00 16000 Rs 55.85 0.81 Rs 45.24
17 32% Rs 388.52 Rs 124.33 Rs 124,326.40 Rs 1,017,922.40 17000 Rs 59.88 0.79 Rs 47.30
18 34% Rs 388.52 Rs 132.10 Rs 132,096.80 Rs 1,150,019.20 18000 Rs 63.89 0.77 Rs 49.20
DUMPER: DOWNTIME COST

Downtime cost of the batching plant increases with the increase in the age of the batching plant.
Here assuming the downtime factors. Table 5.16 shows a method to calculate the hourly
downtime cost. Productivity cost loss is described as a weigh factor where maximum availability
is held at equal to 1.0 and proportionate loss in availability carries weightage less than 1.0.
Productivity is the measurement of the equipment ability to produce at the original rate.
Table 5-16 DUMPER: Downtime Cost
DUMPER
YEAR DOWNTIME
1 2% Rs 658.73 Rs 13.17 Rs 26,349.20 Rs 26,349.20 2000 Rs 13.17 1 Rs 13.17
2 3% Rs 658.73 Rs 19.76 Rs 39,523.80 Rs 65,873.00 4000 Rs 16.47 0.98 Rs 16.14
3 4% Rs 658.73 Rs 26.35 Rs 52,698.40 Rs 118,571.40 6000 Rs 19.76 0.96 Rs 18.97
4 5% Rs 658.73 Rs 32.94 Rs 65,873.00 Rs 184,444.40 8000 Rs 23.06 0.93 Rs 21.44
5 6% Rs 658.73 Rs 39.52 Rs 79,047.60 Rs 263,492.00 10000 Rs 26.35 0.89 Rs 23.45
6 7% Rs 658.73 Rs 46.11 Rs 92,222.20 Rs 355,714.20 12000 Rs 29.64 0.87 Rs 25.79
7 8% Rs 658.73 Rs 52.70 Rs 105,396.80 Rs 461,111.00 14000 Rs 32.94 0.85 Rs 28.00
8 9% Rs 658.73 Rs 59.29 Rs 118,571.40 Rs 579,682.40 16000 Rs 36.23 0.81 Rs 29.35
9 10% Rs 658.73 Rs 65.87 Rs 131,746.00 Rs 711,428.40 18000 Rs 39.52 0.79 Rs 31.22
10 11% Rs 658.73 Rs 72.46 Rs 144,920.60 Rs 856,349.00 20000 Rs 42.82 0.77 Rs 32.97
VI OBSOLESCENSE
Obsolescence is the reduction in value and marketability due to the competition between newer
and more productive models. Obsolescence can be subdivided into two types: technological and
market preference. Technological obsolescence can be measured in terms of productivity. Over

EQUIPMENT
the short term, technological obsolescence has typically occurred at a fairly constant. Market rate
preference obsolescence occurs as a function of the customers taste.
EXCAVATOR: OBSOLESCENSE
Obsolescence cost for excavator cost is determined by multiplying the obsolescence factor to the
hourly operating cost of the excavator. Hourly obsolescence cost is equal to the cumulative
obsolescence cost divided by cumulative use of the excavator.
Table 5-17 EXCAVATOR: Obsolescence
EXCAVATOR 3CX
OBSOLESCENSE OBSOLESCENCE COST OBSOLESCENCE COST CUMULATIVE CUMULATIVE COST
YEAR OPERATING COST CUMULATIVE USE (h)
FACTOR PER HOUR PER YEAR DOWNTIME COST PER HOUR
1 0 Rs 703.82 Rs - Rs - Rs - 2000 Rs -
2 0.06 Rs 703.82 Rs 42.23 Rs 84,458.40 Rs 84,458.40 4000 Rs 21.11
3 0.11 Rs 703.82 Rs 77.42 Rs 154,840.40 Rs 239,298.80 6000 Rs 39.88
4 0.15 Rs 703.82 Rs 105.57 Rs 211,146.00 Rs 450,444.80 8000 Rs 56.31
5 0.2 Rs 703.82 Rs 140.76 Rs 281,528.00 Rs 731,972.80 10000 Rs 73.20
6 0.26 Rs 703.82 Rs 182.99 Rs 365,986.40 Rs 1,097,959.20 12000 Rs 91.50
7 0.32 Rs 703.82 Rs 225.22 Rs 450,444.80 Rs 1,548,404.00 14000 Rs 110.60
TOWER CRANE: OBSOLESCENSE

Obsolescence cost for tower crane cost is determined by multiplying the obsolescence factor to
the hourly operating cost of the tower crane. Hourly obsolescence cost is equal to the cumulative
obsolescence cost divided by cumulative use of the tower crane.
Table 5-18 TOWER CRANE: Obsolescence Cost

1 0 Rs 1,079.31 Rs - Rs - Rs - 1000 Rs -
2 0.06 Rs 1,079.31 Rs 64.76 Rs 64,758.60 Rs 64,758.60 2000 Rs 32.38
3 0.11 Rs 1,079.31 Rs 118.72 Rs 118,724.10 Rs 183,482.70 3000 Rs 61.16
4 0.18 Rs 1,079.31 Rs 194.28 Rs 194,275.80 Rs 377,758.50 4000 Rs 94.44
5 0.22 Rs 1,079.31 Rs 237.45 Rs 237,448.20 Rs 615,206.70 5000 Rs 123.04
6 0.33 Rs 1,079.31 Rs 356.17 Rs 356,172.30 Rs 971,379.00 6000 Rs 161.90
7 0.39 Rs 1,079.31 Rs 420.93 Rs 420,930.90 Rs 1,392,309.90 7000 Rs 198.90
8 0.44 Rs 1,079.31 Rs 474.90 Rs 474,896.40 Rs 1,867,206.30 8000 Rs 233.40
BATCHING PLANT: OBSOLESCENCE

Obsolescence cost for batching plant cost is determined by multiplying the obsolescence factor
to the hourly operating cost of the batching plant. Hourly obsolescence cost is equal to the
cumulative obsolescence cost divided by cumulative use of the batching plant.

EQUIPMENT
Table 5-19 BATCHING PLANT: OBSOLESCENSE
BATCHING PLANT
1 0 Rs 388.52 Rs - Rs - Rs - 1000 Rs -
2 0.06 Rs 388.52 Rs 23.31 Rs 23,311.20 Rs 23,311.20 2000 Rs 11.66
3 0.09 Rs 388.52 Rs 34.97 Rs 34,966.80 Rs 58,278.00 3000 Rs 19.43
4 0.11 Rs 388.52 Rs 42.74 Rs 42,737.20 Rs 101,015.20 4000 Rs 25.25
5 0.15 Rs 388.52 Rs 58.28 Rs 58,278.00 Rs 159,293.20 5000 Rs 31.86
6 0.2 Rs 388.52 Rs 77.70 Rs 77,704.00 Rs 236,997.20 6000 Rs 39.50
7 0.26 Rs 388.52 Rs 101.02 Rs 101,015.20 Rs 338,012.40 7000 Rs 48.29
8 0.32 Rs 388.52 Rs 124.33 Rs 124,326.40 Rs 462,338.80 8000 Rs 57.79
9 0.34 Rs 388.52 Rs 132.10 Rs 132,096.80 Rs 594,435.60 9000 Rs 66.05
10 0.35 Rs 388.52 Rs 135.98 Rs 135,982.00 Rs 730,417.60 10000 Rs 73.04
11 0.36 Rs 388.52 Rs 139.87 Rs 139,867.20 Rs 870,284.80 11000 Rs 79.12
12 0.38 Rs 388.52 Rs 147.64 Rs 147,637.60 Rs 1,017,922.40 12000 Rs 84.83
13 0.41 Rs 388.52 Rs 159.29 Rs 159,293.20 Rs 1,177,215.60 13000 Rs 90.56
14 0.42 Rs 388.52 Rs 163.18 Rs 163,178.40 Rs 1,340,394.00 14000 Rs 95.74
15 0.45 Rs 388.52 Rs 174.83 Rs 174,834.00 Rs 1,515,228.00 15000 Rs 101.02
16 0.46 Rs 388.52 Rs 178.72 Rs 178,719.20 Rs 1,693,947.20 16000 Rs 105.87
17 0.48 Rs 388.52 Rs 186.49 Rs 186,489.60 Rs 1,880,436.80 17000 Rs 110.61
18 0.52 Rs 388.52 Rs 202.03 Rs 202,030.40 Rs 2,082,467.20 18000 Rs 115.69
DUMPER: OBSOLESCENSE COST

Obsolescence cost for dumper/tipper cost is determined by multiplying the obsolescence factor to
the hourly operating cost of the dumper/tipper. Hourly obsolescence cost is equal to the
cumulative obsolescence cost divided by cumulative use of the dumper/tipper.
Table 5-20 DUMPER: Obsolescence Cost
DUMPER
1 0 Rs 658.73 Rs - Rs - Rs - 2000 Rs -
2 0.04 Rs 658.73 Rs 26.35 Rs 52,698.40 Rs 52,698.40 4000 Rs 13.17
3 0.05 Rs 658.73 Rs 32.94 Rs 65,873.00 Rs 118,571.40 6000 Rs 19.76
4 0.08 Rs 658.73 Rs 52.70 Rs 105,396.80 Rs 223,968.20 8000 Rs 28.00
5 0.1 Rs 658.73 Rs 65.87 Rs 131,746.00 Rs 355,714.20 10000 Rs 35.57
6 0.11 Rs 658.73 Rs 72.46 Rs 144,920.60 Rs 500,634.80 12000 Rs 41.72
7 0.13 Rs 658.73 Rs 85.63 Rs 171,269.80 Rs 671,904.60 14000 Rs 47.99
8 0.14 Rs 658.73 Rs 92.22 Rs 184,444.40 Rs 856,349.00 16000 Rs 53.52
9 0.15 Rs 658.73 Rs 98.81 Rs 197,619.00 Rs 1,053,968.00 18000 Rs 58.55
10 0.16 Rs 658.73 Rs 105.40 Rs 210,793.60 Rs 1,264,761.60 20000 Rs 63.24
5.2.3 SUMMARY OF COSTS

The cost for each component discussed in the previous sections can be accumulated and piece of
equipment’s economic life can be measured by identifying the year in which the minimum cost
per hour occurs.

EQUIPMENT
EXCAVATOR: SUMMARY OF COSTS

Accumulating the costs from the previous sections and summarizing them and finding the lowest
cost of the excavator Rs 486.4/hour and the economic life of the equipment is five year.
Therefore, acquisition of the new excavator should be considered in fifth year.
Table 5-21 EXCAVATOR: ECONOMIC LIFE
EXCAVATOR 3CX
YEAR DEPRECIATION & REPLACEMENT INVESTMENT MAINTENANCE & REPAIRS DOWNTIME OBSOLESCENSE TOTAL
1 Rs 271.25 Rs 165.00 Rs 35.36 Rs 21.11 Rs - Rs 492.72
2 Rs 255.80 Rs 148.78 Rs 36.06 Rs 31.36 Rs 21.11 Rs 493.12
3 Rs 240.36 Rs 134.11 Rs 36.77 Rs 41.38 Rs 39.88 Rs 492.50
4 Rs 224.91 Rs 120.98 Rs 37.48 Rs 48.99 Rs 56.31 Rs 488.66
5 Rs 209.46 Rs 109.39 Rs 38.19 Rs 56.16 Rs 73.20 Rs 486.40
6 Rs 194.02 Rs 99.35 Rs 38.89 Rs 62.85 Rs 91.50 Rs 486.61
7 Rs 178.57 Rs 90.86 Rs 39.60 Rs 69.20 Rs 110.60 Rs 488.82
5 ECONOMIC LIFE OF EXCAVATOR Minimum Cost Rs 486.40
Rs600.00
Rs500.00
DEPRECIATION &
REPLACEMENT
Rs400.00 INVESTMENT
TOTAL COST
Rs300.00 MAINTENANCE & REPAIRS
DOWNTIME
Rs200.00
OBSOLESCENSE
Rs100.00
TOTAL
Rs-
0 2 4 6 8
LIFE OF EQUIPMENT (YEARS)
Figure 5-2 Economic Life of the Excavator 3X Site Master

EQUIPMENT
TOWER CRANE: SUMMARY OF COSTS

cost of the tower crane Rs 2,924.95/hour and the economic life of the equipment is six year.
Therefore, acquisition of the new tower crane should be considered in sixth year.
Table 5-22 TOWER CRANE: ECONOMIC LIFE
1 Rs 2,000.00 Rs 800.00 Rs 200.00 Rs 32.38 Rs - Rs 3,032.38
2 Rs 1,900.00 Rs 720.00 Rs 300.00 Rs 48.08 Rs 32.38 Rs 3,000.46
3 Rs 1,800.00 Rs 646.67 Rs 400.00 Rs 63.46 Rs 61.16 Rs 2,971.29
4 Rs 1,700.00 Rs 580.00 Rs 500.00 Rs 75.12 Rs 94.44 Rs 2,949.56
5 Rs 1,600.00 Rs 520.00 Rs 600.00 Rs 86.13 Rs 123.04 Rs 2,929.17
6 Rs 1,500.00 Rs 466.67 Rs 700.00 Rs 96.38 Rs 161.90 Rs 2,924.95
7 Rs 1,400.00 Rs 420.00 Rs 800.00 Rs 106.11 Rs 198.90 Rs 2,925.01
8 Rs 1,300.00 Rs 380.00 Rs 900.00 Rs 114.14 Rs 233.40 Rs 2,927.54
6 ECONOMIC LIFE OF DUMPER Minimum Cost Rs 2,924.95
Rs3,500.00
Rs3,000.00
Rs2,500.00
DEPRECIATION & REPLACEMENT
TOTAL COST
Rs2,000.00 INVESTMENT
MAINTENANCE & REPAIRS
Rs1,500.00
DOWNTIME
Rs1,000.00 OBSOLESCENSE
Rs500.00 TOTAL
Rs-
0 2 4 6 8 10
LIFE OF EQUIPMENT (YEAR)
Figure 5-3 Economic Life of the Tower Crane

EQUIPMENT
BATHCING PLANT: SUMMARY OF COSTS

cost of the batching plant Rs 583.54/hour and the economic life of the equipment is six year.
Therefore, acquisition of the new batching plant should be considered in sixth year.
Table 5-23 BATCHING PLANT: ECONOMIC LIFE
BATCHING PLANT
1 Rs 289.47 Rs 300.00 Rs 10.53 Rs 11.66 Rs - Rs 611.66
2 Rs 284.21 Rs 285.79 Rs 15.79 Rs 15.39 Rs 11.66 Rs 612.83
3 Rs 278.95 Rs 272.11 Rs 21.05 Rs 17.77 Rs 19.43 Rs 609.30
4 Rs 273.68 Rs 258.95 Rs 26.32 Rs 20.51 Rs 25.25 Rs 604.72
5 Rs 268.42 Rs 246.32 Rs 31.58 Rs 22.88 Rs 31.86 Rs 601.06
6 Rs 263.16 Rs 234.21 Rs 36.84 Rs 24.96 Rs 39.50 Rs 598.67
7 Rs 257.89 Rs 222.63 Rs 42.11 Rs 26.84 Rs 48.29 Rs 597.76
8 Rs 252.63 Rs 211.58 Rs 47.37 Rs 28.60 Rs 57.79 Rs 597.97
9 Rs 247.37 Rs 201.05 Rs 52.63 Rs 30.30 Rs 66.05 Rs 597.41
10 Rs 242.11 Rs 187.68 Rs 57.89 Rs 32.50 Rs 73.04 Rs 593.23
11 Rs 236.84 Rs 175.89 Rs 63.16 Rs 34.81 Rs 79.12 Rs 589.81
12 Rs 231.58 Rs 165.35 Rs 68.42 Rs 37.18 Rs 84.83 Rs 587.36
13 Rs 226.32 Rs 155.87 Rs 73.68 Rs 39.84 Rs 90.56 Rs 586.26
14 Rs 221.05 Rs 147.29 Rs 78.95 Rs 42.22 Rs 95.74 Rs 585.26
15 Rs 215.79 Rs 139.51 Rs 84.21 Rs 44.38 Rs 101.02 Rs 584.91
16 Rs 210.53 Rs 132.43 Rs 89.47 Rs 45.24 Rs 105.87 Rs 583.54
17 Rs 205.26 Rs 126.01 Rs 94.74 Rs 47.30 Rs 110.61 Rs 583.92
18 Rs 200.00 Rs 120.18 Rs 100.00 Rs 49.20 Rs 115.69 Rs 585.06
16 ECONOMIC LIFE OF BATCHING PLANT Minimum Cost Rs 583.54
Rs700.00
Rs600.00
Rs500.00 DEPRECIATION &

REPLACEMENT
INVESTMENT
TOTAL COST
Rs400.00
Rs300.00 DOWNTIME
OBSOLESCENSE
Rs200.00
TOTAL
Rs100.00
Rs-
0 5 10 15 20
LIFE OF EQUIPMENT (YEAR )
Figure 5-4 Economic Life of the Batching Plant

EQUIPMENT
DUMPER: SUMMARY OF COST

cost of the dumper Rs 258.4/hour and the economic life of the equipment is six year. Therefore,
acquisition of the new dumper should be considered in sixth year.
Table 5-24 DUMPER: ECONOMIC LIFE
DUMPER
1 Rs 125.00 Rs 120.00 Rs 7.55 Rs 13.17 Rs - Rs 265.72
2 Rs 115.50 Rs 110.50 Rs 11.32 Rs 16.14 Rs 13.17 Rs 266.63
3 Rs 107.27 Rs 102.27 Rs 15.09 Rs 18.97 Rs 19.76 Rs 263.36
4 Rs 100.11 Rs 95.11 Rs 18.86 Rs 21.44 Rs 28.00 Rs 263.52
5 Rs 93.87 Rs 85.67 Rs 22.64 Rs 23.45 Rs 35.57 Rs 261.20
6 Rs 88.41 Rs 76.07 Rs 26.41 Rs 25.79 Rs 41.72 Rs 258.40
7 Rs 83.63 Rs 68.77 Rs 30.18 Rs 28.00 Rs 47.99 Rs 258.57
8 Rs 79.41 Rs 62.98 Rs 33.95 Rs 29.35 Rs 53.52 Rs 259.22
9 Rs 75.69 Rs 58.26 Rs 37.73 Rs 31.22 Rs 58.55 Rs 261.46
10 Rs 72.40 Rs 54.32 Rs 41.50 Rs 32.97 Rs 63.24 Rs 264.43
6 ECONOMIC LIFE OF DUMPER Minimum Cost Rs 258.40
Rs300.00
Rs250.00
Rs200.00
DEPRECIATION & REPLACEMENT
TOTAL COST
INVESTMENT
Rs150.00
DOWNTIME
Rs100.00
OBSOLESCENSE
Rs50.00 TOTAL
Rs-
0 2 4 6 8 10 12
LIFE OF EQUIPMENT (YEAR)
Figure 5-5 Economic Life of the Dumper

EQUIPMENT
5.2.4 REPLACEMENT ANALYSIS

Replacement analysis is a tool with which equipment owner can time the equipment replacement
decision. Through this analysis, the cost of owning the present equipment is compared with the
cost of owning the potential alternatives for replacing it. Following section three methods are
described to accomplish this management task.
Considering a situation in which the a contractor who does only earthwork owns excavator JCB-
3D of cost Rs 22,00,000/- . This excavator is one year old annual operation and maintenance cost
is Rs 70,000/- for first year and increases by Rs 3000/- every year. The rental charges for the
JCB 3D is Rs 750/- which is operated for 2000 hours per year and hence revenue generated
every year is Rs 15,00,000/- . The revenue generated will not remain same and will decrease at
the rate of Rs 1,50,000/- per year thereafter. The contractor came to know about new backhoe
loader JCB 3X sitemaster of cost Rs 24,00,000/- of same size with additional bucket capacity
options. The operation and maintenance cost of the new loader is Rs 70,000/- for the first year
and increases by Rs 2500/- per year. This construction firm uses double declining balance
method for calculating the depreciation.
MINIMUM COST METHOD

Minimizing the cost equipment cost is the prime motive of the owners. The economic life of the
equipment is determined by the year in which the average annual cumulative cost is minimized.
This will result in the lowest cost over a long period of time.
5.3 BUY, RENT OR LEASE CONSIDERATIONS

There are three basic methods for securing a particular machine to use on a project: (I) buy (direct
ownership), (2) rent, or (3) lease. Each method has inherent advantages and disadvantages.
Ownership guarantees control of machine availability and mechanical condition, but it requires a
continuing sequence of projects to pay for the machine. Additionally, ownership may force a
company into using obsolete equipment. The calculations applicable for determining the cost of
direct ownership have been developed.
5.3.1 BUY
Buying or financing the equipment is most sensible if the equipment is essential to construction
company core fleet and expected to provide service life for long time. If the sufficient funds are
available to the company for purchase or for down payment large enough to reduce the monthly
finance payments to an acceptable level then firm should buy the equipment. Owning equipment
can provide long term tax benefits- principally from deduction of interest expense and
depreciation of equipment. By deducting the equipment’s purchases price on tax return each
year, some recovery of the equipment price can be made. This situation is applicable if the
construction firm does not have real estate or office equipment that provide additional
opportunity depreciation deductions.

EQUIPMENT
5.3.2 RENTAL
The rental of a machine is a short-term alternative to direct equipment ownership. With a rental,
a company can pick the machine that is exactly suited for the job at hand. This is particularly
advantageous if the job is of short duration or if the company does not foresee a continuing need
for the particular type of machine in question. Rentals are very beneficial to a company in such
situations, even though the rental charges are higher than normal direct ownership expense. The
advantage lies in the fact that direct ownership costing assumes a continuing need and utilization
of the machine. If that assumption is not valid, a rental should be considered. Another important
point to consider is the fact that with a rental, the company loses the tax depreciation shield of
machine ownership but gains a tax deduction because rental payments are treated as an expense.
It must be remembered that rental companies only have a limited number of machines and,
during the peak work season, all types are not always available. Furthermore, many specialized
or custom machines cannot be rented. Firms many times use rentals as a way to test a machine
prior to a purchase decision. A rental provides the opportunity for a company to operate a
specific make or model machine under actual project conditions. The profitability of the
machine, based on the company's normal operating procedures, can then be evaluated before a
major capital expenditure is approved to purchase the machine.
The general practice of the industry is to price rental rates for equipment on either a daily (8 hr),
weekly (40 hr), or monthly (176 hr) basis. In the case of larger pieces of equipment, rentals may
be available only on a monthly basis. Cost per hour usually is less for a longer-term rental (Le.,
the monthly rate figured on a per hour basis would be less than the daily rate on an hourly basis).
Responsibility for repair cost is stated in the rental contract. Normally, on tractor-type
equipment, the renter is responsible for all repairs. If it is a pneumatic-tired machine (on rubber),
the renting company will measure tread wear and charge the renter for tire wear. In the case of
cranes and shovels, the renting company usually bears the cost of normal wear and tear. The user
must provide servicing of the machine while it is being used. The renter is almost always
responsible for fuel and lubrication expenses. Industry practice is that rentals are payable in
advance. The renting company will require that the user furnish certificates of insurance before
the machine is shipped to the job site. Equipment cost is very sensitive to changes in use hours.
Fluctuations in maintenance expenses or purchase price barely affect cost per hour. But a
decrease in use hours per year can make the difference between cost-effective machine
ownership and renting. The basic cost considerations that need to be examined when considering
a possible rental can be illustrated by a simple set of circumstances.
5.3.3 LEASE
A lease is a long-term agreement for the use of an asset. It provides an alternative to direct
ownership, During the lease term, the leasing company (lessor) always owns the equipment and
the user (lessee) pays the owner to use the equipment. The lessor must retain ownership rights
for the contract to be considered a true lease by the Internal Revenue Service, The lessor will

EQUIPMENT
receive lease payments in return for providing the machine, The lease payments do not have to
be uniform across the lease period. The payments can be structured in the agreement to best fit
the situation of the lessee or the lessor. In the lessee's case, cash flow at the beginning may be
low, so the lessee wants payments that are initially low, Because of tax considerations, the lessor
may agree to such a payment schedule. Lease contracts are binding legal documents, and most
equipment leases are non-cancellable by either party. A lease pays for the use of a machine
during the most reliable years of a machine's service life. Sometimes the advantage of a lease is
that the lessor provides the equipment management and servicing. This frees the contractor from
hiring mechanics and service personnel and enables the company to concentrate on the task of
building,
Long-term, when used in reference to lease agreements, is a period of time that is long relative to
the life of the machine in question. An agreement that is for a very short period of time, as
measured against the expected machine life, is a rental. A conventional-true-Iease will have one
of three different endof-lease options:
(1) buy the machine at fair market value,
(2) renew the lease,
(3) return the equipment to the leasing company.
As in the case of a rental, a lessee loses the tax depreciation shield of machine ownership but
gains a tax deduction because lease payments are treated as an expense. The most important
factor contributing to a decision to lease is reduced cost. Under specific conditions, the actual
cost of a leased machine can be less than the ownership cost of a purchased machine. This is
caused by the different tax treatments for owning and leasing an asset. An equipment user must
make a careful examination of the cash flows associated with each option to determine which
results in the lowest total cost.
A commonly cited advantage of leasing is that working capital is notified up in equipment. This
statement is only partly true. It is true that when a company borrows funds to purchase a
machine, the lender normally requires that the company establish an equity position in the
machine, a down payment, Additionally, the costs of delivery and initial servicing are not
included in the loan and must be paid by the new owner. Corporate funds are therefore tied up in
these up-front costs of a purchase, Leasing does not require these cash outflows and is often
considered as 100% financing. However, most leases require an advance lease payment. Some
even require security deposits and charge other up-front costs.
Still another argument is that because borrowed funds are not used, credit capacity is preserved.
Leasing is often referred to as off-balance-sheet financing. A lease is considered an operating
expense, not a liability, as is the case with a bank loan. With an operating lease (used when the
lessee does not ultimately want to purchase the equipment), leased assets are expensed.

EQUIPMENT
Therefore, such assets do not appear on the balance sheet. Standards of accounting, however,
require disclosure of lease obligations. It is hard to believe that lenders would be so naive as to
not consider all of a company's fixed obligations, including both loans and leases. But the off-
balance-sheet lease typically will not hurt bonding capacity, which is important to a company's
ability to bid work.
Before entering into a contract with a construction company, most owners require that the
company post a bond guaranteeing that it will complete the project. A third-party surety
company secures this bond. The surety closely examines the construction company's financial
position before issuing the bond. Based on the financial strength of the construction company,
the surety typically restricts the total volume of worle that the construction company can have
under contract at anyone time. This restriction is known as bonding capacity. It is the total dollar
value of work under contract that a surety company will guarantee for a construction company.
Owners should make a careful examination of the advantages of a lease situation. The cash
flows, which should be considered when evaluating the cost of a lease, include
 Inflow initially of the equivalent value of the machine.

 Outflow of the periodic lease payments.
 Tax shielding provided by the lease payments. (This is allowed only if the agreement is a
true lease. Some "lease" agreements are essentially installment sale arrangements).
 Loss of salvage value when the machine is returned to the lessor.
These costs all occur at different points in time, so present-value computations must be made
before the costs can be summed. The total present value of the lease option should be compared
to the minimum ownership costs, as determined by a time-value replacement analysis. In most
lease agreements, the lessee is responsible for maintenance. If, for the lease in question,
maintenance expense is the same as for the case of direct ownership, then the maintenance
expense factor can be dropped from the analysis. A leased machine would exhibit the same aging
and resulting reduced availability as a purchased machine.
Analyze the cost of renting, leasing, and purchasing an item of construction equipment under the
conditions described. Evaluate total net after-tax cash flow and its present value.
Cost Rs 2,400,000.00
Salavage Value Rs 240,000.00
Useful Life (year) 10
Use Rate (hr/ year) 1000

EQUIPMENT
FV of Investment P((i(1+i)^n)/((1+i)^n)-1) Rs(572,454.62)
PV of Investment A(i/((i+1)^n-1) Rs9,245.46
Uniform Equivalent/ Year' Rs(563,209.15)
Total Rs(3,942,464.08)
Operator Charges Rs15,000.00 per month
To recover equipment cost appropriate amount should be charged
Charge per hr use Rs563.21
Operator Charges/ hr Rs75.00
Total ammount Rs638.21
Charge per year Rs563,209.15
Operator Charges/ hr Rs150,000.00
Total ammount Rs713,209.15
Loan Details
Cost of Equipment Rs2,400,000.00
Loan Ammount Rs1,920,000.00 80% of cost
Downpayment Rs480,000.00
Duration (yearly) 5
Loan Rate 10.25%
Salvage Value Rs240,000.00 10% of cost

EQUIPMENT
Table 5-25 Depreciation of Equipment
DEPRECIATION EXCAVATOR
Method Sum of years digit method

DEPRECIATION
YEAR DEPRECIATION
0 Rs 2,400,000.00
1 Rs 347,272.7 Rs 347,272.7 Rs 2,052,727.3
2 Rs 312,545.5 Rs 659,818.2 Rs 1,740,181.8
3 Rs 277,818.2 Rs 937,636.4 Rs 1,462,363.6
4 Rs 243,090.9 Rs 1,180,727.3 Rs 1,219,272.7
5 Rs 208,363.6 Rs 1,389,090.9 Rs 1,010,909.1
6 Rs 173,636.4 Rs 1,562,727.3 Rs 837,272.7
7 Rs 138,909.1 Rs 1,701,636.4 Rs 698,363.6
8 Rs 104,181.8 Rs 1,805,818.2 Rs 594,181.8
9 Rs 69,454.5 Rs 1,875,272.7 Rs 524,727.3
10 Rs 34,727.3 Rs 1,910,000.0 Rs 490,000.0
PVFIA (1-1/(1+R)^n)/R 3.766699965
Annual Payment Rs509,730.01
Lease Details
Term of Lease 5 years
Lease Amount Rs393,895.79
Advance Rs1,181,687.38 3 year advance

EQUIPMENT
PURCHASE COST
INITIAL YEAR FINAL TOTAL

Year 1 2 3 4 5 6 7 8 9 10
Payment Rs 480,000.00 Rs 509,730.01 Rs 509,730.01 Rs 509,730.01 Rs 509,730.01 Rs 509,730.01 0 0 0 0 00
Salvage Value Rs 240,000.00 Rs 240,000.00
Depreciation Rs 392,727.27 Rs 353,454.55 Rs 314,181.82 Rs 274,909.09 Rs 235,636.36 Rs 196,363.64 Rs 157,090.91 Rs 117,818.18 Rs 78,545.45 Rs 39,272.73 Rs 1,570,909.09
Net Cost Rs 902,457.28 Rs 863,184.55 Rs 823,911.83 Rs 784,639.10 Rs 745,366.37 Rs 196,363.64 Rs 157,090.91 Rs 117,818.18 Rs 78,545.45 Rs 39,272.73 Rs 4,119,559.13
Net Present Value 0 Rs 902,457.28 Rs 410,551.51 Rs 248,315.33 Rs 168,446.10 Rs 121,483.07 Rs 25,290.08 Rs 16,431.57 Rs 10,209.34 Rs 5,723.59 Rs 2,434.80 Rs 1,911,342.68
LEASE COST

Year 1 2 3 4 5 6 7 8 9 10
Payment Rs 1,181,687.38 Rs 4,726,749.52 Rs 4,726,749.52 Rs 4,726,749.52 Rs 4,726,749.52 Rs 3,545,062.14 0 0 0 0 0 Rs 22,452,060.24
Net Cost 1181687.381 4726749.524 4726749.524 4726749.524 4726749.524 3545062.143 0 0 0 0 0
Net Present Value 1181687.381 Rs 4,726,749.52 Rs 2,248,156.73 Rs 1,424,575.23 Rs 1,014,737.25 Rs 577,789.75 Rs - Rs - Rs - Rs - Rs - Rs 11,173,695.87
RENT COST

Year Rs - 1 2 3 4 5 6 7 8 9 10
Rent Rs 713,209.15 Rs 713,209.15 Rs 713,209.15 Rs 713,209.15 Rs 713,209.15 Rs 713,209.15 Rs 713,209.15 Rs 713,209.15 Rs 713,209.15 Rs 713,209.15 Rs 7,132,091.55
Net Cost
Net Present Value Rs - Rs 713,209.15 Rs 339,219.57 Rs 214,951.12 Rs 153,111.54 Rs 116,241.95 Rs 91,855.70 Rs 74,601.06 Rs 61,801.93 Rs 51,971.38 Rs 44,217.04 Rs 1,861,180.46
ANNUALY COST OF BUYING, RENTING OR LEASING

Rs5,000,000.00
Rs4,500,000.00
Rs4,000,000.00
Rs3,500,000.00
ANNUAL COST
Rs3,000,000.00
Rs2,500,000.00
Rs2,000,000.00
Rs1,500,000.00
Rs1,000,000.00
Rs500,000.00
Rs-
1 2 3 4 5 6 7 8 9 10
RENT COST Rs713,209 Rs713,209 Rs713,209 Rs713,209 Rs713,209 Rs713,209 Rs713,209 Rs713,209 Rs713,209 Rs713,209
LEASE COST Rs4,726,7 Rs2,248,1 Rs1,424,5 Rs1,014,7 Rs577,789 Rs- Rs- Rs- Rs- Rs-
PURCHASE COST Rs902,457 Rs410,551 Rs248,315 Rs168,446 Rs121,483 Rs25,290. Rs16,431. Rs10,209. Rs5,723.5 Rs2,434.8
Figure 5-6 Comparison of different options Buying, Renting or Owning for Acquisition of Equipment
It can be seen from the graph that the renting cost will remain same throughout the life of the
equipment. Purchase cost is higher in first year but decreases in the beginning of the second year.
Leasing option is too much costly cannot be considered. It would be preferred to purchase the
equipment

EQUIPMENT
CHAPTER:6 PRODUCTION COST AND RATE ANALYSIS

OF CONSTRUCTION EQUIPMENT, COMPARING
WITH INDUSTRY RATES
The performance of construction equipment in terms of production rates is required to be
assessed in order to calculate the number and size of equipment and to decide the size on the
matching size of the other equipment. Production rate is also used to calculating the cost of
machine work for preparing cost estimates or for cost control. In this chapter production
estimation will be done on the basis of the specification of the construction equipment and the
owning and operating cost of the equipment as calculated in chapter 4. After obtaining the
production cost of the equipment’s comparing with the industry rates. Find out the gap between
the rates and giving the appropriate reason for that.
6.2 PROCEDURE FOR EQUIPMENT DESIGN

Following steps are involved in construction plant and equipment, in the order these are listed.
1. Estimate the total quantity of the work to be done (such as cft, cyd, cum of earthwork or
concrete placement). For earthwork use bank volume.
2. From construction schedule find probable working time available (such as working hours
or working days to complete the quantity found in step 1).
3. From the step 1 and 2 above, find average rate of production per unit of time (such as X
cum per hour) required to complete the work by dividing quantity found in step 1 by time
as estimated in step 2.
4. Select a suitable size, and find its cycle time and from this cycle time the number of
cycles performed/ hour. Then ideal output of the machine per hour = machine capacity X
no. of cycles per hour. Consult production tables of machine, if available.
5. Scale down the ideal production as calculated in step 4 to probable value which would be
actually realized by using the suitable efficiency factors.
6. Find the average number of machine required to achieve the target production by
dividing the quantity found in step 3 by quantity found in step 5.
7. Add 10to 20% additional capacity for peaking requirement.
8. Add stand by capacity of 10 to 30% to serve during break downs, contingencies etc.
The cost of production as a result of using the specific size and number of machines as calculated
by above procedure should then be estimated. A second trial should be made using alternative
size of machine, and cost of production resulting from its use should be calculated. Several trials
can be made if it’s necessary. A comparison of the unit production rates of the different
CHAPTER 6 PRODUCTION COST AND RATE ANALYSIS OF CONSTRUCTION EQUIPMENT

COMPARING THEM WITH INDUSTRY RATES
machines for which trials have been made would reveal the economically advantageous size to
be used.
6.2.1 CYCLE TIME

Cycle time is the time taken by the machine to complete one full cycle of operations. The cycle
time is composed of two components: fixed time and variable time. Variable time is the time
usually spent on travelling and is a function of distance travelled and speed of the unit. The fixed
time comprises of the time spent in the performances other than travelling like dumping, loading,
turning, shifting, accelerating etc. In production operations labour and equipment don’t work for
exactly 60 minutes an hour. Over a period of time the equipment, labour and conditions of the
job seldom combine to produce more than 50 actual working minutes in an hour. The
theoretically computed cycle time which represents the ideal conditions, therefore needs to be
corrected for working efficiency depending upon the job and management conditions. The
following values of actual working hour for wheel and track type equipment are suggested for
applying the necessary correction to cycle time:
Table 6-1 CORRECTION TO CYCLE TIME
TYPE OF EQUIPMENT WORKING HOUR EFFICIENCY FACTOR

Day Operation
Track Type 50- min hour 0.83
Wheel Type 45- min hour 0.75
Night Operation
Track Type 45- min hour 0.75
Wheel Type 40- min hour 0.67
The cycle time corrected in the following way:
Corrected cycle time = Theoretical Cycle Time/ Efficiency Factor
6.2.2 JOB AND MANAGEMENT FACTORS

The correction to cycle time is applicable when the equipment is available for the operation. The
availability, however, depends on the several factors inherent in the job and resulting from the
managerial limitations. These factors are called managerial factors.
Mr. Frank A. Nirik of USA after a close study of these factors grouped them into a matrix as
shown below
JOB FACTORS MANAGEMENT FACTORS

Excellent Good Fair Poor
Excellent 0.84 0.81 0.76 0.70
Good 0.78 0.75 0.71 0.65
Fair 0.72 0.69 0.65 0.60

Poor 0.63 0.61 0.57 0.52
6.2.3 RECOMMENDATIONS OF PLANT AND MACHINERY COMMITTEE

Plant and machinery committee, 1974 has made certain recommendations for plant planning on
construction projects. These recommendations are summarized below.
Two shift working operations are considered to be economical and should be employed wherever
possible. Three shift working results in frequent breakdowns and low availability, thus
necessitating more standbys and increasing the cost. Single shift should be used where works are
located in difficult terrain, subjected to vagaries of nature or scattered over long distance.
Schedule working hours with 200 working days available in a year should be as follows under
average working conditions:
1. - Shift operation = 12000

2. - Shift operation = 2000
3. - Shift Operation = 2500
6.3 PRODUCTION COST FOR EXCAVATING EQUIPMENTS

Under average conditions, small back hoes bucket size less than 0.75 cubic metercan complete
an excavation cycle in 14 seconds. An excavation cycle consists of loading the bucket, swinging
the loaded bucket, dumping the bucket, and swinging the empty bucket. Average conditions
would be a depth of cut between 40 and 60 percent of the machines rated maximum digging
depth and a swing angle of between 30to 60. The average cycle time for bucket sizes from 1
cubic yard to less than 1.9 cubic meters is 15 seconds. Greater digging depths or swing angles
increase the cycle time. For evaluating heaped capacity, hoe buckets are rated with an assumed
material repose angle of 1:1. Therefore, actual bucket capacity depends on the type of material
being excavated as all materials have their own natural repose angle. Table 6-2 provides bucket
fill factors for hoe buckets based on material type.
Table 6-2 MATERIAL FILL FACTOR
MATERIAL FILL FACTOR (%)

Moist loam or sandy clay 100 to 110
Sand and gravel 95 to 100
Common Earth 80 to 90
Rock (poorly blasted) 40 to 50
Rock (well blasted) 60 to 75
Hard, tough clay 80 to 90

6.3.1 PRODUCTION RATES OF THE BACKHOE LOADERS

I OUTPUT OF 0.75 CUM BUCKET CAPACITY EXCAVATOR (TATA HITACHI)
Bucket size of the excavator = 0.75 m³
Assuming the number of the cycles per minute of excavator = 3
Volume of the earth excavated per hour = 3X0.75X60 = 135 cum
Considering the efficiency of the excavator as 50 minute per hour = 0.83
Capacity of the excavator per hour = 135X0.83 = 112 cum
Applying the job and management factor for good management and good working condition at
site to be 0.75
Actual capacity of excavator per hour = 112 x 0.75= 84 cum
II OUTPUT OF 0.75 CUM BUCKET CAPACITY EXCAVATOR (JCB 3D)
Volume of the earth excavated per hour = 3 X 1.2 X 60 = 216 cum
Capacity of the excavator per hour = 216 X 0.83 = 179 cum
site to be 0.75
Actual capacity of excavator per hour = 179 x 0.75= 134.4 cum
6.4 PRODUCTION COST FOR EARTHMOVING EQUIPMENT

In the earthmoving equipment includes following equipment’s:
 Bulldozers
 Front-end loaders
 Motor graders
 Scrapers
 Trucks

However in this seminar in this category only truck are discussed.
6.4.1 PRODUCTION RATES OF TRUCK

Trucks are important part of the earthmoving and material moving process. Trucks are however
are typically dependent on another piece of equipment for loading. Truck loads are by volume
and weight. Typical cycle fixed times include loading, dumping and required spotting times.
Loading time is the time required by a piece of equipment loading the truck. The loading time
equals number of cycles required to load the truck times the estimated cycle time. The number of
loader cycle to fill a truck equals volume of the truck divided by the loader volume per cycle.
I PRODUCTION RATE OF DUMPER OF CAPACITY 8.5 m³

Consider a JCB 3D equipped with 1.0 m³ of back hoe bucket and cycle time of 3 per minute is
to be used to load a dumper of TATA of capacity 8.5 m³ cycle time 7 per hour and travel time 6
minute.
Time required by excavator to load the dumper (assuming the bucket fill capacity factor to be
0.85)
Number of cycles required to load the truck = 8.5/ (1.0X 0.85)= 10 cycles per truck load
= 10 cycles X 1X0.85
= 8.5 cum / truck load

(10 cycles) (20/60 min/ cycle) = 10 X (20/60) = 3.33 minutes to load
truck
Quantity of earth can be hauled in one hour by one dumper of TATA
Work hour production = [(rated capacity) (operational efficiency)]/ cycle time
Cycle time = load + (haul + dump + return)
= 3.33 + 6 = 9.33 minutes
Estimated hourly production = [(8.5 m³)( 50 min/ h)]/ 9.33 minutes
= 45.55 m³ per hour per TATA dumper

ℎ𝑎𝑢𝑙𝑒𝑟 𝑐𝑦𝑐𝑙𝑒 𝑡𝑖𝑚𝑒
Number of trucks supported by the JCB 3D excavator = ℎ𝑎𝑢𝑙𝑒𝑟 𝑡𝑖𝑚𝑒 𝑎𝑡 𝑡ℎ𝑒 𝑙𝑜𝑎𝑑
9.33
Number of TATA dumper truck of capacity 8.5 m³ supported by JCB 3D= 3.33 = 2.8 ℎ𝑎𝑢𝑙𝑒𝑟𝑠

6.5 PRODUCTION COST FOR CONCRETING EQUIPMENT

In concreting equipment includes following equipment’s:
 Batching Plant
 Concrete Pump
In this seminar only batching plant is covered.
6.5.1 PRODUCTION RATE OF BATCHING PLANT

CHAPTER:7 CASE STUDY: PERFORMANCE ANALYSIS

OF CONSTRUCTION EQUIPMENT
7.1 INTRODUCTION
In this chapter
7.2 INFORMATION ABOUT THE PROJECT

The Red Fort Parasvnath Tower located in heart of the city is a project developed by Parasvnath
in joint venture with red fort capital on DMRC land. This project is a rehabilitation center for
furniture market at panchkuyian road New Delhi.
Table 7-1 INFORMATION OF THE PROJECT
BACKGROUND INFORMATION OF PROJECT:

NAME OF THE PROJECT: Redfort Capital Parasvnath Tower
TYPE OF PROJECT: Commercial
LOCATION: Bhai Veer Singh Marg, Gole Market,
New Delhi
BUA: 0.55 Million Sq.ft.
ESTIMATED COST 130 Cr.
STATUS: Finishing Stage of Project.
COMPLETION DECEMBER 2012
Land Owner DMRC
LAND DEVELOPERS: Parasvnath Estate Developers Pvt.
Ltd. & Red Fort Captial
PROJECT ARCHITECT: Suresh & Sandeep Goel Associates
SERVICES CONSULTANTS: Spectral Services consultants Pvt.
Ltd.
FAÇADE ARCHITECT: TDA Pvt. Ltd.
FAÇADE CONSULTANTS: FACET Construction Engineering
Pvt. Ltd.
LANDSCAPE CONSULTANTS S. Bose
CONTRACTOR Larsen & Toubro Pvt Ltd.
PMC: Masters Management Consultants
(INDIA) Pvt. Ltd.
STRUCTURAL CONSULTANT PIONEER
LEED CONSULTANTS SPECTRAL Sustainability Group
CHAPTER 7 CASE STUDY

7.2.1 SITE ACCESS

All the vehicular access to the site is provided by the peripheral roads. There is a separate
vehicular and pedestrian entry for the furniture market and office block.
7.2.2 PROJECT FEATURES

The building is divided in nine (9) floors and three basements. The floor area and the levels of
the respective floors are as follows:
FLOORS BUILT UP AREA LEVELS USAGES

B-3 Third Basement 9030 Sq. Mt. -11000 Parking
B-2 Second Basement 8938 Sq. Mt -7700 Parking/Services
B-1 First Basement 9148 Sq. Mt -4100 Services
G Ground Floor 6847 Sq. Mt +1200 Shops
L-1 First Floor 2150 Sq. Mt +5100 Office
L-2 Second Floor 1825 Sq. Mt +9000 Office
L-3 Third Floor 1825 Sq. Mt +12900 Office
L-4 Fourth Floor 1825 Sq. Mt +16800 Office
L-5 Fifth Floor 1825 Sq. Mt +20700 Office
L-6 Sixth Floor 1825 Sq. Mt +24600 Office
L-7 Seventh Floor 1825 Sq. Mt +28500 Office
L-8 Eight Floor 1825 Sq. Mt +32400 Office
7.2.3 EXCAVATION
Quantity of the earthwork = 109998.164 m³
Type of equipment used
Excavator = 4 JCB-3D
Dumper = 17 TATA truck of capacity 8.5 m³
Duration of the Excavation = Nov-2010 to June- 2011
= 8 months
Analysis of the earthwork
Total Quantity of the earth work = 109998.164 m³
Total number of working days = 8X23= 184 days
Excavation to be done per day = 109998.164 m³/ 184 days
= 597.816 m³/ day

Production rate of the JCB excavator of 1.2 m³ is calculated as follows
Volume of the earth excavated per hour = 3 X 1.0 X 60 = 180 cum
Capacity of the excavator per hour = 180 X 0.83 = 149.4 cum
site to be 0.75
Actual capacity of excavator per hour = 149.4 x 0.75= 112.05 cum
Total Excavation in 8 hours = 896.4 m³
JCB 3D equipped with 1.0 m³ of back hoe bucket and cycle time of 3 per minute is to be used to
load a dumper of TATA of capacity 8.5 m³ cycle time 7 per hour and travel time 6 minute.
Time required by excavator to load the dumper (assuming the bucket fill capacity factor to be
0.85)
Number of cycles required to load the truck = 8.5/ (1.0X 0.85)= 10 cycles per truck load
= 10 cycles X 1X0.85
= 8.5 cum / truck load

(10 cycles) (20/60 min/ cycle) = 10 X (20/60) = 3.33 minutes to load truck
Quantity of earth can be hauled in one hour by one dumper of TATA
Work hour production = [(rated capacity) (operational efficiency)]/ cycle time
Cycle time = load + (haul + dump + return)
= 3.33 + 6 = 9.33 minutes
Estimated hourly production = [(8.5 m³)( 50 min/ h)]/ 9.33 minutes
= 45.55 m³ per hour per TATA dumper

ℎ𝑎𝑢𝑙𝑒𝑟 𝑐𝑦𝑐𝑙𝑒 𝑡𝑖𝑚𝑒
Number of trucks supported by the JCB 3D excavator = ℎ𝑎𝑢𝑙𝑒𝑟 𝑡𝑖𝑚𝑒 𝑎𝑡 𝑡ℎ𝑒 𝑙𝑜𝑎𝑑
9.33
Number of TATA dumper truck of capacity 8.5 m³ supported by JCB 3D= 3.33 = 2.8 ℎ𝑎𝑢𝑙𝑒𝑟𝑠


Equipment For Construction

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EQUIPMENT MANAGEMENT IN

SHISHUPAL SINGH, BEM/526

DEPARTMENT OF BUILDING ENGINEERING AND MANAGEMENT

SCHOOL OF PLANNING AND ARCHITECTURE, NEW DELHI

Certified that the thesis work entitled “EQUIPMENT MANAGEMENT IN

Dr. V. Thiruvengadam Prof. Y. K Jain

Thesis Guide Head of the Department

Department of Building Engineering and Management,

School of Planning and Architecture, New Delhi

Figure 3-1 Construction Equipment Classification...................................................................... 3-3

4.3 EQUIPMENT COST..................................................................................................... 4-2

5.3.3 LEASE ................................................................................................................. 5-21

CHAPTER 2 LITERATURE REVIEW Page 1-1

CHAPTER 2 LITERATURE REVIEW Page 1-2

CHAPTER 2 LITERATURE REVIEW Page 1-3

productivity. Productivity is governed by engineering fundamentals and management ability.

CHAPTER 2 LITERATURE REVIEW Page 1-4

FORMULATION OF THE SCOPE AND • CHAPTER 1 INTRODUCTION MANAGEMENT OF

STUDYING THE PREVIOUSLY WORK

CLASSIFYING THE CONSTRUCTION

EQUIPMENT ECONOMICS, TIME

STUDYING THE IMPACT OF THE

STUDYING THE CRITERIA FOR

STUDYING THE DIFFERENT METHOD

CONCLUSION OF THE WORK AND

CHAPTER 2 LITERATURE REVIEW Page 1-5

1.5 CHAPTER STRUCTURE

CHAPTER 2: LITERATURE REVIEW

CHAPTER 3 :CLASSIFYING THE CONSTRUCTION EQUIPMENT

CHAPTER 4 : COST OF ANALYSIS OF EQUIPMENTS : OWNING AND

CHAPTER 5: FINANCIAL ANALYSIS FOR DECISION MAKING ON

CHAPTER 6: PRODUCTION COST 'S & RATE ANALYSIS ,

CHAPTER 7:CASE STUDY

CHAPTER 8: MONITORING AND CONTROLLING OF

CHAPTER 2 LITERATURE REVIEW Page 1-6

CHAPTER:2 LITERATURE REVIEW

2.2 UNPUBLISHED SEMINAR AND THESIS WORKS - Dept.

CHAPTER 2 LITERATURE REVIEW Page 2-1

2.2.2 MECHANIZATION IN CONSTRUCTION AND ITS COST ANALYSIS

 Study classify the construction equipment on the basis of their

CHAPTER 2 LITERATURE REVIEW Page 2-2

 Study identifies the area of mechanization in these

2.3 PAPERS, JOURNALS AND ARTICLES

CHAPTER 2 LITERATURE REVIEW Page 2-3

CHAPTER:3 CONSTRUCTION EQUIPMENT

3.1 INTENT OF THE CHAPTER

3.2 CONSTRUCTION EQUIPMENT SECTOR IN INDIA

The growth in this industry is expected to be primarily due to investments in infrastructure,

3.2.1 SECTOR COMPOSITION AND SIZE

CHAPTER 3 CONSTRUCTION EQUIPMENT CLASSIFICATION

3.3 CLASSIFICATION OF CONSTRUCTION EQUIPMENT

• Road construction equipment

• Material handling equipment

• Tunneling and Drilling equipment

CHAPTER 3 CONSTRUCTION EQUIPMENT CLASSIFICATION

Figure 3-1 Construction Equipment Classification

Construction Equipment Industry Structure

Earth Moving Equipment 57%

Material handling 13%

CHAPTER 3 CONSTRUCTION EQUIPMENT CLASSIFICATION

3.3.2 CLASSIFICATION ON THE BASIS MANUFACTURING PROCESS

Construction equipment which is commonly manufactured and available to prospective

I Earth moving equipment

Production =3,600 secQF*(AS:D)60-min hr volume correction , Where