Construction Equipment Ownership Costs

What is the total hourly operating cost calculated for the loader?

How is the hourly depreciation cost calculated for the loader?

What factor is used to calculate the tire repair cost per hour?

What is the hourly fuel cost based on the provided calculations?

Which components contribute to the ownership cost of the loader?

What is the estimated annual ownership cost of a crawler tractor costing $155,000 with a salvage value of 12% under average operating conditions?

How is the hourly ownership cost calculated for a piece of construction equipment?

What percentage is used for estimating tire maintenance and repair costs in relation to hourly Straight-Line depreciation?

What is the estimated usable life of a construction tractor based on an annual usage of 2,000 hours and a total useful life of 12,000 hours?

Which factor is NOT included in the calculation of the Minimum Acceptable Rate of Return (MARR)?

What is the formula for calculating hourly fuel cost in construction equipment operation?

Is fringe benefits typically a percentage of the actual wage rate for labor costs in operating expenses?

Which of the following is NOT a component of operating costs for construction equipment?

Construction Equipment Ownership Costs

Economic useful life is estimated by hours of use
Tables provide estimated useful life for different equipment under favorable, average, and unfavorable operating conditions
Example: A crawler tractor with a $155,000 purchase price and 2,000 operating hours per year has a 6-year ownership period under average conditions.

Ownership Cost Example

A crawler tractor costs $155,000
Annual usage: ~2,000 hours
Salvage value is 12% of purchase price
Interest: 9%; Taxes: 2%; Insurance: 2%; Storage: 2%
Estimated annual ownership cost under average conditions is calculated
Example factors like minimum acceptable rate of return (MARR) and present worth of salvage value are incorporated

Operating Costs

Operating costs depend on equipment age, repair, and operating conditions
Maintenance and repair costs are a percentage of annual straight-line depreciation
Separate costs are for replacements like tires, cutting edges, bucket teeth, and rippers.

Operating Costs: Repair

Hourly repair cost = (Repair Factor) x (Useful Life in hours) x (Hourly Depreciation Rate)
Repair factors vary based on equipment and operating conditions (favorable, average, unfavorable)
Example factors from tables are used to calculate various costs

Operating Costs: Tires

Separate cash flow analysis is used for tire maintenance and repair costs
Tire maintenance and repair costs are estimated at 15% of hourly straight-line depreciation

Operating Costs: Fuel

Hourly fuel cost = (Horsepower) x (Fuel Factor) x (Fuel Cost)
Fuel factors are provided in gallons per horsepower-hour for different equipment and operating conditions

Operating Costs: Service, Downtime, Labor Cost

Servicing costs (filter, oil, and grease) are estimated as a percentage of the hourly fuel cost
Downtime is analyzed using an operating factor (actual working minutes/hour)
Labor cost includes hourly wage rates plus fringe benefits (20% to 30% of actual wage rate)

Operating Cost Example (Wheeled Loader)

A $114,000 wheeled loader with a 2,000 hour per year and 6-year useful life, $35,000 salvage value, and a 105 hp diesel engine
Costs for fuel, operator, tires calculated to find hourly operating costs

Operating Cost Calculation Examples

Examples of detailed calculations for repair, tire and fuel costs are provided showing step by step how those costs are estimated

This quiz explores the various factors influencing the ownership costs of construction equipment. It covers economic useful life assessments, annual ownership cost calculations, and the impact of operating conditions on overall costs. Test your knowledge on factors like salvage value, interest rates, and maintenance expenses.