Chapter 13 - - Equipment Ownership II

Chapter 13 - - Equipment Ownership II - CE 222/CEM 201 Life...

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CE 222/CEM 201 Life Cycle Engineering and Management of Constructed Facilities Equipment Ownership II Chapter 13 1
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Topic Context Construction resources 4M’s Money Time value of money, project cash flow, project funding Machine Materials Manpower
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Learning Objectives Differentiate between productive and support equipment List categories of equipment owning and operating costs Group cost items into cost categories List four components of equipment hourly unit cost Calculate cost items 3
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Categories of Equipment Costs Ownership costs substantial and fixed Accrue whether or not the equipment is used, i.e. in a productive state “Fixed costs”— can be calculated with a fixed formula Operating costs Occur only during the period of operation “Variable costs”— depend on the equipment usage
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Categories of Equipment Costs Ownership costs Depreciation (tax and market basis) IIT (Interest, insurance, taxes) costs Operating costs FOG (Fuel, oil, grease) and other supplies Parts and tire replacement Normal repairs Direct labor costs: operator’s cost
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Hourly charge for equipment Ownership costs Total ownership cost/estimated total service life in hours Operational costs Overhead: includes cost of idle equipment Profit
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Ownership Cost - Depreciation Loss in value of the equipment, resulting from use and age Original cost = Purchase price + transportation + unload and assembling Depreciable amount = Original cost - Salvage value Four methods (estimating and the IRS) Straight-line method Declining balance method Sum-of-the- year’s digits method Production or use method Depreciation based on current law
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