You are on page 1of 16

ASSIGNMENT

PGPCM-SODE Module 11 NCP 24/25

CONSTRUCTION MATERIALS MANAGEMENT CONSTRUCTION EQUIPMENT MANAGEMENT

SUBMITTED BY: AJEET SINGH REG. NO.: 213-03-11-11416-2153 SODE-PGPCM

ASSiGNMENT NICMAR/CODE Office Name Reg. No. Course No. Course Title Assignment No. Date of Dispatch Last Date of Receipt AJEET SINGH 213-03-11-11416-2153 (PGPCM) NCP 24/25 CONSTRUCTION MATERIALS MANAGEMENT CONSTRUCTION EQUIPMENT MANAGEMENT

ASSIGNMENT
Your Company has been awarded a contract of developing and constructing a new International Airport 30 km away from a city. You have been appointed as Planning Engineer(Materials and Equipment). Project is to be implemented in phases. In Phase I, one strip of landing of 100 m width is to be constructed in 100 days. Scope of work for this assignment is only as follows: a) Cutting and Dozing of 100,000 cum of earth. Average eight 0.75 m. b) Transportation of 20.000 cum of surplus earth from site to dumping place 3 km away from the site (including spreading). Filling of 80,000 cum in the landing strip. c) Bringing 3000 cum of Sand from 20 km (including spreading and levelling at site) d) Procurement of 1,50,000 litres of bitumen. Duration of work 30 days from 60 th day of starting of work. Bitumen to be obtained from refinery in Bongaingaon Assam. Lead time up to the site is 45 days. Storage facility available at site is 50,000 litres tank. Estimate total cost of work and your plan of i. ii. Equipment Planning Procurement and Deployment Ordering and replenishing of Bitumen

Scope of work and description of equipment considered Scope of work The scope of work is clearly defined in the problem. The earthwork along with compaction, including spreading and levelling at the dumping site should be complete by 60th day of the start of the work so that the site may be ready for starting the work of bitumen paving. Quantities which need to be executed are listed in tabular form : Sl. No 1 2 3 4 Item Cutting and dozing Filling Watering Compaction in filling Testing 5 rectification of problem area 6 7 Dumping Spreading and Levelling 20000 Cum 20000 Cum 59 the day 59th day of Compaction and Need based 59th Day Qty 100000 Cum 80000 Cum 80000 Cum 80000 Cum Finish By 55th Day (approx) 55nd Day 56rd Day 57th Day

Following points have to be kept in mind to clearly understand the activity schedule: Cutting and Dozing, Filling and Compaction are not series activities nor are they parallel activities. They are staggered in such a way the todays cutting and dozing will be filled in the same day at the required site. Watering will follow next day and compaction will follow one day after watering. Viewed in combination this combined set of activity will take place in a 3day cycle.

No testing needs to be done for cutting and dozing activity. However, Compaction testing is required and if compaction is found to be not satisfactory then another round of compaction will follow. Hence it is necessary to complete the earthwork sufficient time before of 60 th day to allow for testing and another round of compaction, if necessary.

Fallout for not adhering to the given schedule may be as follows:1. Delay in Pavement works will cause either undue pressure on the Paving team to complete their works ahead of schedule or delay in the project, both of which are not desirable. 2. It will lead to the increase in storage cost of bitumen as bitumen will be procured much ahead of start of paving work and will be required to be stock for the additional delay time. 3. Increase is deployment time of earthwork machinery thus increasing the deployment costs, operational cost and depreciation cost. 4. Also, arrangement for the machinery needed for paving work will be done before the 60th day. Any delay will require the paving machinery to remain idle for the additional time by which the earthwork has been delayed.

Planning for the equipment 1. The average height of the area where cutting is to be carried out is 0.75 m as mentioned above. For cutting activity generally 4 type of equipment are available Bulldozer, Shovel, Dragline and Clamshell. Bulldozer is generally suitable for cutting and removing earth in cuttings which is not the case with this project hence this is not suitable equipment for this project. Dragline maybe used for cutting at or below the level of equipment hence we will not choose this option as well. Use of clamshell is also restricted as it is most suitably used when the cutting is involved in the vertical range. Therefore in our case, use of Shovel

makes the most sense. Shovels of various sizes are available. This is an airport project, which is generally undertaken in reasonably big cities; hence we can assume that Shovels of various bucket sizes and makes are available whether crawler mounted or tyre mounted. The terrain is generally flat (average ht 0.75 m) but cutting and dozing along with subsequent filling will lead to lot of loose soil accumulated on the top surface so will choose shovel with 1 cum bucket size mounted on crawlers. 2. As far as earth moving equipment is concerned, proximity with the city can be used to arrange for dumper truck, preferably with 4-Wheel Drive due to the specific site condition as mentioned in para (1.). These trucks will facilitate the dumping of 20000 cum of excess soil to the site 3 km away. 3. At the dumping site, fine and precise levelling is not a high priority so any economical spreading and levelling method can be used. In our case we will select tractor mounted scrappers for levelling this site. 4. Dozing at the Runway site requires good finish and precision so it is better to use Bulldozer. Also the output of Bulldozer is much more than tractor mounted scrappers. Bulldozers come in varying blade sizes and a size of 4.0 m or larger may be used on the site for uniform levelling. 5. Watering arrangement can be done using either the tractor-mounted type sprinklers or truck-mounted type sprinklers. We will choose Truck mounted Sprinklers because of more output and availability near the site. 6. It may be reasonably assumed that the soil on the main site is cohesive in nature. With cohesive soils, Sheep-foot roller is the best alternative. Also it is required to compact 3000 cum of sand supplied on the site and in this case we can arrange for one Vibratory Roller.

Case1: OPERATIONAL COST WITH HIRED MACHINERY


Equipment Procurement Cost

Qty (cum) Sl no. Activity E/w Sand Total (cum) Type of Machinery

Output per day (cum)

Machines needed

Allowance for Beakdown Etc (%)

Number of Machines to be arranged

Procurement Method

Cost of machine per month machine (Rs)

Hiring Cost (Rs)

Cutting

100000

100000

Shovel

600

3.3

20

Hire

75000

600000

Dozing

100000

100000

Bulldozer

400

5.0

20

Hire

60000

720000

Dumping / Filling

20000

3000

23000

Dumper trucks

100

4.6

10

Hire

25000

300000

Spreading and Levelling

20000

3000

23000

Tractor mounter Scrapper

200

2.3

10

Hire

20000

120000

Watering

80000

80000

Truck Mounted Water Tanker

200

8.0

20

10

Hire

25000

500000

Compaction Earthwork Compaction Sand

80000

80000

Sheepfoot Roller

500

3.2

20

Hire

40000

320000

3000

3000

Vibratory Roller

150

0.4

20

Hire

40000

80000

Total (in Rs) =

2640000

Equipment Running Cost


Hourly running cost (including consumables etc) (Rs) 700 1000 700 Maintenance Cost per Hour@10% of running cost (Rs) 70 100 70

Sl no

Machine

Number of working hours each day

Allowance for idling (%)

Operational cost per day (Rs)

Operator Wage (Rs/day)

Allowance for operator (%)

Operator cost per day (Rs)

Working days

Cost of operation of each machine

No of machines

Total Operational Cost

1 2 3

Shovel Bulldozer Dumper trucks Tractor mounter Scrapper Truck Mounted Water Tanker Sheepfoot Roller Vibratory

6 8 12

20 20 10

910 1300 840

800 600 500

20 20 10

960 720 550

60 60 60

112200 121200 83400

3 5 5

336600 606000 417000

12

500

10

50

600

500

10

550

60

69000

207000

400

40

440

500

10

550

60

59400

475200

6 7

6 4

1000 1200

10 10

100 120

1200 1440

500 500

20 20

600 600

60 60

108000 122400

3 1

324000 122400

Roller

Total (in Rs) =

2488200

Total cost of the project =

= 2640000

Machine procurement Cost +

Machine Running Cost = Rs 51,28,200/-

2488200

Case 2: OPERATIONAL COST WITH COMPANY OWNED MACHINERY


Equipment Running Cost

Sl no

Machine

Number of working hours each day 6 8 12

Hourly running cost (icluding consumables etc) (Rs) 700 1000 700

Allowance for idling (%)

Maintainance Cost per Hour@10% of running cost (Rs) 70 100 70

Operational cost per day (Rs) 910 1300 840

Operator Wage (Rs/day)

Allowance for operator (%) 20 20 10

Operator cost per day (Rs) 960 720 550

Hourly depreciation (Rs)

Depreciation Per day (Rs)

Working days

Cost of operation of each machine 177000 193200 126600

No of machines

Total Operational Cost

1 2 3

Shovel Bulldozer Dumper trucks Tractor mounter Scrapper Truck Mounted Water Tanker Sheepfoot Roller Vibratory Roller

20 20 10

800 600 500

180 150 60

1080 1200 720

60 60 60

3 5 5

531000 966000 633000

12

500

10

50

600

500

10

550

45

540

60

101400

304200

400

40

440

500

10

550

60

480

60

88200

705600

6 7

6 4

1000 1200

10 10

100 120

1200 1440

500 500

20 20

600 600

200 200

1200 800

60 60

180000 170400

3 1

540000 170400 3850200

Total (in Rs) =

Hence it will be economical to work with the company owned machinery.

Total Cost of Machine Operations = Rs 38,50,200/-

Assumptions while calculating the project cost:a) Machine maintenance cost is 10% of Hourly Operation Cost for all type of machines. b) Allowance of break down is 20 % for important machinery such as Shovels, Dozers etc. While 10% allowance has been made for other machines. c) No depreciation cost is applicable for hired machinery. However, machine is to be maintained in working conditions by the company, whether hired or owned. d) 20% provision for accounting of sick days, Leave etc has been made for operators of important machines such as Shovel, Bulldozer etc e) 10% allowance has been made for operators of other machines such as Dumper Trucks, Watering Trucks etc f) All machinery is locally available and can be hired at competitive rates from the nearby city.

g) There is no need for replacement of machinery during the project as the operations are for a short duration of 60 days only. h) Machinery remains idle for sole reasons of operator unavailability and site conditions and no other circumstances will lead to idling of machinery during the 60 day period. i) Cost of testing of quality parameters and labour cost is insignificant compared to cost of machine procurement and running and hence these costs are not accounted for in the calculations for arriving at the total cost of the project. j) There are no performance incentives for completing the tasks ahead of time.

k) Cost of transportation of the machinery to the site is same whether it is hired or owned. l) Cost of transportation of the machinery is very small compared to the operational cost hence it can be neglected.

Material management concepts and their applicability in given examples


LEAD TIME Lead time is the time elapsed between the raising the material demand on site and the point of time when the material arrives on the site for consumption. It comprises of following: Time taken to raise the demand by the consuming department Time taken by Materials Management Department to decide that the material is to be purchased. Time taken for the selection of the supplier, negotiating and fixing the price and placing the order. Time required by the supplier to arrange for the material Time required for the transportation and receiving the material in the storage area Time taken for inspection and testing of material if necessary. Time required by the Materials Management Department to deliver the material on site.

SAFETY LEVEL Often it is seen that due to unavoidable circumstances, the replenishing of materials get delayed than planned time. Due to this delay in replenishing of materials, the work will be stopped for want of material if there is no provision of Safety Level. Safety Level is the minimum level of storage which is needed to be maintained at all points of time. Materials should be withdrawn from the safety stock only sparing and whatever debit has been taken should be replenished at the first opportunity. Re-ordering should be done well in advance so that by the time the inventory levels reach safety level, the replenishment has arrived.

EOQ EOQ is the ordering quantity for which total cost of managing the inventory shall be minimum. It is a function of ordering cost and holding cost.

ROL Re-order level is the level of stock at which order is placed such that the stock is replenished by the time consumption of materials brings down the stock to safety level. ROL ensures that the safety stock is used only during emergencies.

For this particular problem, EOQ will be calculated as follows: Economic Order Quantity (Q) is given by the formula:-

Q=

Where A = annual demand in terms of units. Q = Lot size ordered at a time in units. P = Price of material per unit. H = annual inventory carrying cost in Rs. per Rupee of the inventory. S = Ordering cost (i.e. cost of placing one order) in Rs. Cost of bitumen = Rs. 49.50 per litre of bitumen (source: Schedule of Rates of Indian Railway2005)

Assumptions made are as follows: Excise tax = 12%, VAT = 4%, Other taxes = 3 % - each tax applicable on basic price Cost of Transportation = 22000/- per trip per truck containing approx 10000 litres ie. Rs 2.2/litre A (P) Total cost of bitumen per litre Cost of loading/unloading Inventory carrying cost One time ordering cost(S) = = = = = = H S Hence Economic order quantity will be:= = 2% of basis cost 3% of the on-site price of bitumen Rs. 8000/- per order. 1,50,000 litres 49.50(1+12/100+4/100+3/100) + 2.2 + 49.50*2/100 Rs 61.10 61.10*0.03/61.10 Rs 8000 per order = Rs 0.03 per litre

Q=

= 25586 litres , say 25000 litres

EOQ = 25000 Litres

Plan for Ordering and Replenishing of bitumen Lead time = 45 days Consumption Rate = 150000 litres in a period of 30 days = 5000 litres per day Number of orders = 150000/25000 = 6 Procurement Schedule may be depicted in the form of chart and graph as follows:
Day
0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90

Order Qty
0 0 0 25000 25000 25000 25000 25000 25000 0 0 0 0 0 0 0 0 0 0

Supply
0 0 0 0 0 0 0 0 0 0 0 0 25000 25000 25000 25000 25000 25000 0

Opening Balance
0 0 0 0 0 0 0 0 0 0 0 0 25000 50000 50000 50000 50000 50000 25000

Consumption
0 0 0 0 0 0 0 0 0 0 0 0 0 25000 25000 25000 25000 25000 25000

Closing Balance
0 0 0 0 0 0 0 0 0 0 0 0 25000 25000 25000 25000 25000 25000 0

Total Inventory carrying cost

+
70,912.50 Rs 71000/- approx 61.10*150000 Rs 91,65,000/Material Procurement Cost + Material Carrying Cost 91,65,000 + 71,000

= = Cost of Bitumen = = Total Material Cost = =

Rs 92,36,000/-

Total cost of the project


Total cost of the project = = = Machinery Cost 38,50,200 Rs 1,30,86,200/+ + Material Cost 92,36,000

Total Cost of the Project = Rs 1,30,86,200/Logistics for conveyance of bitumen to the site Logistics for the conveyance of bitumen should be decided as per the site conditions. In this particular case, every day the consumption of bitumen is 5000 litres which is approximately 5 T per day. For such infrequent use of machinery, it may be economical to use on-site machinery such as Truck based tippers already employed for earthwork.

Assumptions and their Basis The rate of bitumen is taken from Schedule of Rates2005 of Indian Railway. Ordering cost and material handling cost is based on own work experience. The material is replenished instantaneously after the expiry of lead time. Consumption rate is uniform i.e. 5000 litres per day. There is no planning for safety stock as supply of materials is assured and consumption rate does not change during the project. Cost of testing of materials is negligible and hence not accounted for in the calculation.

Recommendations: 1. Cost of mobilisation of machinery should also be included in working out the project cost as generally it is a sizable fraction of the total cost. However, it is difficult to work it out unless the place where the machinery is idling is specified, route details and distance chart provided and details of octroi charges etc are made available. 2. Cost of material testing and on-site quality control/monitoring should also be accounted for in the calculations. 3. The total storage capacity has been given as 50000 cum. However, no break-up is provided to define the safety stock out of the total capacity. This data should have been provided. 4. Storage area should be such that Supply should be taken on one side and material issued from opposite site. It will ensure first-in first-out consumption such that bitumen supplied first is used first thereby preventing wastage of material on account of expiry of shelf-life. 5. Cost calculations cannot be viewed in isolation and should be linked with activity planning. Therefore, a CPM chart should be made first and project cost should also include the allowance for possible delay in each activity.

Recommended Readings a. Construction Planning: Equipment and Methods K.L. PEUROFOY b. Construction Equipment and Planning Dr. Mahesh Verma c. IRC: Handbook on Road Construction Machinery