Capital Expenditures

Heavy Machinery Management

Contents
• Introduction
• Terminal competences
• Competences
• Uptime elements
• Heavy machinery life cycle
• Business needs analysis
• Design
• Create/acquire
• Bibliography
Introduction
• This unit is based on international
standards of Asset Management,
developing the different stages that are
part of the capital expenditures within the
life cycle of heavy machinery.
Terminal Competences

• Evaluate the type and quantity of heavy

equipment to acquire in a long-term
productive process in mining, construction
and transportation operations.
Competences
• Analyze the timeline of heavy machinery
management, recognizing the parts that compose it,
focusing on the analysis of market requirements.
• Plan and size a fleet of heavy machinery according
to the need for a productive process.
• Develop a financial analysis to compare heavy
machinery alternatives.
Uptime Elements

Reference: Reliabilityweb.com
Asset Managemet
Timeline

Reference: Reliabilityweb.com
Heavy Machinery Life
Cycle

Final Capital
dispose expenditures

Optimal life
Capital Expenditures

Business needs
analysis

Design

Create/acquire
Business Needs Analysis

• Operational
Productive context
process • Process
units

Material's • Bank
type and • Loose
• Compacted
condition

• Quantity
Metrics • Period
Productive Process

Process
Place Accessibility
phases
Material Condition
Contraction Factor

Vcf  Fc.Vci
Where:
Vcf: Final condition volume (m3)
Fc: Contraction Factor
Vcf: Initial condition volume (m3)
Period Production

Vp
PP 
Tp

Where:
PP: Period production (m3/year)
Vp: Volume of material to produce (m3)
Tp: Production time (year)
Design

Machinery • Brands and models

Type • Technical specifications

Hourly • Cycle production

• Cycle time
Production • Efficiency

• Calendar time
Work • Utilization time
Times •
•
Planned time
Uptime
Machinery Type

Type of
work

Evaluation Machinery
criteria market
Hourly Production

60
Q  qx xE
Cm
Where:
Q: Hourly production (m3/h)
q: Cycle production (m3)
Cm: Cycle time (min)
E: Efficiency
Cycle Production
Cycle Time

Reference: Komatsu Handbook

Efficiency
• It depends on the operating conditions and
the maintenance of the machinery.

Operating Maintenance of the machinery

Conditions Excellent Good Normal Regular Bad
Excellent 0.83 0.81 0.76 0.70 0.63
Good 0.78 0.75 0.71 0.65 0.60
Normal 0.72 0.69 0.65 0.60 0.54
Regular 0.63 0.61 0.57 0.52 0.45
Bad 0.52 0.50 0.47 0.42 0.32
Matrix for evaluating
maintenance conditions

Determining Factors of Success Weight Value Weighing

1. Original parts 0.20
2. Oils, greases and additives according to
0.20
technical standards
3. Parts stock 0.25
4. Maintenance plans and programs 0.12
5. Workshop equipment 0.12
6. Technical staff experience and training 0.11
Total 1.00
Matrix for Evaluation of
Operating Conditions

Determining Factors of Success Weight Value Weighing

1. Climatological, environmental and geographical
0.30
conditions
2. Traffic routes 0.30
3. Operator training and experience 0.30
4. Security policies and regulations 0.10
Total 1.00
Work Times

CALENDAR TIME

UTILIZATION TIME IDLE TIME

SCHEDULED
PLANNED TIME
DOWNTIME
UNSCHEDULED
UPTIME
DOWNTIME
Indicators
UtilizationTime
• Utilization U %
CalendarTime

• Operational Availability Uptime

Ao  %
UtilizationTime

Uptime
• Mechanical Availability Am 
PlannedTime
Acquire

Technical Economic Financial

evaluation evaluation evaluation
Technical Evaluation
Ideal
technical
specifications

Decision
making
Machinery
Evaluation
technical
criteria
compatibility
Economic Evaluation

Machinery
price

Machinery
Investment
placement
budget
costs

Cost
estimation
Financial Evaluation
Fleet
investment

Revenue
Cash flow
projections

Cost
estimation
Evaluation Criteria
Net present
value

Internal Investment
return ratio benefit ratio

Recovery
period
Bibliography

• Caterpillar (2015). Caterpillar Performance

Handbook. Peoria: Caterpillar.
• Komatsu (2009). Specifications &
Application Handbook. Japón: Komatsu.
• Reliabilityweb.com (2017). Asset
Management. Florida: Reliabilityweb.com.
• Society for Maintenance and Reliability
Professionals (2013). SMRP Best
Practices. USA: SMRP.