Road Costs

1.
PRINCIPLES OF COST CONTROL
1.1 Introduction
1.2 Basic Classification of Costs
1.3 Total Cost and Unit-Cost Formulas
1.4 Breakeven Analysis
1.5 Minimum Cost Analyses
1.1 Introduction
Cost is important to all industry. Costs can be divided into two general classes; absolute
costs and relative costs. Absolute cost measures the loss in value of assets. Relative
cost involves a comparison between the chosen course of action and the course of
action that was rejected. This cost of the alternative action - the action not taken - is
often called the "opportunity cost".
The accountant is primarily concerned with the absolute cost. However, the forest
engineer, the planner, the manager needs to be concerned with the alternative cost - the
cost of the lost opportunity. Management has to be able to make comparisons between
the policy that should be chosen and the policy that should be rejected. Such
comparisons require the ability to predict costs, rather than merely record costs.
Cost data are, of course, essential to the technique of cost prediction. However, the form
in which much cost data are recorded limits accurate cost prediction to the field of
comparable situations only. This limitation of accurate cost prediction may not be serious
in industries where the production environment changes little from month to month or
year to year. In harvesting, however, identical production situations are the exception
rather than the rule. Unless the cost data are broken down and recorded as unit costs,
and correlated with the factors that control their values, they are of little use in deciding
between alternative procedures. Here, the approach to the problem of useful cost data is
that of identification, isolation, and control of the factors affecting cost.
1.2 Basic Classification of Costs

Costs are divided into two types: variable costs, and fixed costs. Variable costs vary per
unit of production. For example, they may be the cost per cubic meter of wood yarded,
per cubic meter of dirt excavated, etc. Fixed costs, on the other hand, are incurred only
once and as additional units of production are produced, the unit costs fall. Examples of
fixed costs would be equipment move-in costs and road access costs.
1.3 Total Cost and Unit-Cost Formulas

As harvesting operations become more complicated and involve both fixed and variable
costs, there usually is more than one way to accomplish a given task. It may be possible
to change the quantity of one or both types of cost, and thus to arrive at a minimum total
cost. Mathematically, the relationship existing between volume of production and costs
can be expressed by the following equations:
Total cost = fixed cost + variable cost × output
In symbols using the first letters of the cost elements and N for the output or number of
units of production, these simple formulas are
C = F + NV
UC = F/N + V
1.4 Breakeven Analysis

A breakeven analysis determines the point at which one method becomes superior to
another method of accomplishing some task or objective. Breakeven analysis is a
common and important part of cost control.
One illustration of a breakeven analysis would be to compare two methods of road

construction for a road that involves a limited amount of cut-and-fill earthwork. It would
be possible to do the earthwork by hand or by bulldozer. If the manual method were
adopted, the fixed costs would be low or non-existent. Payment would be done on a
daily basis and would call for direct supervision by a foreman. The cost would be
calculated by estimating the time required and multiplying this time by the average
wages of the men employed. The men could also be paid on a piece-work basis.
Alternatively, this work could be done by a bulldozer which would have to be moved in
from another site. Let us assume that the cost of the hand labor would be $0.60 per
cubic meter and the bulldozer would cost $0.40 per cubic meter and would require $100
to move in from another site. The move-in cost for the bulldozer is a fixed cost, and is
independent of the quantity of the earthwork handled. If the bulldozer is used, no
economy will result unless the amount of earthwork is sufficient to carry the fixed cost
plus the direct cost of the bulldozer operation.
Figure 1.1 Breakeven Example for Excavation.

If, on a set of coordinates, cost in dollars is plotted on the vertical axis and units of
production on the horizontal axis, we can indicate fixed cost for any process by a
horizontal line parallel to the x-axis. If variable cost per unit output is constant, then the
total cost for any number of units of production will be the sum of the fixed cost and the
variable cost multiplied by the number of units of production, or F + NV. If the cost data
for two processes or methods, one of which has a higher variable cost, but lower fixed
cost than the other are plotted on the same graph, the total cost lines will intersect at
some point. At this point the levels of production and total cost are the same. This point
is known as the "breakeven" point, since at this level one method is as economical as
the other. Referring to Figure 1.1 the breakeven point at which quantity the bulldozer
alternative and the manual labor alternative become equal is at 500 cubic meters. We
could have found this same result algebraically by writing F + NV = F' + NV' where F and
V are the fixed and variable costs for the manual method, and F' and V' are the
corresponding values for the bulldozer method. Since all values are known except N, we
can solve for N using the formula N = (F' - F) / (V - V')
1.5 Minimum Cost Analyses

A similar, but different problem is the determination of the point of minimum total cost.
Instead of balancing two methods with different fixed and variable costs, the aim is to
bring the sum of two costs to a minimum. We will assume a clearing crew of 20 men is
clearing road right-of-way and the following facts are available:
1. Men are paid at the rate of $0.40 per hour.
2. Time is measured from the time of leaving camp to the time of return.
3. Total walking time per man is increasing at the rate of 15 minutes per day.
4. The cost to move the camp is $50.
If the camp is moved each day, no time is lost walking, but the camp cost is $50 per day.
If the camp is not moved, on the second day 15 crew-minutes are lost or $2.00. On the
third day, the total walking time has increased 30 minutes, the fourth day, 45 minutes,
and so on. How often should the camp be moved assuming all other things are equal?
We could derive an algebraic expression using the sum of an arithmetic series if we
wanted to solve this problem a number of times, but for demonstration purposes we can
simply calculate the average total camp cost. The average total camp cost is the sum of
the average daily cost of walking time plus the average daily cost of moving camp. If we
moved camp each day, then average daily cost of walking time would be zero and the
cost of moving camp would be $50.00. If we moved the camp every other day, the cost
of walking time is $2.00 lost the second day, or an average of $1.00 per day. The
average daily cost of moving camp is $50 divided by 2 or $25.00. The average total
camp cost is then $26.00. If we continued this process for various numbers of days the
camp remains in location, we would obtain the results in Table 1.1.
TABLE 1.1 Average daily total camp cost as the sum of the cost of walking time
plus the cost of moving camp.
Days camp remained Average daily cost of Average daily cost of Average total
in location walking time moving camp camp cost
1 0.00 50.00 50.00
2 1.00 25.00 26.00
3 2.00 16.67 18.67
4 3.00 12.50 15.50
5 4.00 10.00 14.00
6 5.00 8.33 13.33
7 6.00 7.14 13.14
8 7.00 6.25 13.25
9 8.00 5.56 13.56
10 9.00 5.00 14.00

We see the average daily cost of walking time increasing linearly and the average cost
of moving camp decreasing as the number of days the camp remains in one location
increases. The minimum cost is obtained for leaving the camp in location 7 days (Figure
1.2). This minimum cost point should only be used as a guideline as all other things are
rarely equal. An important output of the analysis is the sensitivity of the total cost to
deviations from the minimum cost point. In this example, the total cost changes slowly
between 5 and 10 days. Often, other considerations which may be difficult to quantify will
affect the decision. In Section 2, we discuss balancing road costs against skidding costs.
Sometimes roads are spaced more closely together than that indicated by the point of
minimum total cost if excess road construction capacity is available. In this case the goal
may be to reduce the risk of disrupting skidding production because of poor weather or
equipment availability. Alternatively, we may choose to space roads farther apart to
reduce environmental impacts. Due to the usually flat nature of the total cost curve, the
increase in total cost is often small over a wide range of road spacings.
Figure 1.2 Costs for Camp Location Example.

2. UNIT COST AND COST EQUATIONS
2.1 Introduction
2.2 Example of Cost Equations
2.3 Applications of Cost Equations
2.1 Introduction
The use of breakeven and minimum-cost-point formulas require the collection of unit
costs. Unit costs can be divided into subunits, each of which measures the cost of a
certain part of the total. A typical unit cost formula might be
X=a+b+c
where X is the cost per unit volume such as dollars per cubic meter and the subunits a,
b, c will deal with distance, volume, area, or weight. Careful selection of the subunits to
express the factors controlling costs is the key to success in all cost studies.
2.2 Example of Cost Equations

Let us suppose the cost of harvesting from felling to loading on trucks is being studied. If
X is the cost per cubic meter of wood loaded on the truck, we could represent the total
cost per unit as
X=A+B+Q+L
where A would be the cost per unit of felling, B the cost of bucking, Q the cost of
skidding, and L the cost of loading.
To determine the cost per subunit for felling, bucking, skidding, and loading, the factors
which determine production and cost must be specified. Functional forms for production
in road construction and harvesting are discussed in Sections 4 and 5. Examples for
felling and skidding follow.
For felling, tree diameter may be an important explanatory variable. For a given felling
method, the time required to fell the tree might be expressed as
T = a + b D2
where T is the time to fell the tree, b is the felling time required per cm of diameter, D is
the tree diameter and "a" represents the felling time not explained by tree diameter-such
as for walking between trees. The production rate is equal to the tree volume divided by
the time per tree. The unit cost of felling is equal to the cost per hour of the felling
operation divided by the hourly production or
A = C/P = C/(V/T) = C (a + B D2)/V

where C is the cost per hour for the felling method being used, P is the production per
hour, V is the volume per tree, and T is the time per tree. The hourly cost of operation is
referred to as the machine rate and is the combined cost of labor and equipment
required for production. (Machine rates are discussed in Section 3.)
EXAMPLE:
Determine the felling unit cost for a 60 cm tree if the cost per hour of a man with power
saw is $5.00, the tree volume is 3 cubic meters, and the time to fell the tree is 3 minutes
plus 0.005 times the square of the diameter.
T = 3 + .005 (60) (60) = 21 min = .35 hr

P = V/T = 3.0/.35 = 8.57 m3/hr
A = C/P = 5.00/8.57 = $0.58/m3
In skidding, for example, if logs were being skidded directly to a road (Figure 2.1), then
the distance skidded is an important factor and the stump to truck unit cost might be
written as
X=A+B+Q+L
X = A + B + F + C(D/2) + L
where the skidding subunit Q has been replaced by symbol F representing fixed costs of
skidding such as hooking, unhooking and decking and C(D/2) represents that part of the
skidding cost that varies with distance. C is the cost of skidding a unit distance such as
one meter and D/2 represents the average skidding distance in similar units. It is
important to note that the average skidding cost occurs at the average skidding distance
only when the skidding cost, C does not vary with distance. If C varies with distance, as
for example, with animal skidding where the animal can become increasingly tired with
distance, the average skidding cost does not occur at the average skidding distance and
substantial errors in unit cost calculations can occur if the average skidding distance is
used.
If logs were being skidded to a series of secondary roads (Figure 2.1) running into a
primary road, then the expression C(D/2) would be replaced by the expression C(S/4)
and the cost of truck haul on the secondary roads would appear as a separate item. In
the expression C(S/4), the symbol S represents the spacing of the secondary roads and
the distance S/4 is the average skidding distance if skidding could take place in both
directions. Therefore, the expression C(S/4) would define the variable skidding cost in
terms of spacing of the secondary roads.
Figure 2.1 Nomenclature for 2-way Skidding to Continuous Landings Among Spur
Roads.
A formula for the cost of logs on trucks at the primary road under these circumstances
would be
X = A + B + F + C(S/4) + L + H(D/2)
where D/2 is the average hauling distance along the secondary road and H is the
variable cost of hauling per unit distance.
The formula can be extended still further to include the cost of the secondary road
system by defining the road construction cost per meter R, and the volume per square
meter, V. Then, the formula becomes
X = A + B + F + C(S/4) + L + H(D/2) + R/(VS)
2.3 Applications of Cost Equations

In the preceding equation, we have a situation where as the spacing between skidding
roads increases, skidding unit costs increase, while road unit costs decrease. With the
total cost equation, we can look at the cost tradeoffs between skidding distance and road
spacing. Calculus can be used to derive the formula for road spacing which minimizes
costs as follows:
dX/dS = C/4 - R/(VS2) = 0

or
S = (4R/CV).5
An alternative method is to compare total costs for various road spacings. The total cost
method has become less laborious with the use of programmable calculators and
microcomputers. It provides information on the sensitivity of total unit cost to road
spacing without having to evaluate the derivative of the cost function.
EXAMPLE:
Given the following table of unit costs, what is the effect of alternative spur road
spacings on the total cost of wood delivered to the main road if 50 m3 per hectare is
being cut and the average length of the spur road is 2 km. The cost of spur roads
includes landings.
TABLE 2.1 Table of costs by activity for the road spacing example.
Activity Unit Cost
Fell $/m3 0.50
Buck $/m3 0.20
Skid $/m3 2.00 (fixed cost)
Skid $/m3-km 2.50 (variable cost)
Load $/m3 0.80
Transport $/m3-km 0.15
Roads $/km 2000
Since only the skidding costs and spur road costs are affected by the road spacing, the
total unit cost can be expressed as
X = A + B + F + C(S/4) + L + H(D/2) + R/(VS)

X + 0.50 + 0.20 + 2.00 + C(S/4) + 0.80 + .15 (1) + R/(VS)
X = 3.65 + C(S/4) + R/(VS)
To evaluate different road spacings, we vary the spur road spacing S and calculate the
total unit costs (Table 2.2). It is important to use dimensionally consistent units. That is, if
the left side of the equation is in $/m3, the right side of the equation must be in $/m3. This
is most easily done if all volumes, costs and distances are expressed in meters; such as
volume cut per m2, skidding cost per m3 per meter, and road cost per meter. For
example, the total cost for a spur road spacing of 200 meters is 3.65 + (2.5/1000)
(200/4) + (2000/1000)/[(50/10000) (200)] or $5.78 per m3.
TABLE 2.2 Total unit cost as a function of road spacing.
Spur Road Spacing, m Total Unit Cost, $/m3
200 5.78
400 4.90
600 4.69
800 4.65
1000 4.68
1200 4.73
1400 4.81
1600 4.90
1800 5.00
2000 5.10
The road spacing which minimized total cost could be interpolated from the table or
calculated from the formula
S = (4R/CV) .5
S = 800 m.
When costs have been collected in a form which permits unit costs to be developed from
them, not only is it possible to predict costs, it is also possible to adjust conditions so that
minimum cost can be achieved. Too often, recorded costs are only "experience figures".
They are usually made available in a form which can be used to predict costs only under
conditions that closely conform to those existing where and when the recorded costs
were collected. This is not true of unit costs, which can be fitted into the framework of
many different harvesting situations and can be made to tell the story of the future as
well as that of the past.
A wide range of cost control formulas can be derived. Typical problems include:
1. The economic location of roads and landings. - The calculation of the optimal spacing
between spur roads and landings subject to one-way skidding, two-way skidding,
skidding on slopes, linear and nonlinear skidding cost functions.
2. The economic service standard for roads. - The comparison of the benefits of lower
haul costs and road maintenance costs as a function of increased initial investment. The
calculation of the optimal length of swing roads as a function of the tributary volume.
3. The economic selection of equipment for road systems fixed by topography or other
factors. - The identification of the breakeven points between alternative skidding
methods which have different fixed and variable operating costs.
4. The economic spacing of roads which will be served by two types of skidding
machines. - For example, machines used to skid sawtimber and to relog for fuelwood.
5. The economic spacing of roads which will be reused in future time periods.
Another important application of unit costs is in choosing between alternative harvesting

systems.
EXAMPLE:
A forest manager is developing an area and is trying to decide between harvesting

methods. He has two choices of skidding systems (small or large), two choices of road
standards (high or low), and two choices of trucks (small or large). If larger skidding
equipment is selected to bring the logs to the landing, he can still choose to buck them
into smaller logs on the landing. We assume that bucking on the landing will not affect
log quality or yield.
The managers staff has developed the relevant unit costs, which are summarized in
Table 2.3 and Table 2.4. What should he do?
TABLE 2.3 Unit costs for options of using small equipment and large equipment.
Small Equipment Large Equipment

$/m3 $/m3
Fall, buck 0.70 0.50
Skid 1.70 2.55
Load 1.00 0.80

Transport 1/ 1/
Unload 0.40 0.30
Process - 0.05 2/
1/See Table 2.4 for transport costs as a function of road standard. Wood for large system
could be bucked on landing for $0.15/m3 and loaded on small trucks.
2/Large logs must be bucked at mill.
TABLE 2.4 Unit costs for road and transport options using small and large
equipment.
Small Equipment Large Equipment

$/m3 $/m3
Road
High Standard 1.30 1.30
Low Standard 1.00 1.00
Transport
High Standard 3.50 3.00
Low Standard 4.00 3.40
These choices can be viewed as a network (Figure 2.2). You can verify that the least
cost path is obtained by using the larger skidding equipment and trucks and constructing
the higher standard road. The total unit cost will be $8.50 per m3. A key point is the ease
at which these problems can be analyzed, once the unit costs have been derived. In
turn, the derivation of the unit costs is facilitated by having machine rates available
(Section 3).
Figure 2.2 Network Diagram for Equipment Choice

3. CALCULATION OF MACHINE RATES
3.1 Introduction
3.2 Classification of Costs
3.3 Definitions
3.4 Fixed Costs
3.5 Operating Costs
3.6 Labor Costs
3.7 Variable Effort Cycles
3.8 Animal Rates
3.9 Examples
3.1 Introduction
The unit cost of logging or road construction is essentially derived by dividing cost by
production. In its simplest case, if you rented a tractor with operator for $60 per hour -
including all fuel and other costs - and you excavated 100 cubic meters per hour, your
unit cost for excavation would be $0.60 per cubic meter. The hourly cost of the tractor
with operator is called the machine rate. In cases where the machine and the elements
of production are not rented, a calculation of the owning and operating costs is
necessary to derive the machine rate. The objective in developing a machine rate should
be to arrive at a figure that, as nearly as possible, represents the cost of the work done
under the operating conditions encountered and the accounting system in use. Most
manufacturers of machinery supply data for the cost of owning and operating their
equipment that will serve as the basis of machine rates. However, such data usually
need modification to meet specific conditions of operation, and many owners of
equipment will prefer to prepare their own rates.
3.2 Classification of Costs

The machine rate is usually, but not always, divided into fixed costs, operating costs, and
labor costs. For certain cash flow analyses only items which represent a cash flow are
included. Certain fixed costs, including depreciation and sometimes interest charges, are
omitted if they do not represent a cash payment. In this manual, all fixed costs discussed
below are included. For some analyses, labor costs are not included in the machine rate.
Instead, fixed and operating costs are calculated. Labor costs are then added
separately. This is sometimes done in situations where the labor associated with the
equipment works a different number of hours from the equipment. In this paper, labor is
included in the calculation of the machine rate.
3.2.1 Fixed Costs
Fixed costs are those which can be predetermined as accumulating with the passage of
time, rather than with the rate of work (Figure 3.1). They do not stop when the work
stops and must be spread over the hours of work during the year. Commonly included in
fixed costs are equipment depreciation, interest on investment, taxes, and storage, and
insurance.
3.2.2 Operating Costs
Operating costs vary directly with the rate of work (Figure 3.1). These costs include the
costs of fuel, lubricants, tires, equipment maintenance and repairs.
Figure 3.1 Equipment Cost Model.

3.2.3 Labor Costs
Labor costs are those costs associated with employing labor including direct wages,
food contributions, transport, and social costs, including payments for health and
retirement. The cost of supervision may also be spread over the labor costs.
The machine rate is the sum of the fixed plus operating plus labor costs. The division of
costs in these classifications is arbitrary although accounting rules suggest a rigid
classification. The key point is to separate the costs in such a way as to make the most
sense in explaining the cost of operating the men and equipment. For example, if a
major determinant of equipment salvage value is the rate of obsolescence such as in the
computer industry, the depreciation cost is largely dependent on the passage of time, not
the hours worked. For a truck, tractor, or power saw, a major determinant may be the
actual hours of equipment use. The tractor's life could be viewed as the sand in an hour
glass which is only permitted to flow during the hours the equipment is working.
3.3 Definitions
3.3.1 Purchase Price (P)
This is the actual equipment purchase cost including the standard attachments, optional
attachments, sales taxes, and delivery costs. Prices are usually quoted at the factory or
delivered at the site. The factory price applies if the buyer takes title to the equipment at
the factory and is responsible for shipment. On the other hand, delivered price applies if
the buyer takes title to the equipment after it is delivered. The delivered price usually
includes freight, packing, and insurance. Other costs such as for installation should be
included in the initial investment cost. Special attachments may sometimes have a
separate machine rate if their lives differ from the main equipment and form an important
part of the equipment cost.
3.3.2 Economic Life (N)
This is the period over which the equipment can operate at an acceptable operating cost
and productivity. The economic life is generally measured in terms of years, hours, or in
the case of trucks and trailers in terms of kilometers. It depends upon a variety of
factors, including physical deterioration, technological obsolescence or changing
economic conditions. Physical deterioration can arise from factors such as corrosion,
chemical decomposition, or by wear and tear due to abrasion, shock and impact. These
may result from normal and proper usage, abusive and improper usage, age, inadequate
or lack of maintenance, or severe environmental conditions. Changing economic
conditions such as fuel prices, tax investment incentives, and the rate of interest can
also affect the economic life of equipment. Examples of ownership periods for some
types of skidding and road construction equipment, based upon application and
operating conditions, are shown in Table 3.1. Since the lives are given in terms of
operating hours, the life in years is obtained by working backwards by defining the
number of working days per year and the estimated number of working hours per day.
For equipment that works very few hours per day, the derived equipment lives may be
very long and local conditions should be checked for the reasonableness of the
estimate.
3.3.3 Salvage Value (S)
This is defined as the price that equipment can be sold for at the time of its disposal.
Used equipment rates vary widely throughout the world. However, in any given used
equipment market, factors which have the greatest effect on resale or trade-in value are
the number of hours on the machine at the time of resale or trade-in, the type of jobs and
operating conditions under which it worked, and the physical condition of the machine.
Whatever the variables, however, the decline in value is greater in the first year than the
second, greater the second year than the third, etc. The shorter the work life of the
machine, the higher the percentage of value lost in a year. In agricultural tractors for
example, as a general rule 40 to 50 percent of the value of the machine will be lost in the
first quarter of the machine's life and by the halfway point of lifetime, from 70 to 75
percent of the value will be lost. The salvage value is often estimated as 10 to 20
percent of the initial purchase price.
3.4 Fixed Costs
3.4.1 Depreciation
The objective of the depreciation charge is to recognize the decline of value of the
machine as it is working at a specific task. This may differ from the accountant's
depreciation schedule-which is chosen to maximize profit through the advantages of
various types of tax laws and follows accounting convention. A common example of this
difference is seen where equipment is still working many years after it was "written off" or
has zero "book value".
Depreciation schedules vary from the simplest approach, which is a straight line decline
in value, to more sophisticated techniques which recognize the changing rate of value
loss over time. The formula for the annual depreciation charge using the assumption of
straight line decline in value is
D = (P' - S)/N
where P' is the initial purchase price less the cost of tires, wire rope, or other parts which
are subjected to the greatest rate of wear and can be easily replaced without effect upon
the general mechanical condition of the machine.
Table 3.1.a - Guide for selecting ownership period based on application and
operating conditions.1/
ZONE A ZONE B ZONE C
TRACK-TYPE Pulling scrapers, most Production dozing in Heavy rock ripping.

TRACTORS agricultural drawbar, clays, sands, gravels. Tandem ripping.
stockpile, coalpile and Pushloading scrapers, Pushloading and dozing
landfill work. No impact. borrow pit ripping, most in hard rock. Work on
Intermittent full throttle landclearing and skidding rock surfaces.
operation. applications. Medium Continuous high impact
impact conditions. conditions.
Small 12,000 Hr 10,000 Hr 8,000 Hr
Large 22,000 Hr 18,000 Hr 15,000 Hr
MOTORGRADERS Light road maintenance. Haul road maintenance. Maintenance of hard

Finishing. Plant and road Road construction, pack roads with
mix work. Light ditching. Loose fill embedded rock. Heavy
snowplowing. Large spreading. Landforming, fill spreading. Ripping-
amounts of traveling. land-leveling. Summer scarifying of asphalt or
road maintenance with concrete. Continuous
medium to heavy winter high load factor. High
snow removal. Elevating impact.
grader use.
20,000 Hr 15,000 Hr 12,000 Hr
EXCAVATORS Shallow depth utility Mass excavation or Continuous trenching or

construction where trenching where machine truck loading in rock or
excavator sets pipe and digs all the time in shot rock soils. Large
digs only 3 or 4 natural bed clay soils. amount of travel over
hours/shift. Free flowing, Some traveling and rough ground. Machine
low density material and steady, full throttle continuously working on
little or no impact. Most operation. Most log rock floor with constant
scrap handling loading applications. high load factor and high
arrangements. impact.
12,000 Hr 10,000 Hr 8,000 Hr

1/
Adapted from Caterpillar Performance Handbook, Caterpillar Inc.
Table 3.1.b - Guide for selecting ownership period based on application and
WHEEL Intermittent skidding for Continuous turning, steady Continuous turning,

SKIDDERS short distances, no skidding for medium steady skidding for long
decking. Good distances with moderate distances with frequent
underfoot conditions: decking. Good decking. Poor underfloor
level terrain, dry floor, underfooting: dry floor with conditions: wet floor,
few if any stumps. few stumps and gradual steep slopes and
rolling terrain. numerous stumps.
12,000 Hr 10,000 Hr 8,000 Hr
WHEEL Level or favorable hauls Varying loading and haul High impact condition,
TRACTOR on good haul roads. No road conditions. Long and such as loading ripped
SCRAPERS impact. Easy-loading short hauls. Adverse and rock. Overloading.
materials. favorable grades. Some Continuous high total
impact. Typical road- resistance conditions.
building use on a variety of Rough haul roads.
jobs.
Small 12,000 Hr 10,000 Hr 8,000 Hr
Large 16,000 Hr 12,000 Hr 8,000 Hr
OFF HIGHWAY Mine and quarry use Varying loading and haul Consistently poor haul
TRUCKS & with properly matched road conditions. Typical road conditions. Extreme
TRACTORS loading equipment. Well road-building use on a overloading. Oversized
maintained haul roads. variety of jobs. loading equipment.
Also construction use
under above conditions.
25,000 Hr 20,000 Hr 15,000 Hr
WHEEL Light utility work. Production dozing, Production dozing in rock.

TRACTORS & Stockpile work. Pulling pushloading in clays, Pushloading in rocky,
COMPACTORS compactors. Dozing sands, silts, loose gravels. bouldering borrow pits.
loose fill. No impact. Shovel cleanup. High impact conditions.
Compactor use.
15,000 Hr 12,000 Hr 8,000 Hr

1/
Table 3.1.c - Guide for selecting ownership period based on application and
WHEEL Intermittent truck loading Continuous truck loading Loading shot rock (large
LOADERS from stockpile, hopper from stockpile. Low to loaders). Handling high density
charging on firm, smooth medium density materials with counterweighted
surfaces. Free flowing, low materials in properly machine. Steady loading from
density materials. Utility sized bucket. Hopper very tight banks. Continuous
work in governmental and charging in low to work on rough or very soft
industrial applications. Light medium rolling surfaces. Load and carry in
snowplowing. Load and resistance. Loading from hard digging; travel longer
carry on good surface for bank in good digging. distances on poor surfaces with
short distances with no Load and carry on poor adverse grades.
grades. surfaces and slight
adverse grades.
Small 12,000 Hr 10,000 Hr 8,000 Hr
Large 15,000 Hr 12,000 Hr 10,000 Hr
TRACK- Intermittent truck loading Bank excavation, Loading shot rock, cobbles,
TYPE from stockpile. Minimum intermittent ripping, glacial till, caliche. Steel mill
LOADERS traveling, turning. Free basement digging of work. High density materials in
flowing, low density natural bed clays, sands, standard bucket. Continuous
materials with standard silts, gravels. Some work on rock surfaces. Large
bucket. No impact. traveling. Steady full amount of ripping of tight, rocky
throttle operation. materials. High impact
condition.
12,000 Hr 10,000 Hr 8,000 Hr

1/
3.4.2 Interest
Interest is the cost of using funds over a period of time. Investment funds may be
borrowed or taken from savings or equity. If borrowed, the interest rate is established by
the lender and varies by locality and lending institution. If the money comes from
savings, then opportunity cost or the rate this money would earn if invested elsewhere is
used as the interest rate. The accounting practice of private firms may ignore interest on
equipment on the ground that interest is a part of profits and, therefore, not a proper
charge against operating equipment. Although this is sound from the point of view of the
business as a whole, the exclusion of such charges may lead to the development of
unrealistic comparative rates between machines of low and high initial cost. This may
lead to erroneous decisions in the selection of equipment.
Interest can be calculated by using one of two methods. The first method is to multiply
the interest rate by the actual value of the remaining life of the equipment. The second
simpler method is to multiply the interest rate times the average annual investment.
For straight-line depreciation, the average annual investment, AAI, is calculated as
AAI = (P - S) (N + 1)/(2N) + S
Sometimes a factor of 0.6 times the delivered cost is used as an approximation of the
average annual investment.
3.4.3 Taxes
Many equipment owners must pay property taxes or some type of usage tax on
equipment. Taxes, like interest, can be calculated by either using the estimated tax rate
multiplied by the actual value of the equipment or by multiplying the tax rate by the
average annual investment.
3.4.4 Insurance
Most private equipment owners will have one or more insurance policies against
damage, fire, and other destructive events. Public owners and some large owners may
be self-insured. It could be argued that the cost of insurance is a real cost that reflects
the risk to all owners and some allowance for destructive events should be allowed. Not
anticipating the risk of destructive events is similar to not recognizing the risk of fire or
insect damage in planning the returns from managing a forest. Insurance calculations
are handled in the same way as interest and taxes.
3.4.5 Storage and Protection
Costs for equipment storage and off-duty protection are fixed costs, largely independent
of the hours of use. Costs of storage and protection must be spread over the total hours
of equipment use.
3.5 Operating Costs

Operating costs, unlike fixed costs, change in proportion to hours of operation or use.
They depend upon a variety of factors, many of which are, to some extent, under the
control of the operator or equipment owner.
3.5.1 Maintenance and Repair
This category includes everything from simple maintenance to the periodic overhaul of
engine, transmission, clutch, brakes and other major equipment components, for which
wear primarily occurs on a basis proportional to use. Operator use or abuse of
equipment, the severity of the working conditions, maintenance and repair policies, and
the basic equipment design and quality all affect maintenance and repair costs.
The cost of periodically overhauling major components may be estimated from the
owner's manual and the local cost of parts and labor, or by getting advice from the
manufacturer. Another owner's experience with similar equipment and cost records
under typical working conditions is a valuable source. If experienced owners or cost
records are not available, the hourly maintenance and repair cost can be estimated as a
percentage of hourly depreciation (Table 3.2).
TABLE 3.2. Maintenance and repair rates as a percentage of the hourly

depreciation for selected equipment.
Machine Percentage Rate
Crawler tractor 100
Agricultural tractor 100
Rubber-tired skidder with cable chokers 50
Rubber-tired skidder with grapple 60
Loader with cable grapple 30
Loader with hydraulic grapple 50
Power saw 100
Feller-buncher 50
3.5.2 Fuel
The fuel consumption rate for a piece of equipment depends on the engine size, load
factor, the condition of the equipment, operator's habit, environmental conditions, and
the basic design of equipment.
To determine the hourly fuel cost, the total fuel cost is divided by the productive time of
the equipment. If fuel consumption records are not available, the following formula can
be used to estimate liters of fuel used per machine hour,
where LMPH is the liters used per machine hour, K is the kg of fuel used per brake
hp/hour, GHP is the gross engine horsepower at governed engine rpm, LF is the load
factor in percent, and KPL is the weight of fuel in kg/liter. Typical values are given in
Table 3.3. The load factor is the ratio of the average horsepower used to gross
horsepower available at the flywheel.
TABLE 3.3. Weights, fuel consumption rates, and load factors for diesel and
gasoline engines.
Engine Weight Fuel Consumption Load Factor

(KPL) (K) (LF)
kg/liter kg/brake hp-hour
Low Med High
Gasoline 0.72 0.21 0.38 0.54 0.70
Diesel 0.84 0.17 0.38 0.54 0.70
3.5.3 Lubricants
These include engine oil, transmission oil, final drive oil, grease and filters. The
consumption rate varies with the type of equipment, environmental working condition
(temperature), the design of the equipment and the level of maintenance. In the absence
of local data, the lubricant consumption in liters per hour for skidders, tractors, and front-
end loaders could be estimated as
Q = .0006 × GHP (crankcase oil)

Q = .0003 × GHP (transmission oil)
Q = .0002 × GHP (final drives)
Q = .0001 × GHP (hydraulic controls)
These formulas include normal oil changes and no leaks. They should be increased 25
percent when operating in heavy dust, deep mud, or water. In machines with complex
and high pressure hydraulic systems such as forwarders, processors, and harvesters,
the consumption of hydraulic fluids can be much greater. Another rule of thumb is that
lubricants and grease cost 5 to 10 percent of the cost of fuel.
3.5.4 Tires
Due to their shorter life, tires are considered an operating cost. Tire cost is affected by
the operator's habits, vehicle speed, surface conditions, wheel position, loadings, relative
amount of time spent on curves, and grades. For off-highway equipment, if local
experience is not available, the following categories for tire life based upon tire failure
mode could be used as guidelines with tire life given in Table 3.4.
In Zone A, almost all tires wear through to tread from abrasion before failure. In Zone B,
most tires wear out - but some fail prematurely from rock cuts, rips, and non-repairable
punctures. In Zone C, few if any tires wear through the tread before failure due to cuts.
TABLE 3.4. Guidelines for tire life for off-highway equipment
Equipment Tire Life, hours
Zone A Zone B Zone C
Motor graders 8000 4500 2500
Wheel scrapers 4000 2250 1000
Wheel loaders 4500 2000 750
Skidders 5000 3000 1500
Trucks 5000 3000 1500
3.6 Labor Costs

Labor costs include direct and indirect payments such as taxes, insurance payments,
food, housing subsidy, etc. Labor costs need to be carefully considered when calculating
machine rates since the hours the labor works often differs from the hours the
associated equipment works. What is important is that the user define his convention
and then to use it consistently. For example, in felling, the power saw rarely works more
than 4 hours per day, even though the cutter may work 6 or more hours and may be paid
for 8 hours, including travel. If felling production rates are based upon a six-hour working
day, with two hours of travel, the machine rate for an operator with power saw should
consider 4 hours power saw use and eight hours labor for six hours production.
3.7 Variable Effort Cycles

The concept that men or equipment work at constant rates is an abstraction that
facilitates measurements, record keeping, payments and analysis. However, there are
some work cycles which require such variable effort that it is more useful to construct
machine rates for parts of the cycle. One important case is the calculation of the
machine rate for a truck. When a log truck is waiting to be loaded, is being loaded, and is
being unloaded, its fuel consumption, tire wear, and other running costs are not being
incurred. Or, if these costs are incurred, they are at a much reduced rate. For the
standing truck, a different machine rate is often constructed using only the fixed cost and
the labor cost for this part of the cycle. Part or all of the truck depreciation may be
included.
If a single machine rate were used to estimate the unit cost for truck transport and this
value was converted to a ton-km cost or $/m3-km cost without removing the "fixed" cost
of loading and unloading then the "variable" cost of transport would be overestimated.
This could lead to erroneous results when choosing between road standards or haul
routes.
3.8 Animal Rates

The calculation of the animal rate is similar to the machine rate, but the types of costs
differ and merit additional discussion.
3.8.1 Fixed Cost
The fixed cost includes the investment cost of the animal or team, harness, yoke, cart,
logging chains and any other investments with a life more than one year. Other fixed
costs include the upkeep of the animals.
The purchase price of the animal may include spare animals if the working conditions
require that the animal receive rest more than overnight, such as every other day. To
allow for the possibility of permanent injury, the animal purchase price may be increased
to include extra animals. In other cases, accidents can be allowed for in the insurance
premium. The salvage cost for the animal has the same definition as for a machine rate
but in the case of the animal, the salvage value is often determined by its selling value
for meat. Average annual investment, interest on investment, and any taxes or licenses
are treated the same as for equipment. To find the total fixed costs for the animals, the
fixed costs for the animal, cart, harness, and miscellaneous investments can be
calculated separately since they usually have unequal length lives and the hourly costs
added together.
Animal support costs which do not vary directly with hours worked include pasture rental,
food supplements, medicine, vaccinations, veterinarian services, shoes, ferrier services
and any after-hours care such as feeding, washing or guarding. It could be argued that
food and care requirements are related to hours worked and some part of these costs
could be included in operating costs. Pasture area (ha/animal) can be estimated by
dividing the animal consumption rate (kg/animal/month) by the forage production rate
(kg/ha/month). Food supplements, medicine, vaccinations, and veterinarian schedules
can be obtained from local sources such as agricultural extension agents.
3.8.2 Operating Costs
Operating costs include repair and maintenance costs for harnesses, carts, and
miscellaneous equipment.
3.8.3 Labor Costs

The labor cost in the animal rate is for the animal driver (and any helpers). For full year
operations it is calculated as the labor cost per year including social costs divided by the
average number of working days or hours for the driver (and any helpers).
3.9 Examples
Examples of machine rates for a power saw, a tractor, a team of oxen, and a truck are in
the following tables. Although the machine rates in Tables 3.5 to 3.8 share the same
general format, there is flexibility to represent costs that are specific to the machine type,
particularly in the calculation of the operating costs. For the power saw (Table 3.5), major
operating expenses are identified with the chain, bar, and sprocket so they have been
broken out separately. For the oxen (Table 3.7), the fixed costs have been divided into
major cost components specific to maintaining animals, in addition to depreciation. For
the truck (Table 3.8), costs have been divided in standing costs and traveling costs to
differentiate between costs when the truck is standing by, being loaded, or unloaded as
compared to traveling costs.
TABLE 3.5 Machine Rate Calculation for a Power Saw1
Machine: Description - McCulloch Pro Mac 650 Power Saw
Motor cc 60 Delivered Cost 400
Life in hours 1000 Hours per year 1000
Fuel: Type Gas Price per liter 0.56
Oper: Rate per day 5.50 Social Costs 43.2%
Cost Component Cost/hour
(a) Depreciation 0.36
(b) Interest 0.03

(@ 10% )
(c) Insurance 0.01

(@ 3%)
(d) Taxes -
(e) Labor 1.892
where f = social costs of labor as decimal
SUB-TOTAL 2.29
(f) Fuel = 0.86 l/hr × .95 × CL +0.86 l/hr × .05 × CO) 0.51
where CL = cost of gas, CO = cost of oil
(g) Lube oil for bar and chain = Fuel cons/2.5 × CO 0.45
(h) Servicing and repairs = 1.0 × depreciation 0.36
(i) Chain, bar, and sprocket 0.67
(j) Other 0.22
TOTAL 4.503
1
All costs are in US$.
2
Labor based on 240 days per year.
3
Add 0.04 if standby saw is purchased.
TABLE 3.6 Machine Rate Calculation for a Tractor1
Machine: Description - CAT D-6D PS
Gross hp 140 Delivered cost 142,0002
Life in hrs 10,000 Hrs per year 1,000
Fuel: Type Diesel Price per liter .44
Oper: Rate per day 12.00 Social Costs 43.2%
Help: Rate per day 5.00 Social Costs 43.2%

(b) Interest 8.52
(@ 10% )
(c) Insurance 2.56

(@ 3%)
(d) Taxes 1.70

(@ 2%)
(e) Labor 5.843
SUB-TOTAL 31.40
(f) Fuel = .20 × GHP × LF × CL 6.65
where GHP = gross engine horsepower

CL = cost per liter for fuel
LF = load factor (.54)
(g) Oil and grease = 0.10 × fuel cost 0.67
(i) Other (cable, misc) 5.00
TOTAL 56.50
1
2
With blade, ROPS, winch, integral arch.
3
Labor based upon 240 days per year.
TABLE 3.7 Machine Rate Calculation for a Team of Oxen1
Description - Pair of oxen for skidding
Gross hp - Delivered cost 2,000
Life in years 5 Days per year 125
Labor Rate per day 7.00 Social Costs 43.2%

Cost Component Cost/day
(b) Interest 0.96

(@ 10%)
(c) Taxes -
(d) Pasture 1.10
(e) Food supplements 1.36
(f) Medicine and veterinary services 0.27
(g) Driver 10.023
(h) After-hours feeding and care 2.62
(i) Other (harness and chain) 1.00
TOTAL 19.41
1
2
Oxen sold for meat after 5 years.
3
Driver works with two pair of oxen, 250 day year.
TABLE 3.8 Machine Rate Calculation for a Truck1
Machine: Description - Ford 8000 LTN
Gross hp 200 Delivered cost 55,000
Life in hrs 15,000 Hrs per year 1,500
Fuel: Type Diesel Price per liter .26

Tires: Size 10 × 22 Type Radial Number 10
Labor Rate per day 12.00 Social Costs 43.2%
(b) Interest 2.20

(@ 10%)
(c) Insurance 0.66

(@ 3%)
(d) Taxes 0.44

(@ 2%)
(e) Labor 3.302
Standing Cost SUB-TOTAL 9.72
(f) Fuel = .12 × GHP × CL 6.24
where CL = cost per liter for fuel
(g) Oil and grease = 0.10 × fuel cost 0.62
(i) Tires = 2.40
(j) Other (chains, tighteners) 0.20
Traveling Cost TOTAL 23.86

1
4. ESTIMATING ROAD CONSTRUCTION UNIT COSTS
4.1 Introduction
4.2 Surveying
4.3 Clearing and Piling
4.4 Earthwork
4.5 Finish Grading
4.6 Surfacing
4.7 Drainage
4.1 Introduction
The unit cost of road construction in dollars per kilometer is the sum of the subunit costs
of the road construction activities. Road construction unit costs are estimated by dividing
the machine rates by the production rates for the various activities involved in road
construction. The road construction activities considered here are surveying, clearing
and grubbing, excavation, surfacing, and drainage.
4.2 Surveying
Surveying and staking costs vary considerably depending on type and size of the job,
access, terrain, and job location. One method of estimating production is to estimate the
number of stakes which can be set per hour and the number of stakes which must be set
per kilometer. For example, assume about 15 stakes can be set per hour with a two-man
crew with the preliminary survey line already in place. A typical five-point section consists
of two reference stakes, two slope stakes, and one final centerline stake.
The surveying production rate in km per hour is equal to the number of stakes the crew
sets per hour divided by the number of stakes required per km.
Example:
A survey crew is setting 300 stakes per km at a rate of 15 stakes per hour. The cost of a
survey crew including transport is $10 per hr.
P = 15/300 = .05 km/hr
UC = 10/.05 = $200/km
4.3 Clearing and Piling

The clearing and piling cost can be calculated by estimating the number of hectares of
right-of way to be cleared and piled per kilometer of road. The clearing and piling
production rate in km/hr is the hectares per hour which can be cleared and piled per
hour divided by the number of hectares per km to be cleared and piled. Clearing can be
accomplished in a number of ways, including men with axes or power saws.
Merchantable logs may be removed by skidder or tractor and the remainder piled by
tractor for burning or decay. Felling rates and skidding rates for logging can be used for
determining the cost of the removal of merchantable logs.
On gentle terrain, if a wide right-of-way is being cleared to permit sunlight to dry the road
surface after frequent rains, the project might be estimated as a land clearing project. A
method for estimating the total time per hectare required to clear, grub, and pile on
gentle terrain with a tractor and shearing blade is shown below. Additional details can be
found in the Caterpillar Performance Handbook No. 21, Caterpillar, Inc.
4.3.1 Mechanized Clearing
The clearing time will depend upon the size of tractor and the number and size of the
trees. The clearing time, Tc, in machine hours per hectare is
Tc = (X/60) (AB + M1N1 + M2N2 + M3N3 + M4N4 + DF)
where X is the hardwood density factor, A is the vine density factor, B is the base
minutes per hectare, M is the minutes per tree in each diameter range, N is the number
of trees per hectare in each diameter range, D is the sum of the diameters of all trees
per hectare larger than 180 cm, and F is the minutes per cm of diameter to cut trees with
diameters greater than 180 cm.
TABLE 4.1. Production factors for felling with Rome KG blade.
Tractor Factors Diameter Range, cm Min per cm of diameter for trees
GHP 30-60 61-90 91-120 121-180 > 180 cm
B M1 M2 M3 M4 F
140 100 0.8 4.0 9.0 - -
200 62 0.5 1.8 3.6 11 0.110
335 45 0.2 1.3 2.2 6 0.060
460 39 0.1 0.4 1.3 3 0.033
X = 1.3 if the percentage of hardwoods > 75 and X = 0.7 if percentage of hardwood is <
25, X = 1 otherwise.
A = 2.0 if number of trees/ha > 1500 and A = 0.7 if number of trees/ha < 1000, A = 1.0
otherwise. Increase value of A by 1.0 if there are heavy vines, and by 2.0 for very heavy
vines.
For hectares which must be cleared and where stumps must be removed (grubbed),
multiply the total time for clearing by a factor of 1.25.
4.3.2 Mechanized Piling
To compute piling time, when a rake or angled shearing blade is used, an equation to
calculate the piling time per hectare, Tp, is
Tp = (1/60) (B + M1N1 + M2N2 + M3N3 + M4N4 + DF)
where the variables are defined as above. Table 4.2 shows the coefficients for piling
when stumps have not been removed.
TABLE 4.2. Production factors for piling in windrows.
Tractor Factors Diameter Range, cm Min per cm of diameter for trees
GHP 30-60 61-90 91-120 121-180 > 180 cm
B M1 M2 M3 M4 F
140 185 0.6 1.2 5.0 - -
200 135 0.4 0.7 2.7 5.4 -
335 111 0.1 0.5 1.8 3.6 0.03
460 97 0.08 0.1 1.2 2.1 0.01
When piling is to include piling of stumps, increase the total piling time by 25 percent.
EXAMPLE:
Five hectares per km of right-of-way in hardwoods are being cleared for a road (extra
width is being used to help the road dry after rains). Of the five hectares, 1.2 hectares
per km will need to have the stumps removed. Tractor machine rate is $80 per hour. All
material will be piled for burning. Work is being done by a 335 HP bulldozer. The
average number of trees per hectare less than 180 cm diameter are in Table 4.3. There
is also one tree per hectare with a diameter of approximately 185 cm.
TABLE 4.3 Data for clearing, grubbing and piling example.
Number of trees Diameter Range, cm Sum of tree diameters for trees

<30 cm 30-60 61-90 91-120 121-180 > 180 cm
N1 N2 N3 N4 D
1100 35 6 6 4 185
Tc = (X/60) (AB + M1N1 + M2N2 + M3N3 + M4N4 + DF)
Tc = (1.3/60) [(1) (45) + (.2) (35) + (1.3) (6) + (2.2) (6) + (6) (4) + (185) (0.06)] = 2.34
hr/ha
Tp = (1/60) (B + M1N1 + M2N2 + M3N3 + M4N4 + DF)
Tp = (1/60) [111 + (.1) (35) + (.5) (6) + (1.8) (6) + (3.6) (4) + (185) (0.03) ] = 2.47 hr/ha
Total tractor time/km = 3.8 (2.34 + 2.47) + 1.2(1.25) (2.34 + 2.47) = 25.5 hr/km
P = 1/25.5 = .039 km/hr

UC = 80 × 25.5 = $ 2039/km
4.4 Earthwork
The earthwork cost is calculated by estimating the number of cubic meters of common
material and rock which must be moved to construct the road. The earthwork production
rate is calculated as the cubic meters per hour which can be excavated and placed
divided by the number of cubic meters per km to be excavated.
Road construction superintendents can often estimate the number of meters per hour
that their equipment can build road based upon local experience after looking at the
topography. The engineer's method is to calculate the number of cubic meters to be
excavated using formulas or tables for calculating earthwork quantities as a function of
sideslope, road width, cut and fill slope ratios. Production rates for bulldozers and
hydraulic excavators are available.
For example, a 6.0 meter subgrade on a 30 percent slope with a 1.5:1 fill slope and 0.5:1
cut slope with a one foot ditch and a 20 percent shrinkage factor would be approximately
2100 bank cubic meters per km for a balanced section.
An average production rate in common material (no rock) from an equipment

performance handbook might be 150 bank cubic meters per hour for a 300 hp power-
shift tractor with ripper. The tractor cost is $80/hr. The rate of excavation would be
P = (150 m3/hr)/(2100 m3/km) = .07 km/hr
UC = 80/.07 = $1143/km
If the earthwork is not being placed or sidecast within 50 meters of the cut, the
production rate for pushing the material to the placement location must be made.
Scrapers or excavators and dump trucks may be used.
Excavation rates in rock vary with the size of job, hardness of rock and other local
conditions. Often there is a local market price for blasting. Estimates of blasting
production can be made by knowing the size of equipment and the type of job. For
example, a 10 cm track-mounted drill and 25 cubic meter per minute air-compressor
may prepare 40 cubic meters per hour for small, shallow blasts and 140 cubic meters
per hour for larger, deeper blasts including quarry development to produce rock
surfacing. A major cost will be explosives. For example, 0.8 kg of explosive such as
Tovex might be used per cubic meter of rock at a cost of approximately $2 per kg.
4.5 Finish Grading

Finish grading of the subgrade can be estimated by determining the number of passes a
grader must make for a certain width subgrade and the speed of the grader. This
number can be converted to the number of hours per hectare of subgrade. For example,
a 120 hp grader may require about 10 hours of productive machine time without delays
per hectare of subgrade or 0.1 hectares per hour. The production rate for final grading of
a 6.0 meter subgrade would then be,
P = (0.1 ha/hr)/(0.6 ha/km) = .17 km/hr
If the grader cost is $30/hr, the unit cost of grading is
UC = 30/.17 = $176/km
Similarly, the rate of pulling ditches per kilometer can be estimated.
4.6 Surfacing
Surfacing costs are a function of the type of surfacing material, the quantity of surfacing
material per square meter, and the length of haul. Local information is the best guide in
constructing surfacing costs due to the wide range of conditions that can be
encountered.
Natural gravel from streams may require only loading with front-end loaders directly to
dump trucks, transporting, spreading, and may or may not be compacted.
Laterite may be ripped by crawler tractor, loaded by front-end loader, transported, spread
and grid-rolled with a sheeps-foot roller to produce a sealed running surface.
Rock may have to be blasted, loaded into one or more crusher(s), stockpiled, reloaded,
transported, spread, and compacted.
The costs for each of these operations can be developed by estimating the equipment
production rates and machine rates.
EXAMPLE:
A relatively complex surfacing operation requires developing a 20,000 cubic meter solid
rock source (26,400 cubic meters in the road prism) to surface 26.4 km of road including
shooting and crushing rock, loading, transporting, and spreading rock as follows.
To open up rock source, use data from clearing and common excavation:
(a) To clear and excavate to rock:
Equipment Machine Hours Machine Rate Cost
Tractor 27 72.00 1944.00
Cost per cubic meter solid rock = $0.10
(b) To drill and blast at a production rate of 140 cubic meters per hour
Drills 1.0 60.00 60.00
Compressor 1.0 55.00 55.00
Explosives 0.8 kg × $2.0/kg × 140 m3 224.00
339.00
(c) To crush 225 tons per hour (2.6 tons/solid cubic meter):
Tractor 0.5 72.00 36.00
Loader 1.0 90.00 90.00
Crusher 1.0 90.00 90.00
Stacker 1.0 15.00 15.00
Generator 1.0 20.00 20.00
251.00
(d) To load, transport, spread 20,000 cubic meters of rock.
1 truck × 3 loads/hr × 20 tons/ld × m3/2.6 ton = 23 m3/hr
If 4 trucks are used:
4 trucks 870 50.00 43,500
Loader 218 90.00 19,600
Tractor 218 72.00 15,700
Grader 30 60.00 1,800
80,600
The total unit cost of per cubic meter of rock spread on the road is
Activity $/m3 $/m3

solid prism $/km
Develop pit 0.10 0.08 74
Drill and blast 2.42 1.83 1833
Crush 2.90 2.20 2197
Load, transport, and spread 4.03 3.05 3053
9.45 7.16 7157
Equipment balancing plays an important role in obtaining the minimum cost per cubic
meter for surfacing. In some areas, market prices for various types of surfacing may
exist and tradeoffs between aggregate cost, aggregate quality, and hauling distance will
have to be evaluated. Since surfacing is often expensive, a surveying crew is sometimes
added to stake and monitor the surfacing operation.
4.7 Drainage
Drainage costs vary widely with the type of drainage being installed. The costs of
drainage dips (water bars), culverts, and bridges are often expressed as a cost per lineal
foot which can then be easily applied in road estimating. Local values for cost per lineal
foot for culverts and different types of bridges are generally available. If not, constructed
costs can be made by using time study data.
EXAMPLE:
A 45 cm culvert, 10 meters long, is being installed. Experience indicates that a small

backhoe and operator, and two laborers can install 3 culverts per day. The culvert crew
uses a flat-bed truck to transport themselves and the pipe each day.
To install 3 culverts:
Backhoe 6 60.00 360.00
Truck 9 12.00 108.88
Pipe Cost 30 meters × $15/meter 450.00
918.00
Cost per lineal meter of culvert = $30.60 per meter
Alternatively the cost could be stated as $306 per culvert or if there were an average of 4
culverts per km, then $1224 per km.
6. PACE - A COMPUTER PROGRAM FOR COST

CALCULATIONS
6.1 Introduction
6.2 Starting PACE
6.3 Machine Rate Calculations
6.4 Road Construction Calculations
6.5 Production and Unit Cost
6.6 Sensitivity Analysis
6.7 Installing the PACE Program
6.1 Introduction
The computer program, PACE (Production and Cost Evaluation), was developed to
assist in calculating machine rates, road construction costs, and harvesting costs. It can
be used to evaluate tradeoffs between road costs and harvesting costs. This section will
describe the PACE program and can be used as a user guide. A computer disk with the
PACE program for IBM PC/XT/AT and compatibles are provided with this manual. See
Section 6.7 for installation instructions.
PACE is divided into three parts: (1) machine rate calculations, (2) road construction
calculations, and (3) harvesting production and unit cost calculations. Analysis begins
with the preparation of machine rates for combinations of equipment and labor which will
be used in road construction and harvesting. Next, road construction costs are
developed using the machine rates from (1). And last, machine rates, road costs, and
harvesting production rates are combined to develop production and unit cost estimates
(Figure 6.1).
Figure 6.1 Information flow for PACE program.
PACE is easily learned through a tutorial example. The tutorial includes calculation of a
machine rate, a road construction cost, and a harvesting production and cost estimate
Copies of the computer monitor displays are included along with the formulas used to
make the calculations.
6.2 Starting PACE

PACE consists of six programs linked together by an executive program with the main
menu. Type PACE and press <enter>. The monitor will display the main menu (Figure
6.2). You are now ready to begin.
Figure 6.2 PACE Master Menu.
6.3 Machine Rate Calculations

Let's begin by preparing a machine rate for an operator with a power saw. To reach the
machine rate program menu (Figure 6.3), use the cursor control arrows to highlight the
machine rate program, MAC-COST.EXE and press <enter>. The MAC-COST menu
(Figure 6.3) will appear.
Figure 6.3 Menu for MAC-COST program.
Follow the key strokes below to enter the data and refer to the formulas in Table 6.1 to
understand how PACE is making the calculation.
Key Explanation
stroke
1 Branches to equipment ownership cost screen (Figure 6.4).
550 Type in 550 and either press <enter> or press the down arrow key to enter the data
and move to the next line.
... [continue with input as shown in Figure 6.4]
<esc> Returns to the main menu of the machine cost program.
Figure 6.4 Ownership Cost screen.
Table 6.1 Machine Rate Ownership Cost Formulas
Row Description
1 Delivered equipment cost
2 Line and rigging cost
3 Tire or track replacement cost
4 Residual value
5 Equipment life
6 Days equipment works per year
7 Hours equipment works per day
8 Interest rate
9 Blank
10 Tax, lic, insur, storage rate
11 Depreciable value
12 Annual depreciation
13 Average annual investment
14 Annual interest expense
15 Annual cost tax, lic, insur, storage
16 Annual ownership cost
17 Annual hours utilization
18 Hourly ownership cost
Rows (1) - (10) are input data.

Row (11) = Row (1) - Row (4)
Row (12) = Row (11) / Row (5)
Row (13) = [Row (1) - Row (4)] [Row (5) +1] / [2 * Row (5)] + Row (4)
Row (14) = Row (8) * Row (13) / 100
Row (15) = Row (10) * Row (13) / 100
Row (16) = Row (12) + Row (14) + Row (15)
Row (17) = Row (6) * Row (7)
Row (18) = Row (16) / Row (17)
Key stroke Explanation
2 Selects the operating cost screen.
100 Enter the operating costs as shown in Figure 6.5.

<esc> Returns to the main menu.
Figure 6.5 Machine Operating Cost screen.
Table 6.2 Machine Rate Operating Cost Formulas
Row Description
1 Repairs as % of equip depreciation
2 Fuel consumption rate
3 Fuel cost
4 Lubricants as % of fuel consumption
5 Cost of oil and lubricants
6 Cost of lines
7 Life of lines
8 Cost of rigging
9 Life of rigging
10 Cost of tires or tracks
11 Life of tires or tracks
12 Hourly cost of repairs and maint
13 Hourly cost of fuel
14 Hourly cost of oil and lubricants
15 Hourly cost of lines
16 Hourly cost of rigging

17 Hourly cost of tires or tracks
18 Hourly total operating cost

Row (12) = Row (1) * Row (12)1 / Row (17)1 / 100
Row (13) = Row (2) / Row (3)
Row (14) = Row (2) * Row (4) * Row (5) / 100
Row (15) = Row (6) / Row (7)
Row (16) = Row (8) / Row (9)
Row (17) = Row (10) / Row (11)
Row (18) = Row (12) + Row (13) + Row (14) + Row (15) + Row (16) + Row (17)
------------------
1
Refers to row numbers and values from table 6.1.
3 Selects the labor cost screen.
1.10 Enter the labor costs as shown in Figure 6.6
Figure 6.6 Labor Cost screen.
Table 6.3 Machine Rate Labor Cost Formulas
Row Description
1 Base wage for 1st crew position
2 Base wage for 2nd crew position
3 Base wage for 3rd crew position
4 Base wage for 4th crew position

7 Fringe benefits
8 Non-machine operating hours per day
9 Machine operating hours per day
10 Supervision as % of direct labor
11 Total number of workers
12 Hourly crew wage
13 Hourly direct labor cost per machine operating hour
14 Hourly supervision cost per machine operating hour
15 Hourly total labor cost per machine operating hour
16 Hourly operating cost (equip + labor) per machine operating hour

Row (11) = Sum of workers
Row (12) = Row (1) + Row (2) + Row (3) + Row (4) + Row (5) + Row (6)
Row (13) = Row (12) * [ 1 + Row (7) / 100 ] * [ Row (8) + Row (9) ] / Row (9)
Row (14) = Row (13) * Row (10) / 100
Row (15) = Row (13) + Row (14)
Row (16) = Row (15) + Row (18)1
------------------
1
Refers to Row (18) from Table 6.2.
Key Explanation
stroke
4 Selects the summary cost screen. This screen should appear as Figure 6.7.
Displays the summary of the ownership, operating, and labor costs on the monitor. The
equipment description appears at the top of the summary sheet. This was added using
option 7 from Figure 6.3.
<esc> Returns to main menu.
Figure 6.7 Machine Rate Summary Cost screen.

6 Selects the save-data option.
70CCSAW Enter file name. Name must not be more than 8 characters with no decimal point.
<enter> Stores the information from screens 1, 2, 3, and 4 to the disk.
We have now completed all information for the machine rate example. Let's try some
other options.
5 Displays all machine rate files which have been made with the MAC-COST program
and stored on disk. This option is used to recall files.
Note an extension .MAC has been assigned by the program for use in later file
manipulations.
To load a file, highlight the desired file using the cursor control arrows and press
<enter>. The file will be loaded and the program returns to the main menu.
8 Erases the information currently on the 1, 2, 3, and 4 screens.
9 Returns to the executive program. (Figure 6.2)
This completes the machine cost file preparation. Machine rates for trucks and animals
are prepared similarly. The logic is identical with only slightly different questions being
asked which are specific to the machine/labor combination being evaluated. Remember,
the machine rates are the basic building blocks of any cost analysis and should
represent the labor and cost combinations which you will use in later programs. A
machine rate could a machine without crew, a machine with crew or a crew without
machine. Typical applications might be a power saw with operator, a tractor with
operator and helpers, a survey crew with pickup, etc.
6.4 Road Construction Calculations

To prepare a road construction cost estimate for a typical road section we use the
CONST.EXE program. The objective of the Road Construction Program (CONST.EXE) is
to allow you to develop road construction costs for typical sections of roads or typical
road standards. The road costs can then be used in the UNIT.EXE program to develop
stump-to-mill harvesting costs and to evaluate the sensitivity of harvesting costs to road
spacing alternatives. The CONST.EXE program allows you to specify which
equipment/labor combinations you will use for road construction and retrieves the files
from your disk. You then estimate the production rates for the equipment/labor
combinations for each road construction activity (Figure 6.8). An example follows.
Figure 6.8 Menu for Road Construction program.

Key Explanation
stroke
PACE Loads executive program. The screen output should look as Figure 6.2. This assumes
that you have not yet loaded the program. If the executive program is still in memory,
then skip this step and highlight the CONST.EXE program and press <enter>. The Road
Construction Menu should appear as shown in Figure 6.8.
R Branches to load machine rates for road construction calculations.
Figure 6.9 Machine rates available for road construction.
Key Explanation
stroke
H Switches to manual machine selection mode. You can identify a maximum of 12 machine
rates. Use the cursor to highlight the desired machine rate file and press the space bar.
You will see a "#" sign appear to the left of the file name to indicate it has been selected.
Repeat until you have identified the 5 machine rate files shown in Figure 6.9. Then, press
<return> to begin loading the files.
Alternatively, you could automatically select the first 12 machine rate files on your data
disk for use as machine/labor combinations for road construction by pressing [A].
Next, select the road construction activity you want to evaluate. Let's start with surveying.
1 Branches to the survey window. This should appear as Figure 6.10.
200 Move the cursor to the equipment/labor combination you want and enter the production
rate. The activity totals will appear in the lower box.
<esc> Escape returns to the menu.
Alternatively, you can press <pg dn> or <pg up> to move through the other construction
activity screens.
Repeat this procedure for road construction activities 2 through 7.
Skip any activities you do not need.
At any time you can view the road cost summary sheet by pressing <esc> to return to the
menu and entering (8).
An example of a summary screen is in Figure 6.11. If you move the cursor to highlight any
activity, the equipment mix for that activity is indicated by arrows to the left of the
appropriate equipment/labor combinations in the lower window.

Figure 6.10 Surveying screen.
Key Explanation
stroke
7 Branches to the landings menu (Figure 6.12). The results from this menu do not appear
in the road cost summary. The cost for landing construction however, will be used in the
UNIT.EXE program. It is saved along with the road costs when you select the save mode.
Figure 6.11 Road construction cost summary screen.
Key Explanation
stroke
S Selects the save data mode. The save data mode has three purposes. First, it provides
data for Production and Unit Cost program (UNIT.EXE); second, it provides a way of
updating road cost estimates, and third, it is an easy way to create costs for other road
standards by modifying production rates in existing files.
Y Indicates you want to continue with the save option. If you do not want to do this, press
<N>.
Low-std File name under which the data is to be saved.
Figure 6.12 Landing construction cost menu.
6.5 Production and Unit Cost
Harvesting production and unit costs are calculated in the UNIT.EXE program. An
example of the UNIT.EXE program follows using sample files from the disk.
Key Explanation
stroke
PACE Loads executive program. The screen output should look as Figure 6.2. This assumes
that you have not yet loaded the program. If the executive program is still in memory,
then skip this step and select the UNIT.EXE program. (Figure 6.13)
Figure 6.13 Unit cost program menu.
Key Explanation
stroke
R Reads all machine rates and road costs on the disk. A maximum number of 40 machine
rates and 10 road standard files (.RCS) which can be considered at one time.
The machine rates to be used in calculating the felling, yarding, loading, transport, and
the road cost are now entered. This is done in two steps: (1) use the tab key to highlight
the harvesting activity and (2) use the cursor control arrows to highlight the appropriate
machine rate or road construction rate and press <enter>. Select the machine rates and
road standard shown in Figure 6.14.
C Press <C> when you have completed selection of the machine files for the harvesting
activities and the road file for the road standard.
Figure 6.14 Machine rate and road standard selection
Key Explanation
stroke
1 Selects the felling production and cost window (Figure 6.15).
Note the machine costs already appear from the previous step. Complete the information
by using the cursor arrow to identify the location, enter the data and then move the
cursor to the next data entry location.
Figure 6.15. Falling and bucking screen.
Table 6.4 Falling and Bucking Screen Formulas
Row Description
1 Machine Cost (.MAC, .AML, or .TRK file)
2 Machine minutes to fell and buck tree
3 Volume per tree
4 Delay time (minutes per hour that machine is working, but not doing planned work)
5a Felling and bucking production per machine hour
5b Ownership part of felling and bucking unit cost
5c Operating part of felling and bucking unit cost
5d Labor part of felling and bucking unit cost

5e Total unit cost for felling and bucking
Row (5a) = Row (3) * [ 60 - Row (4) ] / Row (2)
Row (5b) = Row (18)a / Row (5a)
Row (5c) = Row (18)b / Row (5a)
Row (5d) = Row (15)c / Row (5a)
Row (5e) = Row (5b) + Row (5c) + Row (5d)
------------------
a
Refers to Row (18) of Table 6.1
b
c
Key Explanation
stroke
The hourly production adjusted for operating delays and unit costs are shown on the
lower screen.
<esc> Returns to menu or you can move to the next screen by using the <pg dn> key.
2 Complete the skidding activity screen similarly using the test data in Figure 6.16.
The skidding production and costs will not appear until after the road and landing data
window has been completed because the road spacing information is needed and is not
available at this point.
Figure 6.16 Skidding screen.
Table 6.5 Skidding Screen Formulas
Row Description
1 Machine cost (.MAC, .AML, or .TRK file)
2 Move-in time (machine time landing to landing)
3 Volume per cycle (trip)
4 Outhaul velocity (empty)
5 Lateral outhaul velocity
6 Hook time
7 Lateral inhaul velocity
8 Inhaul velocity (loaded)
9 Unhook time
10 Delay time (machine time the equipment is involved in working delays, i.e. meter is
running)
11 Not applicable
12a Skidding production per machine hour
12b Ownership part of skidding unit cost
12c Operating part of skidding unit cost
12d Labor part of skidding unit cost
12e Total unit cost for skidding

Row (12a)a = (Volume per landing) / (Trips × Effec Cycle Time / 60 + Move-in)
Row (12b) = Row (18)b / Row (12a)
Row (12c) = Row (18)c / Row (12a)
Row (12d) = Row (15)d / Row (12a)
------------------
a
Volume per landing calculated from information in the Roads / Landings screen. Trips is equal to
volume per landing divided by volume per trip.
b
c
d
L-shaped Skidding Pattern
If Row (5) and Row (7) are not zero then calculations are for lateral skidding to a corridor, and then
skidding along the corridor to the landing
Cycle Time = [ K * D1 / Row (4) + .25 * D2 / Row (5) + Row (6) + K * D1 / Row (7) + .25 * D2 / Row
(8) + Row (9) ] * W
where
K = 0.5 / Row (6) from Table 6.8

D1 = Row (2) from Table 6.8
W = Row (5) from Table 6.8
Radial Skidding Pattern
If Row (5) and Row (7) are zero then calculations are for radial skidding to a central landing. The
average skidding distance is approximately,
AYD = { .333 * SQR [ (F*D1) * (F*D1) + (D2) * (D2) ] + .333 * SQR [ (.5*F*D1) * (.5*F*D1) + (.5*D2)
* (.5*D2) ] } * W
where
F = 1.0 / Row (6) from Table 6.8

W = Row (5) from Table 6.8
Cycle Time = AYD / Row (4) + Row (6) + AYD / Row (8) + Row (9)
Effective Cycle Time = Cycle Time × 60 / [60 - Row (10)]
Key Explanation
stroke
If lateral inhaul and lateral outhaul are left as zero the timber is assumed to be skidded to
a central landing by the shortest path. This can be adjusted by using a weave factor in
the Roads/Landing screen. Using the <pg dn> key, go to the roads/landing screen to look
at the data needed.
Complete the other screens shown in Figures 6.17 through 6.19.
Figure 6.17 Loading screen.
Table 6.6 Loading Screen Formulas
Row Description
1 Machine cost (.MAC, .AML, or .TRK file)
2 Machine minutes per cycle
3 Volume per grapple (or other) load

4 Delay time (minutes per hour that machine is working, but not loading, i.e. sorting)
5-6 Not applicable
7a Loading production per machine hour
7b Ownership part of loading unit cost
7c Operating part of loading unit cost
7d Labor part of loading unit cost
7e Total unit cost for loading

Row (7a) = Row (3) * [ 60 - Row (4) ] / Row (2)
Row (7b) = Row (18)a / Row (7a)
Row (7c) = Row (18)b / Row (7a)
Row (7d) = Row (15)c / Row (7a)
------------------
a
b
c
<esc> Returns to the menu.
S Selects the save mode if you want to keep the parameters and results of this analysis.
Study-1 Creates a file (Study-1 .UCD) for later recall using the (L) option.
Q Quit. Returns to main menu.
<esc> Leaves the PACE program.
Figure 6.18 Truck Transport screen.
Table 6.7 Truck Transport Screen Formulas
Row Description
1 Truck cost (.TRK file)
2 Distance (one way)
3 Volume per truck load
4 Speed unloaded
5 Loading time
6 Speed loaded
7 Unloading time
8-10 Not applicable
11a Truck transport per machine hour
11b Ownership part of truck transport unit cost
11c Operating part of truck transport unit cost
11d Labor part of truck transport unit cost
11e Total unit cost for truck transport

Row (11a) = Row (3) * 60 / [Row (2) / Row (4) + Row (5) + Row (2) / Row (6) + Row (7)
Row (11b) = Row (18)a / Row (11a)
Row (11c) = Row (18)b { Row (3) * 60 / [Row (2) / Row (4) + Row (2) / Row (6) ] }
Row (11d) = Row (15)c / Row (11a)
Row (11e) = Row (11b) + Row (11e) + Row (11d)
------------------
a
b
c
6.6 Sensitivity Analysis

The sensitivity of production and costs to changes in the skidding or road cost variables
can be examined at any time by paging to the appropriate screen and changing the data.
If the machine rate or road standard is changed in this way, the percentage in
ownership, operating, and labor remains the same with the new rate. To change to a
different machine rate or road file, return to the menu <esc> and read the new machine
rate files (R). Then, use the cursor and tab keys as before. The UNIT.EXE program will
read the new cost files and your other data will still be available. Remember to save your
Unit Cost file before you exit the UNIT.EXE program.
Figure 6.19 Roads and Landing screen.
Table 6.8 Roads/Landings Screen Formulas
Row Description
1 Road cost (.RCS file)
2 Road spacing
3 Landing spacing
4 Harvest removal per unit area
5 Skidding weave factor
6 One way or two way skidding factor
7 Cost per landing
8 Near optimal road spacing
9 Near optimal landing spacing
10-14 Not applicable
15a Not applicable
15b Ownership part of road unit cost
15c Operating part of road unit cost
15d Labor part of road unit cost
15e Total unit cost for roads/landings

Rows (8) and (9) are calculated using calculus and / or numerical approximation techniques
beyond the scope of this manual. You can verify their goodness by substituting the values
displayed in Row (8) and Row (9) into Row (2) and Row (3) and observing the change in TOTAL
COST, Row (15e).
Row (15b) = [ Row (1)a * Row (3) / 1000 + Row (7) ] / [ Row (4) * Row (2) * Row (3) / 10000 ]
Row (15c) = [ Row (1)b * Row (3) / 1000 + Row (7) ] / [ Row (4) * Row (2) * Row (3) / 10000 ]
Row (15d) = [ Row (1)c * Row (3) / 1000 + Row (7) ] / [ Row (4) * Row (2) * Row (3) / 10000 ]
------------------
a
Ownership component of Row (1) from (.RCS) file.
b
Operating component of Row (1) from (.RCS) file.
c
Labor component of Row (1) from (.RCS) file.
The near optimal road and landing spacing is shown on the Road/Landings screen
(Figure 6.19). To find the cost associated with this road and landing spacing, enter the
road spacing and landing spacing indicated. The results are shown in Figure 6.20. A
reduction of $0.17 per cubic meter is achieved by reducing the road spacing to 459 m
and the landing spacing to 250 meters. Although the road cost increases to $1.39 per
cubic meter, the reduced skidding cost more than compensates for this increase.
The UNIT.EXE program is not designed to have zero landing spacing. A default value of
10 meters is used. If you want to analyze continuous landings, the default value of 10
meters will not appreciably increase the skidding distance or affect the unit costs.
Figure 6.20 Roads and Landing screen revised.
6.7 Installing the PACE Program

The PACE program is designed to reside in a directory of your hard disk. Create a
subdirectory on your hard disk and copy the PACE program disk contents into it. Also
copy any example data files into the same subdirectory as the PACE program.
When the PACE program loads data files or saves data files, it will always do so to the
subdirectory that the PACE program is in. The Delete Utility on the PACE Master Menu
can be used to erase files that you no longer want.
7. ADVANCED APPLICATIONS OF PACE
7.1 Introduction
7.2 Shortcuts
7.3 Combining Road Sections
7.4 Combining Skidding Systems
7.1 Introduction
The standard applications of PACE were discussed in Chapter 6. Occasionally, you may
want to model other situations. In this section we present several advanced applications
of PACE. These applications will assist you in thinking up additional ways to model
situations you are interested in studying.
7.2 Shortcuts
The PACE program is designed to build upon machine rates so that the analyst can
trace back a harvesting cost-road cost analysis to the set of underlying assumptions.
Occasionally you might want to get unit costs quickly without making a number of
machine rate files and road cost files. In this situation, it may be useful to keep a .UCD
file on your disk. You only need to build this file once and save it. When you recall this
dummy file, it satisfies the input requirements for PACE. You can then change machine
costs in the various screens. The only thing you need to remember is that PACE uses
the proportions derived in the original machine rate files to divide any revised machine
rates between ownership, operating, and labor costs. If all you are interested in is the
total unit cost for any activity, it does not matter.
7.3 Combining Road Sections

Often the road from the landing to the mill may have two or more road standards or other
factors which affect the travel speed of the truck. PACE only permits entry of one truck
speed.
If you want to calculate a truck transport cost which includes the total route you will need
to derive the average loaded and average unloaded speed outside of PACE and use
these average speeds in PACE. The example below shows how to do this for a road
divided into three sections.
The speed on section 1 is V1, on section 2 is V2 and on section is V3. The length of the
sections are L1, L2, and L3 respectively.
The average speed is calculated by dividing the total travel distance by the total travel
time, or
This calculation would be repeated for the loaded and unloaded direction.
7.4 Combining Skidding Systems

In some cases, PACE can be used to combine two skidding systems. The Unit Cost
program can then be used to solve for the optimal skidding distance for each system
simultaneously. For example, consider a situation where oxen are being used to skid
along trails perpendicular to tractor skid trails, and the tractors swing the wood to truck
roads. If we consider the oxen to be the "lateral skidding cycle" for the tractor skidding
system we can model this system in PACE by deriving an equivalent lateral skidding
speed and equivalent hook and unhook time which takes into account the difference in
machine rates for the oxen relative to the tractor. The formulas for the equivalent
skidding speed and equivalent hooking time are given below:
where,
V = equivalent speed for lateral yarding to be used in Skidding Screen with tractor
machine rate in Row (1) and V in Row (5) or Row (7).
C1 = machine rate for tractor

L1 = load for tractor
C2 = machine rate for oxen

L2 = load for oxen
V2 = speed for oxen
and,
T = equivalent hook or unhook time to be used in Skidding Screen with tractor machine
rate in Row (1) and T in Row (6) or Row (9).
T1 = hook or unhook time for tractor.

T2 = hook or unhook time for oxen.
Other skidding combinations which could be modeled in this way are (1) skidding by
tractors and forwarding by rubber tired skidders and (2) manual forwarding and swinging
by skyline.
APPENDICES
APPENDIX A - Machine Cost and Work Records

APPENDIX B - Field Production Studies
APPENDIX C - PACE Data Collection Forms
APPENDIX A - Machine Cost and Work Records

Machine rates, unit costs, and machine utilization, can be compiled on a weekly basis for
use in comparison and control. The weekly machine costs, accummulated over a period
of time, provide estimates of the hourly machine cost or machine rate for planning and
budgeting.
The basis for the weekly report is the daily report (Figure A.1). This report records the
hour meter or odometer reading at the end of the day, the amounts of materials supplied
to the machine, the number of machine hours worked and any additional hours worked
by the operator which are not machine hours. An estimate of the production is made.
Either at the end of the day, or weekly, the unit costs of the materials consumed are
added to the daily report so that the daily operating costs for the machine are complete.
The daily machine cost and work record is kept for all machines. The weekly report can
be compiled individually by machine or collectively for all machines of the same type
using a form similar to the Weekly Machine Cost and Work Record (Figure A.2). Figure
A. 2 column (25) is the weekly estimate of the machine hourly cost. Column (27) is the
weekly unit production cost. Column (29) is the machine utilization for the week.
DAILY MACHINE COST AND WORK RECORDS
Machine______________________ Machine No. ___________________
Machine Meter Reading (end of day) _______________________________
Total Km Traveled_____________________ Date_____________________
ITEM Amount Used Unit Cost Total Cost
Gasoline (liters)
Oil, Motor Lube (kg)
Oil, Hydraulic (liters)
Diesel Fuel (liters)
Grease (kg)
Filters (number)
Tires (number)
Cost of Repair Parts
Cost of Repair Labor
TOTAL
Day's Work
Machine Hours______________ Preventive

Operator's Other Work Maintenance
__________________________ Done__________________________
Hours_____________ Hours_____________
Major Delay: Cause____________ Time__________________________
Volume of Wood:
Cut ______________________________
Loaded ______________________________
Transported ______________________________
Km of Road Built ______________________________
Km of Road Maintained ______________________________
REMARKS
Table A.1 - Definitions for Daily Machine Cost and Work Record.
Item 1 - Equipment type
Item 2 - Number of machine, all machines should have numbers assigned to them, prominently
displayed.
Item 3 - Either the engine hour meter or the odometer reading at the end of the day.
Item 4 - Subtract from previous day's record to get total machine hours worked or kilometers
traveled.
Item 5 - Date
Item 6- - Consummable Items. Unit costs and total costs can be calculated at the end of each
12 week by office personnel.
Item 13- - Repair parts and labor. These costs can be calculated at the end of each week by office
14 personnel.
Item 15 - Total cost for Items 6-14.
Item 16 - Machine hours from Item 4.
Item 17 - Type of other work done by machine operator off machine.
Item 18 - Operator hours spent on other work.
Item 19 - Type of preventive maintenance done.
Item 20 - Hours spent on preventive maintenance
Item 21 - Cause of any major delays.
Item 22 - Hours spent in major delay.
Item 23- - Production per day, measured in volume cut, skidded, loaded or transported by
27 machine, or miles of road built or maintained by equipment.
Item 28 - Any comments by the operator on the day's activities.
Figure A.2. WEEKLY MACHINE COST AND WORK RECORD PART I
Figure A.2. WEEKLY MACHINE COST AND WORK RECORD PART II
Table A.2 - Definitions for Weekly Machine Cost and Work Record.
Column Description
1 Enter week number.
2-3 Enter gasoline supplied and total cost summed up from the daily work sheets from the
past week.
4-5 Enter motor oil supplied and total cost summed up from the daily work sheets from the
past week.
6-7 Enter diesel fuel supplied and total cost summed up from the daily work sheets from the
past week.
8-9 Enter grease supplied and total cost summed up from the daily work sheets from the
past week.
10-11 Enter hydraulic oil supplied and total cost summed up from the daily work sheets from
the past week.
12-13 Enter the number of filters and total cost of filters summed up from the daily work sheets
from the past week.
14-15 Enter the number of tires and the total cost summed up from the daily work sheets from
the past week.
16-17 Enter amount (if applicable) and total cost of miscellaneous materials summed up from
the daily work sheets from the past week.
18-19 Enter the repair parts cost and repair labor cost from the daily work sheets from the past
week.
20-21 Enter the equipment meter reading or odometer reading from the end of the last day of
the week and subtract it from the reading from the last day of the previous week to obtain
a total for the week.
22 Add columns 3, 5, 1, 9, 11, 13, 15, 17, 18, and 19 to obtain the total operating cost for
the machine during the week.
23 Add the total wages including social costs for the operators and helpers using the
equipment. Do not add in the labor for repairs included in Col (19).
24 Add up the total depreciation, interest, taxes, license, insurance and any other fixed
costs and divide by 52 to establish the weekly ownership cost. Once calculated, it will
usually not change during the year.
25 To obtain the hourly machine cost during the week, add up the operating, labor, and
ownership costs and divide by the number of hours worked by the machine.
26 Enter the production summed up from the daily work sheets from the past week.
27 Divide the total cost by the total production to determine the unit cost of production for
the week.
28 Enter the total number of hours the machine was scheduled to operate for the week.
29 Divide the total number hours the machine worked by the number of hours it was
scheduled to work and multiply by 100 to calculate the machine utilization in percent.
The weekly cost and work report is a valuable record not only for deriving your own
machine rates, but for discussions with the crew and foreman so that they are aware of
the costs of machine operation.
An additional column can be added to the form to show the importance of increased
machine utilization. This additional column could be called the hourly machine cost at
100% utilization. If labor is a constant cost for the week, the hourly machine rate at
100% utilization is calculated as
APPENDIX B - Field Production Studies

To estimate cycle time coefficients, the observer should study the operation until he is
familiar with the elements making up the activity. A flow process chart can then be
prepared to describe the elements and define the beginning and ending points of each
element. A data collection form is prepared, data collected and coefficients calculated.
The observer gathering the time study data must be able to see the operation he is
studying at all times. Often he must constantly move with the equipment in order to
record the element times, while simultaneously keeping a safe distance from the
operation.
For example, let's design a study form to develop cycle time coefficients for a skidding
operation. We would like to estimate the loaded speed, unloaded speed, load size, hook
time and unhook time for a rubber-tired skidder. The flow process for the skidding
activity would be
Element Element Begin (B) and End (E) Point
Skidder travels to logs (B) - Skidder leaves landing.
(E) - Skidder arrives at first log pickup point.
Position skidder (B) - Skidder arrives at first log pickup point.

(E) - Begin pulling winch line from skidder.
Lateral outhaul (B) - Begin pulling winch line from skidder.
(E) - Winch line arrives at log(s)
Hook Log (B) - Winch line arrives at log(s)
(E) - Winch line starts in toward skidder.
Lateral Inhaul (B) - Winch line starts in toward skidder.
(E) - Logs arrive at skidder.
Intermediate Move (B) - Logs arrive at skidder.
(E) - Skidder moves to next pickup point.
Position skidder (B) - Skidder moves to next log pickup point.
(E) - Begin pulling winch line from skidder.
Lateral outhaul (B) - Begin pulling winch line from skidder.
(E) - Winch line arrives at log(s)
Hook Log (B) - Winch line arrives at log(s)
(E) - Winch line starts in toward skidder.
Lateral Inhaul (B) - Winch line starts in toward skidder.
(E) - Logs arrive at skidder.
Loaded Return to Landing (B) - Logs arrive at skidder.
(E) -Skidder arrives at landing.
Unhook and deck logs (B) - Skidder arrives at landing.
(E) - Skidder leaves landing.
Using the Skidding Cycle Element Time Study Form (Table B.1), we record a sample of
cycles for a rubber-tired skidder.
For example, on cycle no. 1 a small rubber-tired skidder leaves the landing and travels
200 meters in 1.5 minutes along the skid trail to the log pickup point. The operator turns
and positions the skidder in 0.2 minutes. The helper pulls out the winch line 20 meters in
0.7 minutes. Two logs are hooked in 1.2 minutes, winched to the skid trail in 1.0 minutes.
The skidder returns to the landing in 3.0 minutes. The logs are unhooked and pushed
into the deck and the skidder is positioned to leave the landing in 1.6 minutes. During
cycle no. 3, the logs are picked up at two points during winching. During cycle no. 4, logs
are picked up at two points along the skid trail.
Summing the times for each element, our estimates for the skidding coefficients are:
Unloaded Travel Speed = 1350 m/12.8 min = 105 m/min
Loaded Travel Speed = (1325 + 25) m/(18.9 + .3) min = 70 m/min
Lateral Outhaul Speed = 120 m/5.0 min = 24 m/min
Lateral Inhaul Speed = 120 m/6.2 min = 19 m/min
Position Skidder = 1.0 m/5 cycles = 0.20 min/trip
Hook Time = 13.5 min/5 cycles = 2.7 min/trip
Unhook and Deck = 8.7 min/5 cycles = 1.7 min/trip
Average number of logs per trip = 13 logs/5 cycles = 2.6 logs/trip
If the average log size is 0.5 cubic meters per log then the average load per trip is 2.6
logs per trip multiplied by 0.5 cubic meters per log or 1.3 cubic meters per trip.
Table B.1 Skidding Cycle Element Time Study Form
APPENDIX C - PACE Data Collection Forms

MACHINE RATE CALCULATIONS
DATA INPUT SHEET 1 of 2
Equipment Description _______________________________________________
Delivered equipment cost ($) ____________
Lines and rigging ($) ____________
Tires and tracks ($) ____________
Salvage value ($) ____________
Equipment life (years) ____________

Days worked per year ____________
Hours worked per day ____________
Interest expense (%) ____________
Percent of average annual investment for taxes, licenses, ____________

storage, insurance (%)
Percent of equipment depreciation for service and repairs ____________

(%)
Fuel consumption (liters per hour) ____________
Fuel cost ($/liter) ____________
Percent of fuel consumption for lubricants (%) ____________
Cost of oil and lubricants ($/liter) ____________
Total cost of lines ($) ____________
Average life of lines (hours) ____________
Cost of miscellaneous rigging ($) ____________
Average life of miscellaneous rigging (hours) ____________
Cost of tracks or tires ($) ____________
Average life of tires or tracks (hours) ____________
MACHINE RATE CALCULATIONS

Equipment Description ______________________
Base wage for 1st crew position ($/hour) ____________
Base wage for 2nd crew position ($/hour) ____________
Base wage for 3rd crew position ($/hour) ____________
Base wage for 4th crew position ($/hour) ____________

Fringe Benefits (% of basic wage) ____________
Travel time per day (hours) ____________
Crew operating time per day (hours) ____________
Supervision cost (% direct labor cost) ____________
TRUCK RATE CALCULATIONS

Equipment Description _______________________________________________
Delivered equipment cost ($) ____________
Tire cost ($) ____________
Equipment life (years) ____________
Days worked per year ____________
Interest expense (%) ____________
Percent of average annual investment for taxes, licenses, ____________

storage, insurance (%)
Percent of equipment depreciation for service and repairs ____________

(%)
Fuel consumption (liters per hour) ____________
Fuel cost ($/liter) ____________
Percent of fuel consumption for lubricants (%) ____________
Cost of oil and lubricants ($/liter) ____________
Cost per tire ($) ____________
Number of tires ____________

Average life per tire (km) ____________
Number of km used per year ____________
TRUCK RATE CALCULATIONS

Equipment Description ________________________
Base wage for 1st crew position ($/hour) ____________
Base wage for 2nd crew position ($/hour) ____________
Base wage for 3rd crew position ($/hour) ____________
Fringe Benefits (% of basic wage) ____________
Travel time per day (hours) ____________
Crew operating time per day (hours) ____________
Supervision cost (% direct labor cost) ____________
ANIMAL RATE CALCULATIONS

Description ______________________________________________________
Delivered animal cost ($) ____________
Working life (years) ____________
Delivered harness cost ($) ____________
Life of harness (years) ____________

Delivered miscellaneous equipment ($) ____________
Life of miscellaneous equipment (yr) ____________
Number of days worked per year ____________
Interest Expense (%) ____________
Percent of average annual investment for taxes, licenses, storage, ____________

insurance (%)
Percent of harness depreciation for service and repairs (%) ____________
Percent of misc equip depreciation for service and repairs (%) ____________
Pasture rental ($/month) ____________
Cost of grain ($/month) ____________
Cost of hay ($/month) ____________
Cost of supplemental vitamins ($/mth) ____________
Veterinarian expenses ($/month) ____________
Cost of shoes ($/month) ____________
After hours care ($/month) ____________
ANIMAL RATE CALCULATIONS

Equipment Description ______________________
Base wage for 1st crew position ($/hour) _________
Base wage for 2nd crew position ($/hour) _________
Base wage for 3rd crew position ($/hour) _________
Base wage for 4th crew position ($/hour) _________

Fringe Benefits (% of basic wage) _________
Travel time per day (hours) _________
Crew operating time per day (hours) _________
Supervision cost (% direct labor cost) _________
STUMP TO TRUCK UNIT COSTS INCLUDING LOCAL ROADS

DATA INPUT SHEET 1 OF 2
Activity Element Quantity Units
Fall and buck Machine costa _________ $/hr
Time to fall/buck _________ min/tree
Volume per tree _________ m3
Delay time _________ min/hr
Skidding or Yarding Machine costa _________ $/hr
Move-in time _________ hr
Volume per cycle _________ m3
Outhaul speed _________ m/min
Lateral outhaul _________ m/min
speed Hook time _________ min
Lateral inhaul _________ m/min
speed Inhaul speed _________ m/min
Unhook time _________ min
Loading Machine costa _________ $/hr

Cycle time _________ min/trip
Load size _________ m3/trip

a
Complete if different from constructed data file
STUMP TO TRUCK UNIT COSTS INCLUDING LOCAL ROADS

DATA INPUT SHEET 2 OF 2
Activity Element Quantity Units
Transport Machine costa _________ $/hr
Distance (one-way) _________ km
Volume per load _________ m3
Speed (unloaded) _________ km/hr
Loading time _________ min
Speed (loaded) _________ km/hr
Unloading time _________ min
Roads and Landings Road costa _________ $/km
Road spacing _________ m
Landing spacing _________ m
Removal per ha _________ m3
Skidding weave _________ > 1
Skidding direction (one or two way) _________ 1 or 2
Cost per landinga _________ $
Removal per ha _________ m3

a
Complete if different from constructed data file

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1.

PRINCIPLES OF COST CONTROL

1.2 Basic Classification of Costs

1.3 Total Cost and Unit-Cost Formulas

Total cost = fixed cost + variable cost × output

1.4 Breakeven Analysis

One illustration of a breakeven analysis would be to compare two methods of road

Figure 1.1 Breakeven Example for Excavation.

1.5 Minimum Cost Analyses

1 0.00 50.00 50.00

2 1.00 25.00 26.00

3 2.00 16.67 18.67

4 3.00 12.50 15.50

5 4.00 10.00 14.00

6 5.00 8.33 13.33

7 6.00 7.14 13.14

8 7.00 6.25 13.25

9 8.00 5.56 13.56

10 9.00 5.00 14.00

Figure 1.2 Costs for Camp Location Example.

2.2 Example of Cost Equations

A = C/P = C/(V/T) = C (a + B D2)/V

T = 3 + .005 (60) (60) = 21 min = .35 hr

X = A + B + F + C(S/4) + L + H(D/2) + R/(VS)

2.3 Applications of Cost Equations

dX/dS = C/4 - R/(VS2) = 0

Activity Unit Cost

Fell $/m3 0.50

Buck $/m3 0.20

Skid $/m3 2.00 (fixed cost)

Skid $/m3-km 2.50 (variable cost)

Load $/m3 0.80

Transport $/m3-km 0.15

Roads $/km 2000

X = A + B + F + C(S/4) + L + H(D/2) + R/(VS)

TABLE 2.2 Total unit cost as a function of road spacing.

Spur Road Spacing, m Total Unit Cost, $/m3

Another important application of unit costs is in choosing between alternative harvesting

A forest manager is developing an area and is trying to decide between harvesting

Small Equipment Large Equipment

Fall, buck 0.70 0.50

Skid 1.70 2.55

Load 1.00 0.80

Unload 0.40 0.30

2/Large logs must be bucked at mill.

Small Equipment Large Equipment

High Standard 1.30 1.30

Low Standard 1.00 1.00

High Standard 3.50 3.00

Low Standard 4.00 3.40

Figure 2.2 Network Diagram for Equipment Choice

3.2 Classification of Costs

3.2.1 Fixed Costs

3.2.2 Operating Costs

Figure 3.1 Equipment Cost Model.

3.3.2 Economic Life (N)

3.3.3 Salvage Value (S)

ZONE A ZONE B ZONE C

TRACK-TYPE Pulling scrapers, most Production dozing in Heavy rock ripping.

Small 12,000 Hr 10,000 Hr 8,000 Hr

Large 22,000 Hr 18,000 Hr 15,000 Hr

MOTORGRADERS Light road maintenance. Haul road maintenance. Maintenance of hard

EXCAVATORS Shallow depth utility Mass excavation or Continuous trenching or