Rob Page - 16696 - Unit 4

Page 1 of 6

Unit 4: Equipment Planning

1. Give short answers to the following questions:

i. What do you understand by equipment planning? (4)

Equipment planning is the selection process by which site equipment can be

assessed and selected for suitability to carry out specific functions. It will determine
when equipment will be used sequentially within a set time frame and highlight the
importance of the order in which equipment is to be used.

The planning process can assist in matching comparable equipment particularly

when there are several types of equipment that can be used to carry out the same
tasks. Essentially, equipment planning is an effective tool for sequencing works
around a project lifespan. As a general rule, only three-quarters of the equipment
should be ordered upfront to reduce equipment downtime wastage, caused by
unpredictability. The remaining quarter can be organised while construction is well
underway and once a more realistic view of progress is in sight.

Several companies offer turnkey services to analyse the most suitable equipment
plan tailored around a particular Construction Project. Experience has shown that
this is an ongoing process of check and balance. In my opinion, a turnkey solution
wouldn’t suffice in this industry.

In conclusion, I believe an established construction company would have access to

previous historical Equipment data, primarily through critical path analysis methods.
Where they can re-use compiled equipment information to determine the best tried
and tested solutions and implement them using their planning team.

ii. What is the primary requirement of scheduling any project? (4)

The key to an efficient profit-making project lies in its effective planning and
scheduling. This can be achieved using various aids; Construction steers towards
the Gantt chart, incorporating the Critical Path Method (CPM) which in recent
decades has utilised developments made in project management software. Namely,
colour codes of priority and work breakdown structures (WBS).
 Rob Page - 16696 - Unit 4
Page 2 of 6

The project schedule is the tool that communicates; what work needs to be

performed, which resources of the organisation will perform the work, and the
timeframes in which that work needs to be performed. The project schedule should
reflect all of the work associated with delivering the project on time. Without a
complete schedule, the project manager would be unable to communicate the
complete effort, in terms of cost and resources, necessary to deliver the project.

Ultimately, a schedule can only make visible what is required to be achieved and
when. It’s the Project Manager and their team(s) that have to plan, direct and control
all aspects, which hone together interconnecting trades and tasks in line with a well-
organised project schedule. So to infer, communication is the main driving force and
a primary requirement to successfully scheduling any project by through supportive
means of the various aids available.

iii. What are the hire-purchase options available to a contractor? (4)

When equipment is necessary for a project, it can be acquired using a number of

financial options. Equipment can be purchased directly outright using the buyers
capital or via a bank loan.

Equipment may be hired depending on whether it is required for a short time or a

longer duration; this will most likely dictate the most economical decision. Another
factor may be who holds ownership and is responsible for the Equipment’s liability.

Hire purchase options are as follows:

1. Rent – continuous monthly payments until full equity/interest payments are

made. Commonly agreed at the start abiding by a fixed term payment plan.
2. Lease – charged per day and account paid monthly or in lump sums.

It is reasonable to assume that if the equipment is only to be used for a short period,
then the most suitable financial option would be to lease. If required for longer,
depending on equipment type and value, then it may be advantageous to choose the
hire-purchase option.
 Rob Page - 16696 - Unit 4
Page 3 of 6

iv. Why is a proper plant layout important? (4)

If set out incorrectly to begin with, a plant layout can be expensive to rectify. The
whole site will have a huge and potentially detrimental impact on the way it functions
if an efficient and effective layout is not performed. Due care and attention are
essential when installing plant and equipment, as the plant layout is a means to
achieving a smooth workflow.

Therefore a sound layout must ensure:

1. A steady and uninterrupted flow of work

2. Safety of employees working around the site
3. Efficient movement of operatives, plant and materials
4. Reduction of waste and subsequent cost
5. Optimisation and integration of the site; location, position, accessibility and
safety of; welfare, security, waste management, car parking, emergency
routes, hoardings, material storage
6. Flexibility to changes where site conditions change, e.g. adverse weather
7. Adaptability in line with construction phase changes from design to completion

A good plant layout can make the difference between a successfully run project and
that of a poorly run site that underperforms and puts lives at risk.

v. What are the disadvantages of purchasing equipment as compared to renting it?

(4)

Purchasing Equipment can come with its disadvantages. Equipment purchased

directly comes with inherent issues especially when compared with the options to
rent, they are as follows:

 Equipment can be more expensive to buy rather than rent particularly when
only required for a short window.
 The Lifespan of Equipment assets is stretched beyond its normally intended
usage. This can result in a higher risk of exposure to operatives using the
equipment whilst it is ‘worn out’. The cause is more often as a result of a
 Rob Page - 16696 - Unit 4
Page 4 of 6

physiological effect, where justification is made to get the most value out of
the purchased asset(s).
 Newer Equipment can enter the market, while the purchased equipment is
only partway through its lifespan. The productivity of existing equipment may
fare poorly when comparing against the newer equipment. This could give a
competitive edge to organisations using the newly released equipment or
generally hamper progress.
 The Capital allocated to purchasing the equipment could have been put to
better use towards another investment.

There is a lot to be said for renting equipment, it can have its Pro’s and Con’s. The
decision to ascertain equipment needs to be assessed on an individual basis. To
gain a benefit, the decision must enhance at least safety, economy or efficiency in
some form.

2. What factors affect the cost of owning and operating construction equipment? (5)

It is difficult to determine the exact cost when calculating the financial value of
owning equipment. That said using existing historical data and giving consideration
to the facts of how and where the equipment will be used should give an accurate
approximation to the operating costs. Longer established companies may have
devised a ‘co-efficient figure’ for certain groups of equipment to give them an ‘off the
shelf’ sum, helping to make calculating the costs somewhat simpler.

Cost Factors to consider are as follows:

 Depreciation
 Age of equipment and expected lifespan
 The individual cost of the equipment
 Maintenance, repair, and breakdown costs
 Whether the equipment has a resale value and at what times value is retained
 Insurances to cover theft, breakdown and Liability
 The average duration of use – set against the standard financial year
 The conditions in which the equipment was and is to be used under
 Rob Page - 16696 - Unit 4
Page 5 of 6

Due to the unpredictable nature of construction, purchasing equipment will only ever
be a close estimation, the true costs will only be realised once the equipment has
been used. Past data may not represent future requirements either. Companies may
devise plans for purchasing and selling equipment after a number of years, for
example, while still retaining asset equity.

Consequently, it is Human instinct that plays a part in deciding on whether there is a

true value to purchasing as opposed to renting and that again may depend on the
type of equipment being used.

3. Discuss the conditions under which the equipment should be taken on rent under
a lease agreement? (5)

An equipment rental agreement, which is sometimes called a rental of goods

agreement, is a contract that details the conditions by which one party can rent
equipment to or from another party.

The agreement defines the following obligations:

 Describe the Equipment

 State the rights of the parties involved
 Include details of who is responsible for repair and maintenance of the
Equipment
 Name who is liable for any injuries suffered while using the equipment
 Identify how the equipment may or may not be used
 How payment for the equipment is to be made
 How long the equipment may be used for
 Transportation and installation to site
 Outline details for contract termination
 Additional warranties that may be added to the agreement

To summarise; an equipment rental should clearly define the nature of the

equipment, state the length of the rental, the cost of renting the equipment –
payment amounts, method(s) and due dates. It will include; usage limitation by
 Rob Page - 16696 - Unit 4
Page 6 of 6

defining ‘normal wear and tear and ‘fair use’, outline insurance cover, and specify
how a contract can be terminated. Stipulate who is responsible for maintenance and
when maintenance needs to be carried out.

Overall, the lease agreement is a fairly simple and flexible document. It makes the
transaction legally binding within the agreed parameters, which is accepted by both
parties.