CONSTRUCTION EQUIPMENT AND ITS

MANAGEMENT

CONSTRUCTION MANAGEMENT &

PLANNING
 EQUIPMENT MANAGEMENT IN
CONSTRUCTION PPROJECTS

•Depending upon the mechanization in a project the

cost of equipments in a project varies from 10% to
30% of the total cost of the project

•Thus proper planning, selection, procurement policy

plays vital role in the success of a project

•Growingneed and use of the machinery in projects,

has made obligation for the engineers to equip
themselves with planning and management
techniques in machines and equipments
 EQUIPMENT MANAGEMENT IN
CONSTRUCTION PPROJECTS

•Planning of a construction project includes, decision

about the extent of mechanization, equipment
planning, execution planning

•Indeveloping countries like Pakistan, man-power is

always cheaply and readily available, so such could be
the advantage

•Soa combination can be made of man-power and the

machines for carrying out a successful project
 SELECTION OF EQUIPMENT

•Proper selection of equipment for a construction

project is of vital importance, so as to achieve its
speedy and economical completion

•Because of large verity of equipments available in the

market now a days has made difficult for engineers to
select the equipment for the job
 SELECTION OF EQUIPMENT

•A considerable experience in the operation and

maintenance in the field is essential
FACTORS AFFECTING THE SELECTION OF
EQUIPMENT
•Suitability for Job Conditions:
•The equipment must meet the requirement of the work,
climate and working conditions
•Size of the Equipment:
•Size of equipment should be such that it must be able to be
used with other matching units
•If the equipment selected is of larger size, that will remain
idle for most of the time
•On the other hand if equipment is of smaller size than
desired equipment will not be able to work until the same
size matches
FACTORS AFFECTING THE SELECTION OF
EQUIPMENT

•Standardization:
•Itsalways better to have same size and of same type of
equipments in the project
•This could lead to lesser spare parts, more
interchangeability of parts
FACTORS AFFECTING THE SELECTION OF
EQUIPMENT
•Availability of Equipment in the Market:
•The equipment which is easily available in the market
should be purchased
•The equipment should be of repute and likely to be
continued for some more period of time by the
manufacturer
•This is necessary for future standardization and spare
parts availability
FACTORS AFFECTING THE SELECTION OF
EQUIPMENT

•Availability of the Spare Parts:

•While selecting a particular type or make of equipment, it
should be ensured that the spare parts will be available at
reasonable price throughout the life of the equipment
•It will be then easy to dispose off the equipment in the
market
FACTORS AFFECTING THE SELECTION OF
EQUIPMENT

•Versatility:
•There are certain types of equipments which are not
utilized fully
•Thus they might be having more capability of performing
more than one function
FACTORS AFFECTING THE SELECTION OF
EQUIPMENT

•Use in Future Projects

•The Economical Aspects of the Equipment

•Reliability of the Equipment (Performance Wise)

FACTORS AFFECTING THE SELECTION OF
EQUIPMENT

•Service Support

•Past Performance
PURCHASING V/S HIRING OF EQUIPMENT

•Contractors are usually required to take a decision as

to whether to purchase an equipment or to acquire it
on hire

•Such decision should be in favour of the source which

is more economical

•The decision is required to be taken after careful

consideration of the requirements, environment and
circumstances
POSITIVE POINTS FOR PURCHASING

•When the requirement is for the most of the

construction period and equipment is likely to
complete almost all of it useful life
POSITIVE POINTS FOR PURCHASING
•It remains available for use when ever it is needed

•Usually owned equipments are kept in better

conditions as compared to hired ones
•Thus more reliable machines would be
POSITIVE POINTS FOR HIRING
•When the equipment can not be used for its full life,
then owing would be expensive then hiring

•Thepurchase would require huge investment initially,

which otherwise could be used for another purpose

•Contractor
may have to face the danger of
OBSOLESENCE of the equipment

Hiring with an Option to Purchase !!!

 ECONOMICS OF
CONSTRUCTION EQUIPMENTS
 ECONOMICS OF
CONSTRUCTION EQUIPMENT
•Equipment cost is often one of a contract’s largest expense
categories and it is a cost laced with variables and questions

•Economics of construction equipment deals with the study of

working of the equipment and to compute the unit costs of
production

•Thiseconomic evaluation helps in taking a decision not only to

select but when the equipment is going to be retire as well
 ECONOMICS OF
CONSTRUCTION EQUIPMENT

•Principles and techniques of engineering economics

are utilized while making equipment selection and
planning of finance for the purchase of the equipment

•Tobe successful equipment owners must carefully

analyze and answer two separate cost questions
about their machines;
• How much does it cost to operate the machine on a
project
• What is the optimum economic life of the machine
 ELEMENTS OF EQUIPMENT COST

•Equipment selection is a decision making from various

alternatives which gives LEAST cost of unit production
considering various factors of economics

•Unit cost of production is calculated after estimating the

cost of production by calculating hourly ownership and
operating cost of the equipment and knowing hourly
production of that equipment
 ELEMENTS OF EQUIPMENT COST

Equipment Owing & Operating Costs (O & O costs), are

composed of owing and operating costs

Owing costs are fixed costs that incurred each year

whether the equipment is operated or not

Operating costs are those cost which incurred only

when the equipment is used
21
 OWNERSHIP COST

Ownership cost is the cumulative result of those

cash flows an owner experiences whether or not the
machine is productively employed on a job.
Most of these cash flows are expenses, but few are
cash inflows
The most significant cash flow affecting ownership
cost are;
•Investment Cost
•Depreciation and Salvage value

•Major repairs and Overhauls

22
 INVESTMENT COST

It represents the annual cost (converted to an hourly

cost) of the capital invested in a machine

If borrowed funds are utilized, it is simply the interest

charge of the funds

23
 INVESTMENT COST

If the machine is purchased from company assets,

an interest rate should be charged equal to the rate of
return on company investments

Thus investment cost is computed as the product of

an interest rate multiplied by the value of the
equipment , and then converted to cost per hour

24
 DEPRECIATION COST

Itrepresents the decline in the market value on

an equipment due to;
Physical Condition
Functional Condition
Depreciation due to Physical Condition includes:
Wear and Tear
Physical Decay

Accidental

Deferred Maintenance and Negligence

25
 DEPRECIATION COST

Depreciation due to functional condition includes:

In adequacy
Obsolescence

In accounting purpose, depreciation is used for two

separate purposes;
EvaluatingTax Liability
Determining the depreciation component of the hourly
equipment cost

26
 MAJOR REPAIRS
AND
OVERHAULS
Major repairs and overhauls are included under
ownership cost because they result in an extension
of a machine’s service life

The major repair cost is spread out during the

entire life span of the equipment and a flat rate is
levied per working hour
27
 OWING COST

Total Owing Cost

Totalequipment owing cost is found as the sum of

depreciation, investment, insurance, tax, and storage

28
 OPERATING COST

These costs incurred only when equipment is

operated

Thus cost vary with the amount of equipmen use and

job operating conditions

Operating costs include operator’s wages, which are

usually added as a separate item after operating costs
have been calculated

29
 OPERATING COST

Major Elements of Operating Costs include:

Fuel cost
Service Cost
Repair cost
Tire cost
Cost of special items
Operator’s wages

30
 OPERATING COST

Total Owing and Operating Cost

Allitems in operating cost are then totaled to yield total

owing and operating cost (O & O cost)

31