GROW MORE FACULTY

OF ENGINEERING

A Presentation on

Introduction to Construction
Equipments

Prepared By
Prof. Krunalbhai Prajapati
Civil Engg. Dept.
Advanced Construction & Equipments (2160601)
IMPORTANCE OF CONSTRUCTION EQUIPMENTS
 In Case of major construction projects, the speed of work
and the timely completion of work is very important.
Due to the reason, the mechanization of most of the
construction work is required, in which the construction
equipment play the most important role. The proper use
of the appropriate equipment contribute to economy,
quality, safety, speedy and timely completion of the
project.
 The cost of construction is a major factor in all the
projects. The factors that influence construction costs
mainly are materials, labour, construction equipments,
overhead and profit
MAJOR CONSTRUCTION PROJECTS
IMPORTANCE OF CONSTRUCTION EQUIPMENTS

•The cost of construction equipment for civil engineering

construction projects ranges f r o m 2 5 % to 40 % of the total
project.
•The amount which is invested in the purchase of a
construction equipment should be recovered during the
useful period of such equipment.
 If it is found that the purchase price of a particular
construction equipment is far less than the estimated profit
to the contractor due to its use on the project, the
contractor should purchase the same without considering
its further use or salvage value.
 The construction equipment are deployed on the
construction projects for the various reasons, such as...
• Cost-effective implementation. For execution of work
that is not feasible by manual efforts or when
deployment of construction equipments may help in
doing the work more efficiently.

• Large output can be maintained, even if there is a

shortage of skilled and semi-skilled manpower.

• Precession of implementation is done by using modern

construction equipments equipped with software control.

• The construction equipment and machineries of very

high capacities are available now and very large output
are possible due to mechanization, adhering to the
construction schedules.
CLASSIFICATION OF EQUIPMENTS
The Construction equipments are classified as below:
The equipment are classified according to the type of
work it performs,
Intermittent Type: This type of equipments have the
intermittent cycle of work. They can be operated on series
of work cycles and each cycle completes in itself.
Continuous flow type: This type of equipments have a
continuous flow of work turned out.
Belt conveyors, pipelines, air compressor, etc. are the
example of continuous flow type equipments.
Mixed type :This type of equipments have characteristics
of both, intermittent as well as continuous flow type
equipments.
CONCRETE MIXERS & BELT
CONVEYORS
 They are continuously operated over a defined surface
area. After completion of a particular sweep, it
requires operation cease and readjustment of its position
to resume production on another area.
 Motor graders, bulldozers, scrapers, etc. are the examples

of mixed type equipments.

MOTOR GRADERS, BULLDOZERS,
SCRAPERS
CLASSIFICATION OF EQUIPMENTS
 The construction machineries or equipments can be
broadly classified into following types:
 Earth Excavating and transportation equipments
 Hoisting Equipments
 Conveying Equipments
 Drilling equipments
 Pumping equipments
 Compacting Equipments
 Pile- Driving Equipments
 EARTH EXCAVATING AND
TRANSPORTATION EQUIPMENTS
HOISTING EQUIPMENTS
CONVEYING EQUIPMENTS
DRILLING EQUIPMENTS
PUMPING EQUIPMENTS
COMPACTING EQUIPMENTS
PILE- DRIVING EQUIPMENTS
CLASSIFICATION OF EQUIPMENTS
• Depending upon their availability, commercial sizes and
specifications, the equipments can be classified into following
types:
• (i) Standard Equipments
• (ii) Special Equipments
• Standard Equipments:
 The standard equipments are commonly manufactured and
are easily available to the prospective purchasers.
 They can be used for variety of construction operations
without any difficulty and they are available in standard
commercial sizes. The initial investment is less as compared to
a special equipment
 The delivery of standard equipments is very quick, as it is
readily available in the market.
 The repair parts for standard equipment can be obtained
more quickly in short period
STANDARD EQUIPMENTS:
STANDARD EQUIPMENTS:
CLASSIFICATION OF EQUIPMENTS
 Special Equipments:
The special equipments are those which are manufactured for a
specific project or which does not have readily accessible spare parts.
•The selection of special equipment's should be made carefully after
proper financial analysis.
•The initial investment in case of special equipment is very high and
there is risk of change in design, it cannot, be used economically on
the other project
•A special order is to be given to the manufacturer of special
equipment's and a special price is to be given and therefore the
delivery of special equipments can be obtained after long period.
•Examples of special equipment include tunnel- boring machines,
large hauling units and very large shovels, such as a 70 to 80 cubic
metre shovel used to strip-mine coal.
SPECIAL EQUIPMENTS:
SELECTION OF EQUIPMENTS
• The various factors to be considered, while selecting the
construction equipment are as follows:
• Standard Type of Equipments:
• The contractor should confine their purchase to standard
equipment unless a project definitely justifies the
purchase of special equipment's.
•Replacement of Parts: Prior to purchasing
equipments, the buyer should determine where spare
parts are obtained.
• If the parts are not obtainable quickly, it may be wise to
purchase other equipment, for which the parts are
quickly available, even though the latter seems less
desirable
• Operating Costs:
• The most efficient and therefore the most economical
equipment is one whose operating cost is the minimum.
This is a full proof measure for selection of the equipment.
• Utilization of Equipments:
• The maximum utilization of the existing machine should
be done to reduce the cost of production of various items
of the project.
• Availability of Equipment:

• Sometimes the selection of equipment has to be made

from the available equipment held with the manufacturers
or dealers.
• Source of Equipment:
• Contractor and other users of construction equipment
 frequently are concerned with a decision as to whether to
purchase or rent (Lease) equipments.
 Country of Origin:
 As far as possible, indigenous equipments should be used.
This encourages the industry of the country and saves foreign
exchange. When imports have to be resorted to, they should
be preferable restricted to soft currency area.
 Operating Facility:
 The equipments chosen for project should be such that the
trained operators for the machine are available
 Suitability of Equipment for Future:
 While selecting an equipment, the useful life of the
equipment should be compared with the duration of the
project. If the life of the equipment is longer, it should be
possible to use the equipment for other projects
 FINANCIAL ASPECTS RELATED TO
CONSTRUCTION EQUIPMENTS
 1) How to arrange finance
 2) Whether to buy

Sources of
equipment

Long term Short term

(new or used) (Renting)

Lease
Buy

Leasing with
Down On loans Payment in Time lease option to buy
payment mobilized later
installments
ASPECTS RELATED TO FINANCE
 How to Arrange Finance
• When the contractor place the equipment purchase order
to the manufacturers, the majority of the manufacturers,
demand 10 to 30 % advance with orders, without any
commitment of delivery period.
• The arrangement of finance can be done from the
advances given by the project authorities or from the
advances given to the contractor on equipment
purchase.
• Now a days, the contractors are allowed for advances
on new equipment to be purchased in case of all major
contracts.
• In some cases, even foreign exchange is made available
in contracts for import of equipments and spares.
•
The finance can also be arranged from Industrial
Development Banks and leasing companies.
 BUY OR HIRE
•A Piece of Equipment may be employed on a project, in
one of the following two ways:
• 1. Direct Purchase(Buy)
• 2. Hiring(Rent)
DIRECT PURCHASING
 If the equipments are to be used frequently for many
types of jobs for a long duration of time on a project, it
will be economical for the contractors to purchase the
equipments
 DIRECT PURCHASE

 Advantages
• Equipment is always
 Disadvantages
economically operated
• If equipment become
• It receive better care &
obsolete, it is useless
maintenance
• Tendency to perform work
• It can be available and
as per available equipment
used at any time
• Disposal is difficult
• Equipment may be used
beyond its economic life
• Equipment may remain in
ideal condition for some
time
 HIRING
 If the project is small and if the equipment is to be used
for a short duration of time on the project, it will be
economical for the contractor to get it by hiring or by
renting from other agencies
HIRING(ADVANTAGES)
• Little care is required for maintenance and storage
• Desired equipment is available in working order at
short notice
• Investment cost can be diverted to other better
purpose
• No fear of obsolescence of equipment, full
advantages is taken by contractor of the improved
technical aspect of equipment
• If found useful, equipment can be bought later
DISCOUNTED PRESENTWORTH ANALYSIS
 It involves calculating the present value of all amounts
involved in all the alternatives to determine the present
worth of the proposed or best alternatives.

Decision problems may be of two types:

I. Revenue dominated cash flow diagram
II. Cost dominated cash flow diagram
WHAT IS INFLOW AND OUTFLOW
 (A) REVENUE PROFIT DOMINATED
CASH FLOW DIAGRAM
 In this type of cash flow diagram, the revenue, profit,
salvage value, etc. (inflows) will be assigned a (+ve)
sign while costs (outflows) will be assigned with (-ve)
sign.
 Finally, the alternative having the maximum present
worth amount should be selected as the best alternative.
 (B) COST DOMINATED CASH FLOW
DIAGRAM
▪ In this type of diagram, the cost(outflows) will be
assigned with (+ve) sign and revenue, profit, salvage
value(all inflows) etc. will be assigned with (-ve) sign.

▪ Finally, the alternative having the minimum present

worth amount should be selected as the best alternative
 DEPRECIATION
• Depreciation can be defined as the loss or decrease in
the value of the property due to the use life, wear
and tear, decay and obsolescence.
• As the equipment which is purchased today will not
work for ever. This may be due to wear and tear of the
equipment or obsolescence of technology.
• It is dependent on its original condition, quality of
maintenance & mode of use.
• Usually a % of depreciation per annum is
allowed, which gradually increases with time.
• Present value of property = Initial cost – Total amount
of depreciation
 DEPRECIATION FUND
 The recovery of money from the earnings of an
equipment for its replacement purpose is called
depreciation fund, since we make an assumption that the
value of the equipments decrease with the passage of
time.
 Thus, the word, depreciation means decrease in value of
physical assets with the passage of time.
TYPES OF DEPRECIATION
 A) Physical depreciation
1.Wear and tear from operation
2.Action of time and other elements
 B) Functional depreciation

1.Inadequacy or suppression
2.Obsolescence
 METHODS OF CALCULATING
DEPRECIATION
1. Straight Line method

2. Constant Percentage method

3. Sinking Fund method

4. Sum of years Digits method

5. Service Output method

 STRAIGHT LINE METHOD

Assumption: Property loses its value by the same amount

every year.
Therefore, Annual Depreciation= Annual Decrease in property
value
where, D = Annual Depreciation
Depreciation of property after m years:
C= Original Cost

S= Scrap Value

n , m= life in years
Therefore, Book value after m years
 CONSTANT PERCENTAGE METHOD
Assumption: Property will lose its value by a constant
percentage of its value at the beginning of every year.

Where, p= % rate of annual Depreciation S= Scrap value C= Original cost

n= life in years

 If any age of property is m years, the value of property after m

years
 SINKING FUND METHOD

Assumption: Depreciation of theproperty=the annual

sinking fund + interest on the sinking fund for that year.

 If i is the rate of interest, the annual sinking fund

instalment(p) to accumulate 1 Rs in m years:

 Ifi is the rate of interest, and 1 Rs is deposited every

year, total sinking fund accumulated at the end of n
years:

 Rate of depreciation in n years:

 FACTORS AFFECTING COST OF
OWNING OPERATING EQUIPMENT
1. Cost of the equipment delivered to the owner
2. Demand of the equipment at the end of its useful life
3. Number of hours it is used per year
4. Number of years it is used
5. Severity of conditions under which it is used
6. State of maintenance and repairs
 COSTS TO BE CONSIDERED FOR
OWNING AND OPERATING EQUIPMENT
• Depreciation Cost
• Investment cost (average investment= )
• Maintenance and repair Cost
• Operation Cost (Repair charges, Depreciation on tyres
and tubes, Labour Charges, Fuel Charges, Operators and
maintenance crew charges, Miscellaneous Supplies)
• Down time Cost
• Obsolescence Cost
• Replacement Costs
 INVESTMENT COST
 Investment (or interest) cost represents the annual cost
(converted into an hourly cost) of capital invested in a
machine. if borrowed funds are utilized for purchasing a
piece of equipment, the investment cost is simply the
interest charged on these funds. if it is purchased with
company assets, an interest rate that is equal to the rate
of return on company investment should be charged.
 MAINTENANCE COST AND REPAIR
COST
 The cost for maintenance and repairs include the
expenditures for replacement parts and the labour
required to keep the equipment in good working
condition. Historical cost records of maintaining and
servicing equipment are the most reliable guide in
estimating maintenance and repair cost. The
manufacturers of construction equipment provide
information showing recommended costs for
maintenance and repairs for the equipment they
manufacture. The annual cost of maintenance and
repairs is often expressed as a percentage of purchase
prices or as a percentage of the straight-line depreciation
costs.
 OPERATING COST
Operating cost is incurred only when the equipment is
operated. The operating cost of the equipment is
influenced by various parameters namely number of
operating hours, location of job site, operating conditions,
category of equipment etc. The operating cost consists of
the following;
a) Repair and maintenance cost,
b) Fuel cost,
c) Cost of lubricating oil, filter and grease,
d) Tire cost
e) Equipment operator wages,
f) Cost of replacing high-wear items and
g) Cost of mobilization, demobilization and assembly
Down time cost
It is a time that a machine is not working ,because it is
undergoing repairs or adjustments

Obsolescence cost
It may be defined as the loss in the value of an equipment
due to improvement in designs of equipments.

Replacement Cost
Every year the cost of equipment is increasing. In view of
these factors, they are to be included in ownership cost
which will allow the unit of equipment to generate
sufficient capital during its economical life to ensure its
replacement at the end of the depreciation period.
 ECONOMIC LIFE OF CONSTRUCTION
EQUIPMENTS
Equipment should be replaced under following
circumstances:
Depreciation

Downtime

Inadequacy

Normal Deterioration
 EQUIPMENT REPLACEMENT POLICY
A firm has to face three type of decisions:
•The replacement of equipment as it wears out
•The equipment required for expansion
•The replacement of old technology by new
 Equipment is replaced before its estimated
life to:
• Reduce production cost
• Reduce fatigue
• Raise quality
• Increase output
• Secure greater convenience, safety and reliability
 CONSIDER DO NOT CONSIDER
For equipment in use
•Operating cost
•Repair and maintenance cost For equipment in use
•Down time cost •Original Cost
•Salvage value Rebuilding cost • Money already spent on repairs
and maintenance
•Unrealistic book value For New
Equipment
For new equipment
•Initial cost For new equipment
•Interest on capital investment • Any savings not clearly
•Salvage value
assessable
•Labour savings •Overhead charges
FIG : BREAK-EVEN POINT THEORY
THANK YOU