Construction Equipment

Management
 Planning and Selection of
Equipment
• Introduction
• Advantages and Disadvantages of
Equipments
• Factors affecting extent of mechanization
• Equipment planning
• Equipment selection
 Advantages of construction
equipments

• Capable of handling tough work.

• Machine is dependable source.
• Effectively used where large quantity of material is to be
hauled over a long distance or greater height.
• Performance can be assessed correctly.
• Increases the technical know how and skilled workmen
which may become asset to the country in technical
development.
• Use if indigenous machine will improve industrialization.
 Disadvantages of construction
equipments

• Sometimes they are required to import from other

countries.
• Dependence on foreign manufacturers is required for spare
parts and specialized services.
• Delay caused in procurement, mobilization, operation may
cause delay in execution.
• Disposal of machine or its spare parts after its life period
may become a problem.
• It may create problem of unemployment in case work can
be done by labours.
 Extent of mechanization
• Manpower
• Completion period
• Nature of work
• Availability of money
• Availability of indigenous equipment
• Social object of the project
• Labour relations
• Overseas projects
• Quality and performance
• Development of industries
 Equipment planning
• Equipment selection
• Working shifts
• Number and size of equipment
• Matching unit
• Equipment operational planning
• Manpower planning
 Factors affecting equipment
selection
• Suitability for job
condition
• Size of the equipment
• Standardization
• Availability in the market
• Availability of spare parts
• Versatility
• Availability of know how
• Service support
• Economical aspect
• Operating requirement
• Past performance
• Reputation of manufacturer
• Warranty or Guarantee
offered by the manufacturer
• Prime mover used and its
power
 Buy
Points in Favour of Buying Procurement process
• When the equipment used for most of 1. Calling Enquiries
the construction period and likely to
complete almost its full life, while 2. Technical and Financial Evaluation
working on project. 3. Ordering
• It is remain available for use whenever 4. Contract making/Purchasing
it is needed.
5. Transporting
• It is basically owned equipment and
hence it is kept in better mechanical 6. Assembling and Installation
condition and is more reliable. 7. Operation/Commissioning
Points which are against Buying
• When the equipment can not be used
for its full life, then owning may be
more expensive than hiring.
• The purchaser is required to do huge
investment initially, which otherwise he
may need for other purpose.
• Contractor may have to face the danger
of obsolescence.
 Renting
• It is basically a short term alternative to
the direct ownership.
• Company can pick a machine which is
exactly suitable for job.
• Used when the job is of short duration
and there is no continuous need of the
equipment.
• Only limited machines are available on
rent.
• No assurance of availability of
equipment at required time.
• Renter is responsible for Fuel and
lubrication of machine
• Renter is responsible for repair of
machine.
• Rent rates are based on per day (8 hr),
per week (40 hr), or per month basis
(176 hr).
• Quipo Infrastructure Equipment Bank-
Formed in 2002 By SREI Infrastructure
Finance Ltd and CIDC. IFC Washington,
FMO Netherlands, Sweadfund International
AB, Sweden and an international equipment
manufacturer, Ingersoll Rand, together hold
more than 54 % of Quipo stake.
• At present, Quipo has branches one each in
Gurgaon, Neemrana, Ahmedabad, Mumbai,
Bangalore, Hyderabad, Kolkata, Chennai,
Guwahati, Ranchi, Raipur, Cochin,
Lucknow, Chandigarh Patna, Bhopal, and
Bhubaneswar.
• Gives equipment on rent.
• Offers value added services like supplying
of skilled manpower, repair and
maintenance etc.
• It provides information about equipment and
allows for depositing the idle equipments
form contractors.
• It helps equipment manufacturers for finding
out new customers and and conduct
equipment demos and application tests.
 Lease
• Lease is basically long term
agreement to use the equipment.
• In this contract Lessor will
always hold the ownership rights.
Lessee will give the payments to
Lessor in return for providing
machine.
• Lease contracts are binding legal
documents and non cancelable by
either party.
• In most of the lease agreements
user is responsible for fuel,
lubricants, repair and
maintenance.
Advantages of this method
1. Working capital is not tied up
in equipment.
2. Lessee gains a tax deduction
because lease payments are
treated as an expense.
Disadvantages of this method
1. Only limited machines are
available on lease.
2. No assurance of availability
of equipment at required time.
 Working Shifts
• Working Shifts Depends upon
nature of work, Area in which
work is spread etc.
• It is always good practice that
working shifts should be decided
in such a way that equipment must
be utilize of its whole life on one
particular project.
• Yearly utilization of equipment
under average working conditions
Single shift operation- 1500 hrs
Double shift operation- 2500 hrs
Triple shift operation- 3200 hrs
Experience has shown that
the standby provision should
be as below
(i) For equipment used in
single shifts 10 % standby
(ii) For equipment used in
double shifts 20 % standby
(iii) For equipment used in triple
shifts 30 % standby
 Number and Size of Equipment

Factors affecting • Number of matching units must

number and size of be calculated considering the
equipment are output of both the equipments.
1. Quantum of work
2. Working Days
available
3. Number of shifts
planned
Size of the
equipment should be
such that it should
not be too big or too
small
 Equipment Operation Planning

• Equipments must work in coordination,

especially when they are required to work
in a team.
• Proper maintenance of service road.
• Planning required for repair and
maintenance.
 Hourly Working Rate

Cost of Equipment

Owning Cost Operating Cost

(A) Investment cost (A) Cost of Fuel

(B) Depreciation
(C) Major repair cost
(B) Cost of Lubricants
(C) Cost of Servicing, maintenance
and Field Repair
(D) Cost of labour
(E) Cost of Overheads
 Investment cost

• Interest on money Generally this cost is 10 to

invested in Purchasing the 15 % of total cost where
equipment total cost consists of
• Price of the equipment with all
• Various taxes on the attachments and accessories
equipment • Insurance and freight charges
• Expenses on unloading, clearance
• Insurance expenses and custom duty
• Storage cost • Cost of transportation to the job
site including loading and
unloading
• Erection and commissioning
charges
 Depreciation

Depreciation

Due to Physical Due to Functional

Condition condition

Wear Physical Accidental Deferred Inadequacy Obsolescence

and Tear decay maintenance
and neglect
Methods of calculating Depreciation

• Straight line method

• Sum of years method
• Declining balance method
 Straight line method

C -S
D= in R u p e e s
N

C = In itia l c o s t o f m a c h in e
S = S c ra p v a lu e
N = N u m b e r o f y e a rs o f life o f m a c h in e
D = D e p re c ia tio n a m o u n t p e r y e a r
 Declining Balance Method

1
⎛ S ⎞ n
P = 1 - ⎜ ⎟
⎝ C ⎠
W h e re
S = S c r a p v a lu e / S a lv a g e v a lu e
C = In i t i a l c o s t o f e q u i p m e n t
n = U s e f u l li f e o f e q u i p m e n t
 Major Repair Cost

It depends upon
It is defined by many • Type of equipment
ways as • Working conditions
1. Cost incurred by base • Extent of care taken in its
workshop maintenance and servicing
2. Any repairs requiring • Price of spare parts and
more than 24 hours labour.
3. Jobs costing more than 1 Major repair cost is generally
% of the value of taken as 80 to 240 % of
equipments etc. straight line depreciation cost
depending upon type of
equipment.
 Major repair cost

Equipment Type % of cost of

depreciation

Crawler tractor/ Dozer 240

Wheeled tractor/ Dozer 200

Shovels/ Draglines, Hydraulic Excavators, Vibratory 150

compactors, Wheeled loaders, Motorized scrapers
Dumpers, Tractor tailors 140

Crawler and Mobile cranes, Transit mixers 120

Air compressors and Water pumps with diesel engine 100

Air compressors with electric motors, Wagon drills, 80

Concrete mixers
Batching and mixing plants, Towed scrapers 75
 Cost of Fuel

Fuel Consumption
Diesel Engine: -
Fuel consumption per metric H.P. per hour = 0.15 litre
Fuel consumption per Kilowatt per hour = 0.205 litre

Load factor corrections

Cranes – 30 to 50 %
Clamshells and draglines – 40 to 60 %
Shovels and Backhoes- 50 to 70 %
 Cost of Lubricants
• Engine oil
• Air Filter oil
• Transmission oil
• Hydraulic oil
• Grease
It depends upon
• Machine condition
• Capacity of crankcase
• Condition of piston ring
• Number of hours between oil
changes
Cost of lubricants is normally
taken as 30 % of Fuel cost in
case of diesel engines.
H.P.× f × 0.006 × 4.5 C
Q= +
7.4 t
Where
Q = Quantity of oil consumed in Lit/hr
H.P. = Rated horse power of the engine
f = Operating factor
C = Capacity of crankcase, in Lit
t = Number of hours between oil changes
 Cost of field repair and servicing
Servicing cost include
• Cost of checking up and
servicing of Fuel and oil supply
systems of machines
• Cost to take care of tyres and
tubes
• Cost to take care of batteries
and electrical equipments
• Cost of providing various
services like supply of water,
transportations system,
compressed air, electricity etc
• Salaries of servicing personnel
Field repair cost includes
• Cost for replacing of minor
parts such as fan belts, spark
plugs, small bearings, filters,
wire ropes etc.
• Cost of stores as well as cost of
personnel required for Field
repair
• It is normally taken as 30 % to
50 % of depreciation cost on
this account.
 Cost of Labour Cost of Overhead
It includes salaries of It includes payment of
operators, helpers, Watchmen, Uniform
mechanics etc. of operators, Supply of
drinking water at site,
tools, services of
stores etc.
It is normally taken as
2 % of the ownership
cost of machine.