Calculate the Operating Cost of an Equipment

How to Calculate the Operating Cost of an Equipment

Operating Cost of an Equipment: The running expenses of construction equipment is only important until the machine is operational. The cost of service relies on the duration of operation (hours), the location of the construction site, the operating conditions on the construction site, and the type of construction equipment.

This article discusses the various costs that fall within the category of operating costs.

Operating Cost of an Equipment

Operating Cost of an Equipment

1. Repair and maintenance costs

This expense represents the cost of repairing and maintaining construction equipment that is exposed to wear as a result of the regular operations it conducts. Repair/maintenance costs account for a large portion of total operating costs.

This expense includes the following:

  • The cost of replacing an equipment component.
  • Labor Wages
  • Cost of facilities prepared for repair/maintenance process of equipment

This expense rises as the equipment ages. Proper and timely servicing of construction equipment contributes to the gradual reduction of repair and maintenance costs.

The majority of minor repairs are completed on-site without delay. Major repairs may be carried out at a facility dedicated to the equipment by trained and registered dealers.
Annual repair and maintenance costs are measured as a proportion of the equipment’s annual depreciation expense.

This cost may also be calculated by analyzing previous records for similar equipment or by consulting the equipment’s manufacturer’s guidelines.

2. Cost of Fuel

The construction machinery is powered by internal combustion engines. These vehicles run on gasoline, or diesel. The amount of fuel required varies according to the nature of the work and the rated flywheel horsepower.

The term “flywheel horsepower” refers to the amount of power needed to operate a piece of equipment.

Fuel consumption per hour can be calculated by examining historical records of fuel consumption by similar equipment operating under similar conditions. In the absence of historical data, the manufacturer’s stated fuel consumption can be used to estimate the cost of fuel.

3. Tire Price

Tire costs are divided into two categories: tire repair and tire replacement.

The price of pneumatic tires falls under the category of operating costs. It is worth noting that pneumatic tires wear out more quickly than other types of tires. The more wear, the shorter the tire’s life.

Tire maintenance charges are calculated as a percentage of the tire’s depreciation cost.
Additionally, the repair cost can be determined based on historical reports of similar equipment operating under similar environmental conditions.

4. Equipment Operator’s Wage

The hourly salaries and extra benefits given to operators are also included in the equipment’s operating costs. This expense includes regular salaries, bonuses, and fringe benefits, among other things.

Wages for operators differ according to project. Typically, it is measured as a distinct expense category and then added to the operating cost.

5. Replacement cost of equipment’s high-wear components

Certain components of the equipment have a shorter life span than the equipment’s overall service life. As a result, these are considered high-wear pieces. Among these are cutting edges, drill bits, bucket teeth, and knives.

The standard expected life of these products can be calculated using either historical data or manufacturer specifications.

6. Costs of mobilization, demobilization, and assembly

This expense includes the following:

  • Transportation costs between projects; 
  • Unloading costs.
  • Cost of assembly on-site
  • Permits for Road Use

7. Lubricating oil, grease, and filter costs

Lubricating the oil, grease, and filter requires a certain amount of oil, grease, and filter depending on the frequency of adjustments, operating hours, engine characteristics, and construction site conditions.

The time interval between changes can be measured using historical records.
Lubricating oil quantity The amount required by an engine is equal to the sum of the amount added during the complete change and the sum of the smaller amounts added in between the changes.

The amount of oil needed by the engine is calculated as:

q1 = {(hp x f x 0.006)/7.4  } + c/t.

Where q1 equals the quantity of oil needed in gallons per hour, hp equals the engine’s rated horsepower, f equals the operating factor, c equals the crankcase capacity in gallons, and t equals the number of hours (i.e. duration) between oil changes.

References: Equipment World

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