CONSTRUCTION METHOD AND EQUIPMENTS

ASSIGNMENT ON COST ANALYSIS (OWNERSHIP AND

OPERATING) OF CONSTRUCTION EQUIPMENT

MASTER OF TECHNOLOGY
IN
CONSTRUCTION TECHNOLOGY AND MANAGEMENT
DEPARTMENT OF CIVIL ENGINEERING

Under the supervision of

Dr. Ramesh Nayaka

By

Jitesh Kumar Aneja (191563)

NATIONAL INSTITUTE OF TECHNOLOGY WARANGAL

TELANGANA
FEBURARY 2020
 INDEX
Sr. No. Particulars Page No.
1. About Equipment 2.
2. Equipment Specification 3.-4.
3. Cost Analysis (O&O) 5.-9.

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About Equipment:

The Cat 320D3 Excavator balances productivity, efficiency and reliability to deliver you
reliable, highly efficient, low-cost per-hour excavator solutions for a wide range of job site
tasks. Work in comfort from its industry-leading cab with great visibility, controls and
 UP TO 5% LOWER MAINTENANCE COSTS
With 20%, less refill oil volume and reduced frequency of refills increases uptime and reduce
costs technology.
 UP TO 15% MORE FUEL EFFICIENT
An optimized power train and improved hydraulic power deliver more work per unit of fuel.
 UP TO 7% MORE HYDRAULIC POWER
New tandem hydraulic pumps provide more hydraulic power with less internal friction to
increase overall efficiency.

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EQUIPMENT SPECIFICATION:

ENGINE

HYDRAULIC SYSTEM

DIMENSIONS

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WORKING RANGES AND FORCES

WEIGHT

SERVICE REFILL CAPACITY

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COST ANALSIS (OWNER SHIP AND OPERATING COST)
DATA
Sr. No. Particulars
1. Equipment CAT EXCAVATOR-320D3
2. Engine Type DIESEL
3. Cost of Equipment $ 200000
4. Machine Life Period 15000 hrs
5. Machine operating hours per year 1875 hrs
6. Salvage Value 20% of initial Cost
7. Interest 8.25%
8. Machine Tax 4% of initial Cost
7. Machine Insurance 2% of initial cost
8. Machine Storage Cost $ 800 /year
9. Fuel oil, grease and minor repair Cost $ 35 / hr.
10. Fuel Consumption 0.04gal /H.P
11. Cost of planned Maintenance $ 10000
12. Period of Planned Maintenance After 11250 hrs
13. H.P. of Engine 114
14. Operating Factor 0.65
15. Engine Oil Capacity 4.8 gal (18 l)

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Solution:
Owner Ship Cost
1. Initial Cost of the Excavator:
Initial Cost of Equipment: $200000
Life period of Equipment: 15000 hrs.
Machine operating hours per year: 1875 hrs
15000
Machine life period in years: = 8𝑦𝑒𝑎𝑟𝑠
1875

Annuity value of the initial cost for 8 years:

Using Capital recovery Factor:
𝐴 0.0875∗(1.0875)^8
𝐴 (𝑃 , 8.75%, 8) = $200000 ∗ ( )
1.0875)^8−1

Annuity Value of Initial Cost = $35799.81/yr.

2. Salvage value
= 0.20*200000=$40000
Present value of Salvage value:
𝑃 $40000
𝑃( ,8.75%, 8) =
𝐹 1.0875^8
Present Value of salvage cost= $20446.82/yr.
Annuity of the Salvage value:
𝐴 0.0875∗(1.0875)^8
𝐴 (𝑃 , 8.75%, 8) = $20446.82 ∗ ( (1.0875)8 −1
)

Annuity value of salvage cost: $3659.96/yr.

3. Machine Tax:
=0.04*200000= $8000
Annuity of Machine Tax
𝐴 0.0875∗(1.0875)^8
𝐴 (𝑃 , 8.75%, 8) = $8000 ∗ ( )
1.0875)^8−1

Annuity = $1431.99/yr.
4. Insurance of Machine
0.02*200000= $2000
Annuity of Machine Tax
𝐴 0.0875 ∗ (1.0875)8
𝐴 ( , 8.75%, 8) = $4000 ∗ ( )
𝑃 1.0875)^8 − 1
Annuity = $715.99/yr.

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5. Storage Cost of Equipment:
= $800/ yr.

Annual Owner Ship Cost of Excavator

= (Initial Cost + Tax+ Insurance + Storage Cost - Salvage Value)
= $35799.81+$1431.99 + $715.99 + $800 - $3659.6
= $35094.19/yr.

Hourly Ownership cost of Excavator:

=Annual Ownership cost/Operating hours per year
=35094.19/1875
= $18.72/hr.

OPERATING COST

1. Fuel oil, minor repair:

=$ 35/hr.
2. Major Planned Maintenance:
Cost = $10000
Time Period of maintenance= after 11250hr
In Years= 11250/1875
= After 6 year
Present Value of Maintenance Cost:

𝑃 $10000
𝑃( ,8.75%, 6) =
𝐹 1.0875^6
= $6045.4
Annuity Value of Maintenance cost for 8 years

𝐴 0.0875 ∗ (1.0875)8
( , 8.75%, 8) = $6045.4 ∗ ( )
𝑃 (1.0875)^8 − 1
Annuity Cost = $1082.12/yr.

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3. Lubrication Cost
Assuming Lubrication Requirement
Lubrication Consumption: 50 L
Lubrication Interval: After 1875 hr (1 year)
Lubrication Rate: 0.2*35 =$7/L (20% of fuel Cost)
Total Lubrication cost per year = $350/yr.

Total Annual Operating Cost = Fuel Cost, Minor repair +Major Planned Cost + Lubrication
Cost
= $(65625+1082.12+350)
= $67057.12/yr.
Hourly Operating Cost = Total Annual operating Cost / operating hour per year
= $67057.12/1875
= $35.76/hr.
Therefore for the given CAT Excavator 320D3
Hourly Owner ship Cost= $18.72/hr.
Hourly Operating Cost= $35.76/hr.
Total O&O Cost = $54.488/hr.

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