Professional Documents
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Unit 4 - Equipment Planning 12-05-20
Unit 4 - Equipment Planning 12-05-20
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Several companies offer turnkey services to analyse the most suitable equipment
plan tailored around a particular Construction Project. Experience has shown that
this is an ongoing process of check and balance. In my opinion, a turnkey solution
wouldn’t suffice in this industry.
The key to an efficient profit-making project lies in its effective planning and
scheduling. This can be achieved using various aids; Construction steers towards
the Gantt chart, incorporating the Critical Path Method (CPM) which in recent
decades has utilised developments made in project management software. Namely,
colour codes of priority and work breakdown structures (WBS).
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Ultimately, a schedule can only make visible what is required to be achieved and
when. It’s the Project Manager and their team(s) that have to plan, direct and control
all aspects, which hone together interconnecting trades and tasks in line with a well-
organised project schedule. So to infer, communication is the main driving force and
a primary requirement to successfully scheduling any project by through supportive
means of the various aids available.
It is reasonable to assume that if the equipment is only to be used for a short period,
then the most suitable financial option would be to lease. If required for longer,
depending on equipment type and value, then it may be advantageous to choose the
hire-purchase option.
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If set out incorrectly to begin with, a plant layout can be expensive to rectify. The
whole site will have a huge and potentially detrimental impact on the way it functions
if an efficient and effective layout is not performed. Due care and attention are
essential when installing plant and equipment, as the plant layout is a means to
achieving a smooth workflow.
A good plant layout can make the difference between a successfully run project and
that of a poorly run site that underperforms and puts lives at risk.
Equipment can be more expensive to buy rather than rent particularly when
only required for a short window.
The Lifespan of Equipment assets is stretched beyond its normally intended
usage. This can result in a higher risk of exposure to operatives using the
equipment whilst it is ‘worn out’. The cause is more often as a result of a
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physiological effect, where justification is made to get the most value out of
the purchased asset(s).
Newer Equipment can enter the market, while the purchased equipment is
only partway through its lifespan. The productivity of existing equipment may
fare poorly when comparing against the newer equipment. This could give a
competitive edge to organisations using the newly released equipment or
generally hamper progress.
The Capital allocated to purchasing the equipment could have been put to
better use towards another investment.
There is a lot to be said for renting equipment, it can have its Pro’s and Con’s. The
decision to ascertain equipment needs to be assessed on an individual basis. To
gain a benefit, the decision must enhance at least safety, economy or efficiency in
some form.
2. What factors affect the cost of owning and operating construction equipment? (5)
It is difficult to determine the exact cost when calculating the financial value of
owning equipment. That said using existing historical data and giving consideration
to the facts of how and where the equipment will be used should give an accurate
approximation to the operating costs. Longer established companies may have
devised a ‘co-efficient figure’ for certain groups of equipment to give them an ‘off the
shelf’ sum, helping to make calculating the costs somewhat simpler.
Depreciation
Age of equipment and expected lifespan
The individual cost of the equipment
Maintenance, repair, and breakdown costs
Whether the equipment has a resale value and at what times value is retained
Insurances to cover theft, breakdown and Liability
The average duration of use – set against the standard financial year
The conditions in which the equipment was and is to be used under
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Due to the unpredictable nature of construction, purchasing equipment will only ever
be a close estimation, the true costs will only be realised once the equipment has
been used. Past data may not represent future requirements either. Companies may
devise plans for purchasing and selling equipment after a number of years, for
example, while still retaining asset equity.
3. Discuss the conditions under which the equipment should be taken on rent under
a lease agreement? (5)
defining ‘normal wear and tear and ‘fair use’, outline insurance cover, and specify
how a contract can be terminated. Stipulate who is responsible for maintenance and
when maintenance needs to be carried out.
Overall, the lease agreement is a fairly simple and flexible document. It makes the
transaction legally binding within the agreed parameters, which is accepted by both
parties.