Estimating in Building Construction

Chapter 8 Equipment's
 GENERAL
• One problem an estimator faces is the selection of equipment suitable to use
for a given project.
• The equipment must pay for itself.
• It is impossible for contractors to own all types and sizes of equipment, the
selection of equipment will be primarily from that which they own.
• However, new equipment can be purchased if the cost can be justified.
• Figuring the cost of equipment required for a project presents the same
problems to estimators as figuring labor.
 GENERAL
• Equipment that is required throughout the project is included under
equipment expenses, because it cannot be charged to any particular item of
work.
• This equipment often includes the hoist towers and material-handling
equipment such as lift trucks and long-reach forklifts.
• Equipment required for one project only or equipment that might be used
infrequently may be purchased for the one project and sold when it is no
longer needed.
 OPERATING COST
• The costs of operating the construction equipment should be calculated on
the basis of the working hour since the ownership or rental cost is also a cost
per hour.
• Included are items such as fuel, grease, oil, electricity, miscellaneous supplies,
and repairs.
• Operators’ wages and mobilization costs are not included in equipment
operation costs.
 OPERATING COST
• Costs for power equipment are usually based on the horsepower of the
equipment.
• Generally, a gasoline engine will use between 0.06 and 0.07 gallons of
gasoline per horsepower per hour when operating at full capacity.
• When operating, the engine will probably operate at 55 to 80 percent of full
capacity, or 55 to 80 percent of its available power will be utilized.
• This is known as power utilization and reduces fuel consumption.
 OPERATING COST
• Typically, equipment is operated between 30 and 50 minutes per hour. This is
known as the system efficiency or use factor and is expressed as a percentage
of the hour that the equipment is operating.
 OPERATING COST
• The diesel engine requires about 0.04 to 0.06 gallons of fuel per horsepower
per hour when operating at full capacity.
• Because the equipment is usually operated at 55 to 80 percent of capacity and
will not operate continuously each hour, the amount of fuel actually used will
be less than the full per hour requirement.
• The full capacity at which the equipment works, the portion of each hour it
will be operated, the horsepower, and the cost of fuel must all be determined
from a job condition analysis.
 EXAMPLE NO. 01
What is the estimated fuel cost of a 120-horsepower payloader? A job condition
analysis indicates that the unit will operate about 45 minutes per hour (75
percent) at about 70 percent of its rated horsepower.
SOLUTION
 OPERATING COST
Lubrication : The amount of oil and grease required by any given piece of
equipment varies with the type of equipment and job conditions.
A piece of equipment usually has its oil changed and is greased every 100 to 150
hours.
Under severe conditions, the equipment may need much more frequent
servicing.
 EXAMPLE NO. 02
A piece of equipment has its oil changed and is greased every 120 hours. It
requires six quarts of oil for the change. The time required for the oil change and
greasing is estimated at 2.5 hours.
SOLUTION
 OPERATING COST
Tires : The cost of tires can be quite high on an hourly basis.
Because the cost of tires is part of the original cost, it is left in when figuring the
cost of interest, but taken out for the cost of repairs and salvage values.
The cost of tires, replacement, repair, and depreciation should be figured
separately.
The cost of the tires is depreciated over the useful life of the tires, and the cost
of repairs is taken as a percentage of the depreciation, based on past experience.
 EXAMPLE NO. 03
Four tires for a piece of equipment cost $5,000 and have a useful life of about
3,500 hours; the average cost for repairs to the tires is 15 percent of
depreciation. What is the average cost of the tires per hour?
SOLUTION
 DEPRECIATION
• As soon as a piece of equipment is purchased, it begins to decrease
(depreciate) in value.
• As the equipment is used on the projects, it begins to wear out, and in a given
amount of time it will have become completely worn out or obsolete.
• If an allowance for depreciation is not included in the estimate, there will be
no money set aside to purchase new equipment when the equipment is worn
out.
• This is not profit, and the money for equipment should not be taken from
profit.
 DEPRECIATION
• On a yearly basis, for tax purposes, depreciation can be figured in a number of
ways. But for practical purposes, the total depreciation for any piece of
equipment will be 100 percent of the capital investment minus the scrap or
salvage value, divided by the number of years it will be used.
 EXAMPLE NO. 04
If a piece of equipment had an original cost of $67,500, an anticipated salvage
value of $10,000, and an estimated life of five years, what would be the annual
depreciation cost?
SOLUTION
 INTEREST
• Interest rates must be checked by the estimator.
• The interest should be charged against the entire cost of the equipment, even
though the contractor paid part of the cost in cash.
• Contractors should figure that the least they should get for the use of their
money is the current rate of interest. Interest is paid on the unpaid balance.
INTEREST
INTEREST
 OWNERSHIP COST
• To estimate the cost of using a piece of equipment owned by the contractor,
the estimator must consider depreciation, major repairs, and overhaul as well
as interest, insurance, taxes, and storage.
• These items are most often taken as a percentage of the initial cost to the
owner. Also to be added later is the cost for fuel, oil, and tires.
• The cost to the owner should include all freight costs, sales taxes, and
preparation charges.
 EXAMPLE NO. 05
Estimate the cost of owning and operating a piece of equipment on a project
with the following costs:
SOLUTION
SOLUTION
SOLUTION
SOLUTION
 RENTAL COST
• If a project is a long distance from the contractor’s home base or if the
construction involves the use of equipment that the contractor does not own
and will not likely use after the completion of this one project, the estimator
should seriously consider renting the equipment.
• In considering the rental of equipment, the estimator must investigate the
available rental agencies for the type and condition of equipment available,
the costs, and the services the rental firm provides.
 RENTAL COST
• The price of the rental is important, but the emphasis should be on the
equipment’s condition and service.
• If no reputable rental agency is available, the contractor may be forced to
purchase the required equipment.
• Equipment is generally rented for a short time, and lease agreements are
arranged when that time extends to one year or more.
 RENTAL COST
• Rental rates are usually quoted by the month, week, or day.
• These costs must be broken down into costs per hour or per unit of work so
that they may be accurately included in the estimate and checked during
construction.
• The rental charge will be based on a day of eight hours (or less).
• If the equipment is to be used more than eight hours per day, a proportional
charge will be added.
 MISCELLANEOUS TOOLS
• Examples of miscellaneous tools are wheelbarrows, shovels, picks, crowbars,
hammers, hoses, buckets, and ropes.
• The life of this type of equipment and tools is generally taken as an average of
one year.
• Loss of miscellaneous tools and equipment due to disappearance (theft) is
common, and all attempts must be made to keep it under control
 COST ACCOUNTING
• The costs for equipment cannot come from thin air; the estimator must rely
heavily on equipment expense data for future bids.
• Especially in heavy construction, the cost accounting is important since the
contractor has a great deal of money invested, and the equipment costs
become a large percentage of the costs of the project.
 COST ACCOUNTING
• It is important that equipment costs be constantly analyzed and kept under
control.
• Small, miscellaneous equipment and tools are not subjected to this cost
control analysis and are generally charged to each project on a flat-rate basis.
• The procedure for determining equipment expenses varies from contractor to
contractor, but the important point is that the expenses must be determined.
 COST ACCOUNTING
• The procedure for determining equipment expenses varies from contractor to
contractor, but the important point is that the expenses must be determined.
• Generally the equipment expense is broken down into a charge per hour or a
charge per unit of work.
• A report on quantities of work performed is required if a cost per unit of work
is desired.
• Generally the work is measured on a weekly basis; sometimes the work
completed is estimated as a percentage of the total work to be performed.
 MOBILIZATION
• The estimate must also include the cost of transporting all equipment
required for the project to the job and then back again when the work is
completed.
• Obviously, this cost will vary with the distance, type and amount of
equipment, method of transportation used, and the amount of dismantling
required for the various pieces of equipment.
 MOBILIZATION
• The cost of erecting some types of equipment, such as hoists, scaffolding, or
cranes, must also be included, as well as the costs of loading the equipment at
the contractor’s yard and unloading it at the job site.
 CHECKLIST
• Equipment listings are given in each chapter and are considered in relation to
the work required on the project. Equipment that may be required
throughout the project includes the following:
Thank You