THE USE OF PLANT AND EQUIPMENTS

1. Economic considerations
2. Maintainance organization
3. Statutory requirements

Economic considerations

Plant plays an increasingly important role in bilding as well as civil engineering operations.

Plant & equipments save both time and money when well managed both on and off site

Economic aspects of using plant and equipments

a) Further mechanism of erection is largely influenced by design for machine needs mass
production to pay off, and this greater standardization and repetition. For example, a crane will
become more expensive if the design does not allow a fairly continuous program of work while
it is on site. Still an immense task lies before the building industry for many years to come and
because of other national demands on man power the available labour force can not be made
for mechanical plant.
b) As a larger proportion of the fixed capital of the contracting industry is absorbed by plant, it
becomes increasingly important that it should be used to its full working capacity and be well
maintained inorder to pay for itself and help to reduce construction costs.
c) While it is obviously desirable that a plant department should be profitable, this should never be
achieved at the expense of contracts, for its primary function is to provide a service to other
divisions of the company. This requires that general management should not only have clear
objectives, but also reliable information upon which to base rational decisions.
d) Highly competitive tendering relies upon factual costing of plant for estimating purposes and in
civil engineering particularly the choice of method can be decicive.

Operating costs of plants and equipments

I. Costing methods
II. Management decisions
III. Choice of plant

Costing Methods

In absence of factual hire rates, it is possible to obtain a guide, either from the schedule of rates of hire
issued by the contractor’s plant association or from schedules of daywork charges recommended by the
two national employer’s organisations.

Although the plat hire industry is generally competitive, the rates charged do not necessarily reflect the
actual cost of operating, for questions of demand and supply of fluctuations of trade may greatly vary
the margin of profit made with different types of equipment.

Method based upon the depreciation of plant over a short assumed life such as used for pure
accounting purposes, not only disguise or exaggerate the actual costs, but may also prevent the
purchase of desirable and truly economical machines
Factors influencing calculating and comparison of plant costs

a) Working life of any individual item of plant will depend upon its typical characteristics, on the
way it is used and on how it is maintained; but eventually further servicing will become
uneconomic and the piece of equipment must be scrapped and replaced. Estimates of the
average working life for various types of machines may be obtained from company records or
plant text books.
b) The utilization of particular unit of plant must be assessed if the hire charge is to bew levied
upon the time it is available for work on a contract. Annual usage rates may also be estimated
from past experience, although the results obtained from a survey of plant users and tabled in
B.R.S Digest 113 can serve as a guide.
c) Market depreciation must be allowed for if it is intended to sell pieces of equipment before the
ends of their useful lives low resale values must be expected in the early years for the
depreciation rate is steepest in the first year and still fairly steep over the next few years before
tailing off. Basic influences are age and use.
d) Obsolescence must be borne in mind for new models may be produced with lower relative
operating costs. Although this is not generally one of the important factors, machines may
become obsolete before they are worn out if they are not used sufficiently.
e) Replacement costs should make allowance for inflation because prices often change fairly
rapidly, so that the schedule of annual charges might need to be revised annually. If the annual
hire charge is calculated as a percentage of the initial purchase price and applied to the current
price for new plant, this will overcome the problem.
f) It is necessary to include the interest charges on the capital loaned to finance the purchase of
equipment should also accrue interest.
g) The standard of maintainance and the length of life are obviously related so that cost data must
if possible come from the same source. Maintainance costs shou;ld be responsible for day to day
repairs but this should be remembered when comparing with outside hire charges.

Management decisions

Realistic plant charges will allow several important management decisions to be taken as the logical
results of scientific analysis.

Source of supply is a common problem that may give rise to friction between sites and plant
department. Decisions must be taken from the point of view of the economy of the undertaking as a
whole and the majority of contractors supply most of their needs from their own pools. It is more
economic to own those types of plantg most frequently required, and to look for items that would
otherwise stand idle for periods.

Ownership however, brings its own problems of additional organization and capital, the uncertainty of
hiring surplus equipment to other firms and the temptation to use unsuitable plant from the yard rather
than hire a more efficient machine.

Plant hire is justified if the changed utilization rates result in lower hire charges and hiring from local
sources may sometimes obviate high haulage costs from a distant plant depot
Choice of plant

 Choice of plant for a particular operation can be determined by preparing a program and
costing on the basis of the time allowed and the plant consumable stores and labour
requirements.
 The total cost must include the hire charge for the full period, the cost of transport both ways
and the expenses of setting up and dismantling.
 Estimated outputs for a particular piece of plant may be found from text books or experience
but due to allowance must be made for the influence of mechanical efficiency, the efficiency of
operator and prevailing site and weather cobnsitions.