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Construction Equipments and its Management

Importance of Construction Equipment
- Construction equipment plays an important role in most
construction projects.
-to prepare the site, erect a building or bridge, or construct an
airport runway
- Commercial or residential contractors typically rely on renting or
leasing equipment as needed, or they may choose to subcontract
the work.
- Decisions regarding the types and quantity of equipment to use
on a project will greatly impact the project cost and duration.

- because of repeated use of many major pieces of equipment,
heavy civil construction contractors often find it more cost-
effective to own their own equipment and treat their equipment
fleet as a profit center for their companies.
- Consequently, the construction manager needs to select the
equipment combination that yields the lowest production cost
while achieving the desired productivity to enable meeting the
contractual completion date.

Construction Equipment Management
• Equipment is a critical resource in the execution of most
construction projects.
• As the equipment fleet may represent the largest long-term
capital investment in many construction companies, equipment
management decisions have significant impacts on the economic
viability of these construction firms.
• Equipment must pay for itself by earning more for the contractor
than it costs to purchase, own, and use it.
• Idle equipment is a drain on income – operating costs are
earned only when the equipment is used, but ownership costs
are earned irrespective of frequency of use.

• Equipment productivity - The costs to be considered are the
cost of owning, leasing, or renting the equipment and
the costs of operating, maintaining, and repairing it.
• The effectiveness of a contractor’s preventive maintenance
program will significantly influence equipment operating
and repair costs.
• Contractors must continually evaluate their equipment
fleets to determine when to acquire additional items,
when to replace items, and when to dispose of items
that are underutilized.

The basic criteria that should be used in selecting equipment for specific
tasks are:
• The capability of the equipment to perform the work.
• The capability of the equipment to perform effectively under the working
conditions of the job site.
• The availability of the equipment, either from the contractor’s equipment
fleet or from a rental or leasing agency.
• The reliability of the equipment and predicted maintenance requirements.
• The availability of parts and service support for the equipment.
• The capability of the equipment to perform multiple tasks on the project.
• Safety features available with the equipment.
Selection of Equipment

• Suitability for Job Conditions: The equipment must meet the
requirement of the work, climate and working conditions.
• Size of the Equipment: Size of equipment should be such that it
must be able to be used with other matching units.
• Standardization: It is better to have same type and size of
equipment in the project.
• The Economical Aspects: While selecting the equipment, it
should be considered that the cost of unit production should be
minimum.
• Reliability of the Equipment: Equipment selected for the
project must be reliable one.

• Service Support: Service support should be available in the
area of project where the equipment shall be used. Service after
sales is a major criteria for selection of equipment.
• Operating Requirements: The equipment selected should be
easy to operate and maintain, acceptable to the operator and
should have lesser fuel consumption.
• Past performance: If the equipment being purchased is of new
make and model, it is desirable to enquire about its
performance from other users, who are using this make and
model.

FORECASTING EQUIPMENT REQUIREMENT
Following are the main points planner has to decide in equipment planning
Working Shifts: By increasing the number of shifts we can reduce the number of
equipment required, as the same equipment can be used in second and third shift.
Number and Size of Equipments: For deciding the number and size of the
equipments following factors should be considered.
 Quantum of work,
 Working days available for completion of project.
 Number of shifts planned.
Matching Units: The number and size of the matching equipment should be
planned for each activity, keeping in view that complete matching set must be
utilized at the maximum and combination must be optimum.
EQUIPMENT MANAGEMENT IN CONSTRUCTION PROJECTS

Procurement Scheduling : Procurement scheduling is done considering
procurement time required and time when equipment is required.
Workshop and Stores Planning: While planning for the purchase of equipments,
it is necessary to plan for the workshop and stores for carrying out the repair and
maintenance.
Man power planning: Planning for manpower in order to operate the equipment
and to carry out the repair and maintenance is also necessarily be done sufficiently
in advance.
Site Conditions: The type of equipment selected mainly depends upon soil
available, and valley conditions, surface and strata where work is to be carried out.

• Different type of soil needs different amount of effort.
• Reduction of horse power of engine due to altitude.
• Time spent on servicing and inspection varies with the working
conditions.
• Output of the equipment also depends upon the operator's efficiency.
• Output of dumper etc. depends on the condition of haul road.
• Time spent on the unproductive works.
• Changing weather conditions are responsible for variation in output.
• Capacities of the matching machineries working in the same group.
Output and Capacity of Equipment
Output of the equipment varies with various conditions. Following are some
of them:

MAINTENANCE MANAGEMENT
Every machine is thoroughly tested and inspected by the
manufacturers before selling.
When used it is subjected to wear and tear, hence proper attention
should be given to protect the machine and its components from
unnecessary wear and thus protect them from failures.
A proper attention means lubrication, cleaning, timely
inspection and systematic maintenance.
Maintenance means efforts directed towards the upkeep and the
repair of that machine.

A. Repair Maintenance can be followed for non-critical
equipment, and where failures are unpredicted.
B. Corrective Maintenance should be adopted for frequently
failing components.
C. Preventive Maintenance (planned or scheduled or
systematic maintenance). Periodic inspection or checking at
the pre-decided frequency helps to find out the reasons leading
to break down and to rectify them when they are in minor (or
initial) stages.

Cost of Owning
Plant, equipment, and tools used in construction operations are priced in the following
three categories in the estimate:
1. Small tools and consumables: Hand tools up to a certain value together with blades,
drill bits, and other consumables used in the project are priced as a percentage of the
total labor price of the estimate.
2. Equipment usually shared by a number of work activities: These kinds of
equipment items are kept at the site over a period of time and used in the work in
progress.
3. Equipment used for specific tasks: These are capital items and used in projects such
as digging trench or hoisting material into specified slots. This equipment is priced
directly against the take-off quantities for the Project it is to be used on. The equipment
is not kept on-site for extended periods - the equipment is shipped to the site, used for
its particular task, and then immediately shipped back to its original location.

Total equipment costs comprise two separate components: ownership costs
and operating costs.
Except for the one-time initial capital cost of purchasing the
machine, ownership costs are fixed costs that are incurred each year,
regardless of whether the equipment is operated or idle.
Operating costs are the costs incurred only when the equipment is used.
Each cost has different characteristics of its own and is calculated using
different methods.

OWNERSHIP COST
Ownership costs are fixed costs. Almost all of these costs are annual in
nature and include:
. Initial capital cost
. Depreciation
. Investment (or interest) cost
. Insurance cost
. Taxes
. Storage cost

INITIAL COST
On an average, initial cost makes up about 25% of the total cost invested
during the equipment’s useful life. This cost is incurred for getting equipment into
the contractor’s yard, or construction site, and having the equipment ready for
operation. Many kinds of ownership and operating costs are calculated using initial
cost as a basis, and normally this cost can be calculated accurately.
Initial cost consists of the following items:
. Price at factory (₹) extra equipment (₹) sales tax
. Cost of shipping
. Cost of assembly and erection

DEPRECIATION
Depreciation represents the decline in market value of a piece of
equipment due to age, wear, deterioration, and obsolescence.
Depreciation can result from:
. Physical deterioration occurring from wear and tear of the machine
. Economic decline or obsolescence occurring over the passage of time
In the appraisal of depreciation, some factors are explicit while other
factors have to be estimated. Generally, the asset costs are known which
include:
• Initial cost: The amount needed to acquire the equipment
• Useful life: The number of years it is expected to be of utility value
• Salvage value: The expected amount the asset will be sold at the
end of its useful life

Among many depreciation methods, the straight-line
method, double-declining balance method, and
sum-of-years’-digits method are the most commonly
used in the construction equipment industry

Straight-Line Depreciation
Straight-line depreciation is the simplest to understand as it
makes the basic assumption that the equipment will lose the same
amount of value in every year of its useful life until it reaches its
salvage value.
The depreciation in a given year can be expressed by the following
equation:

Sum-of-Years’-Digits Depreciation
The sum-of-years’-digits depreciation method tries to model depreciation
assuming that it is not a straight line.
The actual market value of a piece of equipment after 1 year is less than the
amount predicted by the straight-line method. Thus, this is an accelerated
depreciation method and models more annual depreciation in the early
years of a machine’s life and less in its later years.
The calculation is straight forward and done using the following equation:

Double-Declining Balance Depreciation
The double-declining balance depreciation is another method for calculating an
accelerated depreciation rate.
It produces more depreciation in the early years of a machine’s useful life than the sum-
of-years’-digits depreciation method.
This is done by depreciating the ‘‘book value’’ of the equipment rather than just its
initial cost.
The book value in the second year is merely the initial cost minus the depreciation in
the first year. Then the book value in the next year is merely the book value of the
second year minus the depreciation in the second year, and so on until the book value
reaches the salvage value. The estimator has to be careful when using this method and
ensure that the book value never drops below the salvage value:

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Construction Equipments and its Management

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