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Construction Equipment purchases are an investment that needs to be evaluated to determine which purchase is the better va
your business. Equipment performance and capacity to do the job are part of the decision process. However, the single purcha
cost is only one factor in the real lifetime" equipment cost. Any purchase should be evaluated and take into account the loan f
cost for maintenance and repairs, fuel consumption, insurance, and depreciation value to determine your the real lifetime cost
equipment being purchased.
As a guide to help you estimate real lifetime equipment costs before your next equipment purchase, the included "Cost of
Ownership Template" spreadsheet (next sheet) can give you an example on how you can estimate your construction equipme
true cost of ownership. This template breaks all costs into both fixed and variable cost per hour amounts. Fixed cost are your
and depreciation expense whereas variable cost are fuel, tires and maintenance costs.
To use the Cost of Ownership template, you will need to enter your equipment model cost parameters to calculate the true equ
cost of ownership.
The template should be modified with your own values. You can change all the factors in yellow for your own calculations. Whi
are optional. A detailed explanation of the factors used to calculate the cost are given in the sheet "Parameters". Be sure to sa
sheet under a different name to keep your information. Values shown are for example purposes only.
The "Cost of Ownership Template" spreadsheet example breaks the cost down into both variable and fixed cost per hour over
ownership period. With these cost per hour, you can do a best estimate to find the real lifetime cost of ownership of your cons
equipment.
As an example, the Volvo L50E wheel loader has a suggested retail price of $109,712 (see your dealer for exact pricing). Ente
amount as parameter A on the sheet. Tires and rims retail for $4,418. Enter this amount as parameter N. With the other cost
assumptions made and entered in the parameter cells: 5 year ownership (C), 6% loan interest (F), 2000 hrs in use per year (R
$9,484 in annual service (P) are entered in the table, the "Real cost of owning and operating" this equipment is $17.00 per hou
operator cost, and $37.00 per hour with the operator cost included. Therefore, $37.00 per hour is the estimated true cost of ow
based upon the assumptions entered. See the paramers sheet for the explanations of these values.
You can used this template for other equipment in a similar manner to determine the real lifetime cost of ownership to you as a
equipment owner. This template represents one way to determine an estimated "real cost analysis" that is frequently used in t
industry.
ITEM
Parameters
A
B
C
D
E
F
G
H
I
J
K
L
M
N
O
P
Q
R
Machine Model
Purchase price
Purchase price, excluding tires / Tracks
Depreciation time
Residual value
Depreciation cost ((B-D)/C)
Interest
Interest cost (F x (A+D)/2)
Machine tax
Insurance
Fuel Cost
Fuel Cunsumption
Oil Cost
Oil Consumption
Cost of a Set of Tires / Tracks
Lifetime of Tires / Tracks
Repairs and Maintenance
Operator Cost
Operating Hours
Machine Model
Units
USD
years
per year
%
per year
per year
per year
per gal
gph
per qt.
qt. per hr.
hours
per year
per year
per year
Volvo Construction Equipment North America, Inc. and its subsidiaries and affiliates (collectively "Volvo CE") hereby disclaims any and all expressed or implied warranties regarding the cost data, the
calculations contained therein, or the appropriateness of equipment used in the analysis, including, without limitation, any warranties of merchantability or fitness for a particular purpose. In no event shall
Volvo CE be liable to the entity for whom the report was created (or any other entity) for any indirect, incidental, consequential, or special damages, including without limitation, lost revenues or profits.
109,712
105,294
5
43,885
12,282
6%
4,608
2.25
1.30
0.00
4,418
5000
9,484
40,000
2000
6.14
2.30
-
8.44
$
$
$
$
2.93
0.88
4.74
8.55
17.00
20.00
37.00
Note:
You are allowed to change values in cells
which have yellow background. White cells
are optional.
The light blue cells have formula coded in them.
Therefore, making any changes will overwrite
the formulas. Remember to save under
different file name.
eby disclaims any and all expressed or implied warranties regarding the cost data, the
on, any warranties of merchantability or fitness for a particular purpose. In no event shall
onsequential, or special damages, including without limitation, lost revenues or profits.
11
Err:504
Err:504
K - Fuel consumption (gallons per hour). Fuel consumption figures are usually available in the Product Manuals or the
Manufactures Product Handbook. Fuel consumption can vary depending on how the machine is used. Note: this can be an
important consideration. A machine which is 2 gallons per hour more efficent can, over the life of the machine, save
thousands of dollars in fuel cost. Volvo Construction Equipment have the highest fuel efficency ratings in the industry. Fuel
consumption factors for Volvo products are available in the Volvo Product Manuals or from your local dealer.
L - Estimated cost of a quart of oil, grease and or filters.
M - Oil consumption (quarts per hour) of the machine.
N - Cost of a set of tracks or tires. These are high wear items and need to be included separately for calculating
ownership cost.
O - The expected lifetime (in number of hours) of a set of tracks or tires.
P - Estimated repair and maintenance cost. This can be a significant factor in your equipment cost. Repair and
maintenance costs vary considerability depending on the type of work. Equipment with the lowest repair and maintenance
are cost effective over the life of a machine. Periodic Maintenance Plans are important to keep this cost down. Your
Service Manager is the best source for this type of information. Estimated repair and maintenance costs are sometimes
available from either the manufactures performance handbook, or from the product manuals. Estimated service costs for
Volvo construction equipment are available from your local dealer. Volvo Construction Equipment are engineered for
minimal service requirements offering higher productivity.