Construction Equipment Management

Planning and Selection of Equipment

Introduction Advantages and Disadvantages of Equipments Factors affecting extent of mechanization Equipment planning Equipment selection

Advantages of construction equipments

Capable of handling tough work. Machine is dependable source. Effectively used where large quantity of material is to be hauled over a long distance or greater height. Performance can be assessed correctly. Increases the technical know how and skilled workmen which may become asset to the country in technical development. Use if indigenous machine will improve industrialization.

Disadvantages of construction equipments

Sometimes they are required to import from other countries. Dependence on foreign manufacturers is required for spare parts and specialized services. Delay caused in procurement, mobilization, operation may cause delay in execution. Disposal of machine or its spare parts after its life period may become a problem. It may create problem of unemployment in case work can be done by labours.

Extent of mechanization
Manpower Completion period Nature of work Availability of money Availability of indigenous equipment Social object of the project Labour relations Overseas projects Quality and performance Development of industries

Equipment planning
Equipment selection Working shifts Number and size of equipment Matching unit Equipment operational planning Manpower planning

Factors affecting equipment selection

Suitability for job condition Size of the equipment Standardization Availability in the market Availability of spare parts Versatility Availability of know how Service support Economical aspect Operating requirement Past performance Reputation of manufacturer Warranty or Guarantee offered by the manufacturer Prime mover used and its power

Buy
Points in Favour of Buying
When the equipment used for most of the construction period and likely to complete almost its full life, while working on project. It is remain available for use whenever it is needed. It is basically owned equipment and hence it is kept in better mechanical condition and is more reliable.

Procurement process
1. 2. 3. 4. 5. 6. 7. Calling Enquiries Technical and Financial Evaluation Ordering Contract making/Purchasing Transporting Assembling and Installation Operation/Commissioning

Points which are against Buying

When the equipment can not be used for its full life, then owning may be more expensive than hiring. The purchaser is required to do huge investment initially, which otherwise he may need for other purpose. Contractor may have to face the danger of obsolescence.

Renting
It is basically a short term alternative to the direct ownership. Company can pick a machine which is exactly suitable for job. Used when the job is of short duration and there is no continuous need of the equipment. Only limited machines are available on rent. No assurance of availability of equipment at required time. Renter is responsible for Fuel and lubrication of machine Renter is responsible for repair of machine. Rent rates are based on per day (8 hr), per week (40 hr), or per month basis (176 hr). Quipo Infrastructure Equipment BankFormed in 2002 By SREI Infrastructure Finance Ltd and CIDC. IFC Washington, FMO Netherlands, Sweadfund International AB, Sweden and an international equipment manufacturer, Ingersoll Rand, together hold more than 54 % of Quipo stake. At present, Quipo has branches one each in Gurgaon, Neemrana, Ahmedabad, Mumbai, Bangalore, Hyderabad, Kolkata, Chennai, Guwahati, Ranchi, Raipur, Cochin, Lucknow, Chandigarh Patna, Bhopal, and Bhubaneswar. Gives equipment on rent. Offers value added services like supplying of skilled manpower, repair and maintenance etc. It provides information about equipment and allows for depositing the idle equipments form contractors. It helps equipment manufacturers for finding out new customers and and conduct equipment demos and application tests.

Lease
Lease is basically long term agreement to use the equipment. In this contract Lessor will always hold the ownership rights. Lessee will give the payments to Lessor in return for providing machine. Lease contracts are binding legal documents and non cancelable by either party. In most of the lease agreements user is responsible for fuel, lubricants, repair and maintenance. 1. 2. Advantages of this method Working capital is not tied up in equipment. Lessee gains a tax deduction because lease payments are treated as an expense.

Disadvantages of this method 1. Only limited machines are available on lease. 2. No assurance of availability of equipment at required time.

Working Shifts
Working Shifts Depends upon nature of work, Area in which work is spread etc. It is always good practice that working shifts should be decided in such a way that equipment must be utilize of its whole life on one particular project. Yearly utilization of equipment under average working conditions Single shift operation- 1500 hrs Double shift operation- 2500 hrs Triple shift operation- 3200 hrs Experience has shown that the standby provision should be as below (i) For equipment used in single shifts 10 % standby (ii) For equipment used in double shifts 20 % standby (iii) For equipment used in triple shifts 30 % standby

Number and Size of Equipment

Factors affecting number and size of equipment are Quantum of work Working Days available Number of shifts planned Size of the equipment should be such that it should not be too big or too small
Number of matching units must be calculated considering the output of both the equipments.

1. 2. 3.

Equipment Operation Planning

Equipments must work in coordination, especially when they are required to work in a team. Proper maintenance of service road. Planning required for repair and maintenance.

Hourly Working Rate

Cost of Equipment

Owning Cost

Operating Cost

(A) Investment cost (B) Depreciation (C) Major repair cost

(A) Cost of Fuel (B) Cost of Lubricants (C) Cost of Servicing, maintenance and Field Repair (D) Cost of labour (E) Cost of Overheads

Investment cost
Interest on money invested in Purchasing the equipment Various taxes on the equipment Insurance expenses Storage cost Generally this cost is 10 to 15 % of total cost where total cost consists of
Price of the equipment with all attachments and accessories Insurance and freight charges Expenses on unloading, clearance and custom duty Cost of transportation to the job site including loading and unloading Erection and commissioning charges

Depreciation
Depreciation

Due to Physical Condition

Due to Functional condition

Wear and Tear

Physical decay

Accidental

Deferred maintenance and neglect

Inadequacy

Obsolescence

Methods of calculating Depreciation

Straight line method Sum of years method Declining balance method

Straight line method

C -S D= in R u p e e s N C = In itia l c o s t o f m a c h in e S = S c ra p v a lu e N = N u m b e r o f y e a rs o f life o f m a c h in e D = D e p re c ia tio n a m o u n t p e r y e a r

Declining Balance Method

1 n

S P = 1 - C

W h e re S = S c r a p v a lu e / S a lv a g e v a lu e C = In i t i a l c o s t o f e q u i p m e n t n = U s e f u l li f e o f e q u i p m e n t

Major Repair Cost

It is defined by many ways as 1. Cost incurred by base workshop 2. Any repairs requiring more than 24 hours 3. Jobs costing more than 1 % of the value of equipments etc. It depends upon Type of equipment Working conditions Extent of care taken in its maintenance and servicing Price of spare parts and labour. Major repair cost is generally taken as 80 to 240 % of straight line depreciation cost depending upon type of equipment.

Major repair cost

Equipment Type % of cost of depreciation 240 200 150 140 120 100 80 75

Crawler tractor/ Dozer Wheeled tractor/ Dozer Shovels/ Draglines, Hydraulic Excavators, Vibratory compactors, Wheeled loaders, Motorized scrapers Dumpers, Tractor tailors Crawler and Mobile cranes, Transit mixers Air compressors and Water pumps with diesel engine Air compressors with electric motors, Wagon drills, Concrete mixers Batching and mixing plants, Towed scrapers

Cost of Fuel
Fuel Consumption Diesel Engine: Fuel consumption per metric H.P. per hour = 0.15 litre Fuel consumption per Kilowatt per hour = 0.205 litre

Load factor corrections Cranes 30 to 50 % Clamshells and draglines 40 to 60 % Shovels and Backhoes- 50 to 70 %

Cost of Lubricants
Engine oil Air Filter oil Transmission oil Hydraulic oil Grease It depends upon Machine condition Capacity of crankcase Condition of piston ring Number of hours between oil changes Cost of lubricants is normally taken as 30 % of Fuel cost in case of diesel engines.
H.P. f 0.006 4.5 C + 7.4 t Where Q = Quantity of oil consumed in Lit/hr Q= H.P. = Rated horse power of the engine f = Operating factor C = Capacity of crankcase, in Lit t = Number of hours between oil changes

Cost of field repair and servicing

Servicing cost include Cost of checking up and servicing of Fuel and oil supply systems of machines Cost to take care of tyres and tubes Cost to take care of batteries and electrical equipments Cost of providing various services like supply of water, transportations system, compressed air, electricity etc Salaries of servicing personnel Field repair cost includes Cost for replacing of minor parts such as fan belts, spark plugs, small bearings, filters, wire ropes etc. Cost of stores as well as cost of personnel required for Field repair It is normally taken as 30 % to 50 % of depreciation cost on this account.

Cost of Labour It includes salaries of operators, helpers, mechanics etc.

Cost of Overhead It includes payment of Watchmen, Uniform of operators, Supply of drinking water at site, tools, services of stores etc. It is normally taken as 2 % of the ownership cost of machine.