Operating Conditions
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Overview of Operating Costs
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Welcome class! Today, we are diving into operating costs related to construction equipment. Can anyone tell me what sets operating costs apart from ownership costs?
Is it that operating costs only accrue when the equipment is used?
Exactly! Unlike ownership costs, which are constant, operating costs vary based on usage. Who can give me an example of an operating cost?
Fuel and lubricants would be operating costs, right?
Correct! We refer to them as consumables. Remember: *C-FLOM* – Consumables, Fuel, Labor, Operations, Maintenance.
Components of Operating Costs
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Now let's break down the components of operating costs. Who can name one component other than consumables?
Labor costs! We pay operators to run the equipment.
Yes, labor is a big part of this as well. What about maintenance costs?
Does that include both minor and major repairs?
It does! However, minor repairs contribute to operating costs while major repairs fall under ownership costs. Let's summarize: operating costs depend on consumption, labor, and maintenance costs.
Factors Affecting Operating Costs
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Let's discuss factors that can influence operating costs more extensively. What do you think happens to costs when equipment is frequently used?
The costs would definitely go up due to increased fuel and repair needs.
That’s absolutely right! Also, think about job conditions. How might a difficult terrain change our estimated costs?
The repairs will likely increase due to more wear and tear!
Precisely! Operating costs vary significantly based on job conditions. Remember the acronym *C-RACK* for Cost-Risks: What affects our costs depends on how the machine operates under certain risk conditions in tasks.
Estimating Operating Costs
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Finally, how can we estimate these operating costs effectively?
We could look at past records or use manufacturer guidelines!
Great point! Manufacturer handbooks often provide valuable insights. Can anyone think of other information we might seek?
We could look into average operating hours or maintenance history for decisions!
Exactly! Gathering all this data will help us provide accurate estimates for planning and budgeting.
Introduction & Overview
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Quick Overview
Standard
The section discusses operating costs, emphasizing their variable nature that depends on machine usage and job conditions. It elaborates on the components of operating costs, including consumables, labor, and maintenance costs, and outlines methods for estimating total equipment costs through established methodologies.
Detailed
Operating Conditions
This section delves into the components of operating costs associated with equipment in construction. Operating costs arise only when equipment is used, unlike ownership costs, which accumulate regardless of usage. Thus, operating costs are highly variable and depend on the frequency of equipment use and the nature of the job being performed.
Components of Operating Costs
- Consumables: Includes fuel, lubricants, filters, and other small parts consumed during operations.
- Labor Costs: This reflects the wages paid to equipment operators, constituting an essential part of the operating cost.
- Maintenance and Repair: This can be classified as either minor or major. Minor repairs are part of operating costs whereas major repairs are tied to ownership costs.
Operating costs can fluctuate not only with usage but also based on job conditions. For example, operating an excavator in a quarry poses more challenges than a standard construction site, dramatically raising the operating costs due to increased fuel consumption and repair needs.
To accurately estimate these costs, one can refer to records from past experiences or use manufacturer guidelines, as they typically provide comprehensive handbooks detailing maintenance and operational costs for their equipment across various conditions. Relevant costs depend on multiple factors, including the age of the machine, nature of tasks, and operational settings, highlighting that understanding these variables is crucial for effective equipment management.
Audio Book
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Introduction to Operating Costs
Chapter 1 of 5
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Chapter Content
So what are these operating cost? So basically these operating costs occur only when the equipment is used. So unlike ownership cost when we discuss about the ownership cost I told you that the ownership is incurred irrespective of whether the equipment is operated or not. Even if your equipment is ideal we are going to bear the ownership cost but in your in the case of operating cost the operating cost occurs only when the equipment is used.
Detailed Explanation
Operating costs are expenses that arise only when machinery or equipment is actively used. This is different from ownership costs, which are incurred whether the equipment is in use or not. For example, if you own a construction machine, you still pay for it even if it sits unused, but fuel or repair costs only come into play when you actually operate it.
Examples & Analogies
Think of operating costs like the fuel you use in your car. If you don't drive, you don't spend money on gas. But even if your car sits in the garage, you still have to pay for things like insurance and maintenance—which is akin to ownership costs.
Components of Operating Costs
Chapter 2 of 5
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Chapter Content
This will be a highly variable cost it depends upon the usage of the equipment but your ownership costs are generally relatively fixed annual costs every year. First let us see what are all the components of the operating cost? So basically you have this consumables, they come under the operating cost. Your fuel, lubrication oil, filter, grease and all the other small components which are getting consumed during the equipment operation all these are called as consumables.
Detailed Explanation
Operating costs vary greatly with how much a machine is used, while ownership costs remain constant regardless of usage. The main components of operating costs include consumables, which are items that get used during operation, such as fuel, lubrication oil, filters, and grease. Therefore, the more the equipment is used, the higher these costs will be.
Examples & Analogies
Consider a lawn mower. The more you use it, the more gas and oil you will need to keep it running, which are the consumables. If it sits unused, you don’t buy fuel, but you still pay to maintain it or fix any parts, reflecting ownership costs.
Impact of Usage and Job Conditions
Chapter 3 of 5
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Chapter Content
The more you use the machine the more will be the fuel consumption more will be the repair cost. The operating cost will also be more it depends upon the usage similarly it also depends upon the job operating condition.
Detailed Explanation
The operating costs of a machine increase with its usage—more operation leads to greater fuel consumption and higher repair costs. Furthermore, the specific conditions of the job significantly affect operating costs. For example, working in harsher conditions can result in more wear and tear, leading to higher expenses.
Examples & Analogies
Imagine a car driving through a smooth highway compared to a rough, unpaved road. On the highway, the wear and tear on the car will be less, resulting in lower repair costs. However, if it has to drive through bumpy terrains, it will likely incur more damage and require more repairs.
Variability Based on Job Type
Chapter 4 of 5
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Chapter Content
So basically the operating cost depends upon the job also. It depends upon for what job we are using the equipment. Say for example this excavator...
Detailed Explanation
The type of job significantly impacts operating costs. Different jobs require different levels of exertion and operational intensity, which will lead to varying costs. For instance, using an excavator for digging in tough, rocky conditions will require more effort and resources than using it on a flat, soft surface.
Examples & Analogies
Think of this as using a cooking pot on high heat versus low heat. On high heat, the pot wears out more quickly due to the intense energy use and may require more maintenance compared to cooking gently at low heat.
Estimating Operating Costs
Chapter 5 of 5
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Chapter Content
So how to estimate these operating costs how to get information on all these operating costs that is very important. Because basically; you can get this information from the past experience records.
Detailed Explanation
To accurately estimate operating costs, one can refer to historical data and records of past equipment usage. If these records are maintained meticulously, they can yield valuable insights for future estimates. Additionally, equipment manufacturers often provide guidelines and handbooks containing recommended operating costs based on different conditions.
Examples & Analogies
Just like a chef who relies on previous recipes and cooking experiences to estimate how much time or resources a new dish might take, construction managers can use previous job records to forecast future equipment operating costs accurately.
Key Concepts
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Cost Estimation: The process of predicting the costs associated with operating equipment based on various factors.
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Operating Costs vs. Ownership Costs: Recognizing that operating costs are variable while ownership costs are fixed regardless of machine usage.
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Impact of Job Conditions: Understanding how different job conditions can affect wear, repair, and ultimately the cost of equipment operation.
Examples & Applications
An excavator working in a quarry incurs higher operating costs than one working in a typical construction site due to increased wear and fuel consumption.
A truck operating in favorable conditions will have lower repair costs compared to one in adverse conditions like rocky terrain.
Memory Aids
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Rhymes
To keep the machine in prime condition, check your costs with precision!
Stories
Imagine a truck that works hard in muddy conditions. Each day, it grumbles as it spends more on repairs; it learns that to save costs, it needs to use the right tires and avoid the mud!
Memory Tools
Remember C-FLOM: Consumables, Fuel, Labor, Operations, Maintenance which make up the costs!
Acronyms
Use *RACK* to remember how job risks can change operating costs.
Flash Cards
Glossary
- Operating Costs
Costs incurred only when the equipment is in use, varying with usage and job conditions.
- Ownership Costs
Fixed costs associated with owning equipment, regardless of its usage.
- Consumables
Supplies used during equipment operation, such as fuel and lubricants.
- Maintenance and Repair Costs
Costs associated with keeping equipment in working condition, including minor repairs as part of operating costs.
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