Using Literature for Estimates
Enroll to start learning
You’ve not yet enrolled in this course. Please enroll for free to listen to audio lessons, classroom podcasts and take practice test.
Interactive Audio Lesson
Listen to a student-teacher conversation explaining the topic in a relatable way.
Introduction to Operating Costs
🔒 Unlock Audio Lesson
Sign up and enroll to listen to this audio lesson
Today, we're going to discuss the concept of operating costs in construction equipment. Can anyone tell me what they think operating costs are?
Isn't it the costs incurred when the equipment is actually being used?
Exactly! Unlike ownership costs, which we incur regardless of usage, operating costs depend on how much we utilize the machinery. Can anyone share what some examples of operating costs might be?
It could be fuel, maintenance, and wages for the operators.
Great points! Remember, we can remember this as 'FWM' — Fuel, Wages, and Maintenance. At the end of this lesson, you'll be able to estimate these costs.
Components of Operating Costs
🔒 Unlock Audio Lesson
Sign up and enroll to listen to this audio lesson
Now, let's break down the components of operational costs. Who can tell me what consumables are?
Are they things like fuel and oil?
Correct! Consumables are essential for machine operation. What factors do we consider when calculating maintenance costs?
The machine's age, its condition, and the type of work it's doing?
Exactly! The age is critical because older machines typically require more repairs. Keeping this in mind can greatly aid in cost estimation.
Estimating Total Equipment Costs
🔒 Unlock Audio Lesson
Sign up and enroll to listen to this audio lesson
Let's talk about how we estimate operating costs. What are some methods we can use?
The Caterpillar method or the Peurifoy method?
Exactly! Both methods provide frameworks to estimate total costs. Can someone explain how manufacturer literature might help in this process?
It has guidelines for fuel consumption and repair costs under different conditions, right?
Correct! Using these handbooks helps us base our estimates on proven data rather than guesswork.
Factors Affecting Operating Costs
🔒 Unlock Audio Lesson
Sign up and enroll to listen to this audio lesson
What factors can lead to variability in operating costs?
I think it depends on how often the machine is used and the job conditions.
And the skill level of the operator could play a role too!
Excellent insights! More usage indeed leads to increased wear, while favorable job conditions can significantly reduce these costs.
Introduction & Overview
Read summaries of the section's main ideas at different levels of detail.
Quick Overview
Standard
The section delves into the components of operating costs, emphasizing that these costs vary based on equipment use, operational conditions, and job nature. It also discusses methods to estimate total equipment costs, including the Caterpillar and Peurifoy methods, and the importance of using historical data and manufacturer guidelines for accurate calculations.
Detailed
Detailed Summary
Understanding Operating Costs
In the context of construction equipment, operating costs are costs incurred only when the equipment is in use, unlike ownership costs which are incurred regardless of use. Operations costs are highly variable, depending on factors like usage and job conditions.
Components of Operating Costs
Key components include:
- Consumables: Includes fuel, lubrication oils, and other small parts used during operation.
- Wages: Operator wages are a recurring operating cost.
- Maintenance and Repair Costs: Minor repairs are part of operating costs, while major repairs are considered ownership costs.
These costs can increase with machine usage and deteriorate with job conditions—machines operated in tougher conditions will incur higher costs due to increased wear and tear.
Estimating Operating Costs
Estimating these operating costs requires historical records, manufacturer data, and established rules of thumb. Handbooks from manufacturers provide valuable information regarding expected fuel and maintenance costs under varying operational scenarios.
Conclusion
Ultimately, understanding these factors is crucial for accurate budgeting and management of construction projects.
Audio Book
Dive deep into the subject with an immersive audiobook experience.
Understanding Operating Costs
Chapter 1 of 4
🔒 Unlock Audio Chapter
Sign up and enroll to access the full audio experience
Chapter Content
Operating costs occur only when the equipment is used and are highly variable. These costs depend on the usage of the equipment as opposed to ownership costs, which are fixed annual costs regardless of actual usage.
Detailed Explanation
Operating costs differ fundamentally from ownership costs. While ownership costs are incurred regardless of whether the equipment is in use (such as insurance and depreciation), operating costs only arise when the equipment is actively working. This means that if machinery sits idle, no operating costs are incurred.
Examples & Analogies
Imagine you own a car. The ownership costs like insurance and taxes must be paid even if the car is parked in your garage all year. However, fuel, maintenance, and wear-and-tear only occur when you drive the car. If you drive more, you'll spend more on fuel and maintenance.
Components of Operating Costs
Chapter 2 of 4
🔒 Unlock Audio Chapter
Sign up and enroll to access the full audio experience
Chapter Content
Key components of operating costs include consumables, operator wages, and maintenance and repair costs. Consumables cover fuel, oil, and small parts that are used during operation.
Detailed Explanation
Operating costs can be broken down into specific components. Consumables like fuel and lubricants are necessary for the functioning of machinery. Additionally, operators must be paid, which contributes to overall operating costs. Maintenance costs vary depending on whether the repairs are minor (which count as operating costs) or major (which may be considered part of ownership costs). Minor repairs, such as replacing filters or lights, are routine and factored into operating costs.
Examples & Analogies
Consider a restaurant. The cost of ingredients (consumables) and the wages of chefs (labor) are part of operating costs. Just like a restaurant must plan for food waste and daily cooking supplies, construction equipment must account for fuel and minor repairs in its operating budget.
Impact of Usage on Operating Costs
Chapter 3 of 4
🔒 Unlock Audio Chapter
Sign up and enroll to access the full audio experience
Chapter Content
Operating costs vary significantly based on how much the equipment is used and the conditions in which it operates. Heavy usage or tough work environments lead to increased fuel consumption and repair needs.
Detailed Explanation
The more an equipment is used, the higher the operational costs due to increased fuel consumption and repairs. For instance, equipment running in challenging environments, like quarries, will face more wear and tear compared to those in standard conditions. Therefore, understanding the usage patterns and conditions can help in predicting costs more accurately.
Examples & Analogies
Think of a fitness tracker: the more you exercise (use your body), the more calories you burn and the higher your recovery needs (akin to repair costs). Similarly, a bulldozer will consume more fuel and require more maintenance when moving through dense earth compared to moving through soft dirt.
Estimating Operating Costs from Literature
Chapter 4 of 4
🔒 Unlock Audio Chapter
Sign up and enroll to access the full audio experience
Chapter Content
To estimate operating costs, information can be gathered from past experience records or equipment manufacturer handbooks. These sources provide crucial data like fuel consumption rates and expected maintenance costs under various conditions.
Detailed Explanation
Accurate estimations of operating costs can be derived from historical data of similar equipment usage and conditions. Manufacturer handbooks also provide predefined values for costs like fuel consumption, maintenance intervals, and repair costs, which are vital for budgeting effectively. This reliance on documented data ensures that estimations are based on real-world performance rather than assumptions.
Examples & Analogies
Using operating manuals and past records is like following a recipe for baking a cake. The recipe gives precise measurements and times to ensure you get the result you want, just as data from manufacturers helps ensure accurate calculations for operating costs.
Key Concepts
-
Operating Costs: Costs that occur when equipment is operational.
-
Ownership Costs: Fixed costs incurred regardless of equipment use.
-
Caterpillar and Peurifoy Methods: Techniques for estimating equipment costs.
-
Impact of Job Conditions: Work environment significantly affects operating costs.
Examples & Applications
An excavator might have higher fuel expenses operating in a quarry compared to residential earthling.
When performing trenching tasks, an excavator may use fuel at varying rates depending on the load and conditions.
Memory Aids
Interactive tools to help you remember key concepts
Rhymes
When machines run, costs start to flow, Fuel and wages, learn them, don’t you know!
Stories
Imagine a contractor who needs to budget. He only uses machines that are up and running. More use means more costs. He always refers to the handbooks to keep estimates on track.
Memory Tools
Remember 'FWM' — Fuel, Wages, and Maintenance, for operating costs you'll need to take a stance!
Acronyms
CPO for cost estimation
Caterpillar Method
Peurifoy Method
Operational factors.
Flash Cards
Glossary
- Operating Cost
Costs incurred only when construction equipment is in use, differing from fixed ownership costs.
- Ownership Cost
Costs associated with owning equipment regardless of its usage.
- Consumables
Materials such as fuel and lubricants used during equipment operation.
- Maintenance and Repair Costs
Expenses associated with the upkeep of machinery, including both major and minor repairs.
- Caterpillar Method
A standard method used for estimating equipment costs, developed by Caterpillar.
- Peurifoy Method
An alternative method for estimating operating costs, named after the engineer who developed it.
Reference links
Supplementary resources to enhance your learning experience.