Construction Engineering & Management - Vol 1 | 17. Downtime Cost Calculation by Abraham | Learn Smarter
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Knowledge
17. Downtime Cost Calculation

The chapter delves into the financial implications of machine downtime costs, obsolescence, and the economic life of equipment, emphasizing the need for timely replacement to minimize costs. It outlines how cumulative costs evolve over time and how depreciation, maintenance, and obsolescence hitches can affect the total cost of ownership. Analytical methods are discussed to identify the optimal replacement time to optimize productivity versus cost.

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Sections

  • 1

    Downtime Cost Calculation

    The section covers how to calculate the downtime costs associated with equipment, including both hourly and yearly assessments, and introduces concepts such as cumulative costs and productivity adjustments.

    Learning Practice

  • 1.1

    First Year Downtime Cost

    This section explains how to calculate first-year downtime costs associated with equipment and the varying costs in subsequent years while considering factors like productivity loss and obsolescence.

    Learning Practice

  • 1.2

    Second Year Downtime Cost

    This section discusses how to calculate downtime costs per hour and year for machinery, emphasizing the impact of downtime on productivity and obsolescence.

    Learning Practice

  • 1.3

    Cumulative Downtime Cost

    This section addresses the calculation and implications of cumulative downtime costs associated with equipment over its operational period.

    Learning Practice

  • 1.4

    Cumulative Cost Per Hour Calculation

    This section explains the calculation of cumulative costs per hour related to machinery downtime and obsolescence over multiple years.

    Learning Practice

  • 1.5

    Loss In Productivity

    This section discusses the financial implications of downtime costs due to loss in productivity, detailing the calculation of cumulative costs over the machine's operational lifespan.

    Learning Practice

  • 1.6

    Productivity Adjusted Cumulative Downtime Costs

    This section explores how downtime costs are calculated per hour and how these costs accumulate over time, adjusting for productivity.

    Learning Practice

  • 2

    Obsolescence Cost Calculation

    This section outlines the process of calculating obsolescence costs related to equipment, including downtime and productivity adjustments over an operating period.

    Learning Practice

  • 2.1

    Second Year Obsolescence Cost

    This section discusses the calculation of downtime costs and obsolescence costs associated with aging equipment over multiple years.

    Learning Practice

  • 2.2

    Third Year Obsolescence Cost

    This section discusses the calculation of various costs associated with machine downtime and obsolescence over time.

    Learning Practice

  • 2.3

    Cumulative Obsolescence Cost

    This section discusses the computation of cumulative obsolescence costs associated with machinery over time, considering downtime and productivity losses.

    Learning Practice

  • 2.4

    Cumulative Cost Per Hour Calculation For Obsolescence

    This section discusses the calculation of cumulative costs related to downtime and obsolescence in equipment maintenance over time.

    Learning Practice

  • 3

    Summary Of Costs And Economic Life Assessment

    This section outlines the assessment of costs associated with machine downtime, obsolescence, and overall economic life, highlighting the importance of determining optimal replacement timing for equipment.

    Learning Practice

  • 3.1

    Trends In Cost Over Years

    This section discusses how costs associated with machinery, including downtime and obsolescence, evolve over the years and the importance of determining optimal replacement times.

    Learning Practice

  • 3.2

    Economic Life Of The Machine

    This section discusses the various costs associated with machine downtime, depreciation, obsolescence, and how these affect the economic life of the machine.

    Learning Practice

  • 3.3

    Importance Of Accurate Cost Estimation

    Accurate cost estimation of downtime and obsolescence is crucial for evaluating the economic life of machinery, ensuring optimal replacements and operational efficiency.

    Learning Practice

  • 4

    Upcoming Topics

    This section focuses on calculating downtime and obsolescence costs for machines, emphasizing the economic life of equipment and the impact of productivity loss.

    Learning Practice

  • 4.1

    Equipment Replacement Analysis Overview

    This section details the calculation of downtime and obsolescence costs associated with equipment, emphasizing the importance of determining the optimal time for machinery replacement.

    Learning Practice

  • 4.2

    Defender And Challenger Comparison

    This section elaborates on calculating downtime and obsolescence costs, emphasizing the importance of understanding these costs in comparing existing (defender) and potential replacement (challenger) machines.

    Learning Practice

References

6 c.pdf

Class Notes

Memorization

What we have learnt

  • Downtime costs can accumula...
  • Obsolescence costs emerge a...
  • Determining the economic li...

Final Test

Revision Tests