8.2. Downtime Cost

Try these first

1. 1.

   What is downtime cost?

   Hint

   Think about the core reason machinery is non-operational.

2. 2.

   What constitutes fixed ownership costs?

   Hint

   Consider costs that occur during both operation and idle time.

3. 3.

   What is downtime cost?

   • Costs incurred when machinery is operational
   • Costs incurred when machinery is not working
   • Costs incurred when machinery is purchased

   Hint

   Focus on the times when the machine is unable to contribute to work.

4. 4.

   True or False: Fixed ownership costs are not incurred when machines are idle.

   • True
   • False

   Hint

   Consider costs that are typically stable no matter the operation.

5. 5.

   Consider a construction site with 3 machines where machine A is down for 15% of the project time, machine B for 20%, and machine C for 10%. If each machine has equivalent operating costs and downtime implications, how should costs be represented when calculating total downtime expenses?

   Hint

   Factor in how these percentages interact to affect project efficiency.

6. 6.

   A company operates two excavators. When one is repaired, productivity drops by 30%, thereby leading to increased operational costs. If operational costs are $250,000 annually, estimate the increase in expenses due to downtime based on the productivity loss.

   Hint

   Reflect on how productivity directly affects financials during operation.