Construction Engineering & Management - Vol 1 | 19. Equipment Life and Replacement Analysis (Part 3) by Abraham | Learn Smarter
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19. Equipment Life and Replacement Analysis (Part 3)

The chapter focuses on the application of the time value of money in equipment replacement analysis. It outlines important factors influencing economic life, emphasizing the need to consider current market values rather than historical costs. The discussion includes calculating equivalent annual costs for various expenses associated with equipment, striving to optimize replacement timing based on cost efficiency.

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Sections

  • 1

    Construction Methods And Equipment Management

    This section focuses on equipment life and replacement analysis, emphasizing the importance of timing cash flows in determining the economic life of machinery.

    Learning Practice

  • 1.1

    Equipment Life And Replacement Analysis (Part 3)

    This section addresses equipment life and replacement analysis, emphasizing the impact of cash flow timing on economic decisions.

    Learning Practice

  • 1.2

    Recap Of Previous Lecture

    This section reviews critical concepts from the previous lecture on equipment life and replacement analysis in construction methods.

    Learning Practice

  • 1.3

    Outline Of Today's Presentation

    This section outlines the key topics covered in the lecture on equipment life and replacement analysis, focusing on the timing of cash flows and equivalent annual cost.

    Learning Practice

  • 1.4

    Important Points In Replacement Analysis

    This section outlines the key considerations and methodologies involved in equipment replacement analysis, emphasizing the importance of evaluating costs from a current market value perspective.

    Learning Practice

  • 1.5

    Third-Party Approach In Replacement Analysis

    This section discusses the third-party perspective in equipment replacement analysis, emphasizing the importance of current market value over historical purchase costs.

    Learning Practice

  • 1.6

    Irrelevance Of Past Estimates

    This section emphasizes the importance of current market values in equipment replacement analysis, discarding past estimates.

    Learning Practice

  • 1.7

    Defining Sunk Cost

    This section explains the concept of sunk cost in the context of equipment replacement analysis, emphasizing its irrelevance to current market value assessments.

    Learning Practice

  • 1.8

    Cost Variation With Age Of Equipment

    This section discusses how the costs associated with construction equipment vary with age and outlines the importance of considering these variations in replacement analysis.

    Learning Practice

  • 1.9

    Economic Life And Equivalent Annual Cost

    The section discusses equipment life and replacement analysis, focusing on equivalent annual cost (EAC) and the significance of timing in cash flow calculations.

    Learning Practice

  • 2

    Calculating Equivalent Annual Cost

    This section explains the method of calculating Equivalent Annual Cost (EAC) to analyze equipment life and replacement options in construction management.

    Learning Practice

  • 2.1

    Finding Present Worth Of Costs

    This section focuses on the replacement analysis of construction equipment, emphasizing the importance of present worth calculations for costs to make informed decisions regarding equipment replacements.

    Learning Practice

  • 2.2

    Uniform Series Capital Recovery Factor

    This section discusses the Uniform Series Capital Recovery Factor and its application in equipment replacement analysis, emphasizing the importance of considering time value of money.

    Learning Practice

  • 2.3

    Calculating Eac For Purchase Price

    This section discusses the method of calculating the Equivalent Annual Cost (EAC) in equipment replacement analysis, focusing on the purchase price.

    Learning Practice

  • 2.4

    Calculating Eac For Salvage Value

    This section focuses on the calculation of the Equivalent Annual Cost (EAC) of equipment, emphasizing the importance of salvage value in replacement analysis.

    Learning Practice

  • 2.5

    Capital Recovery Calculation

    The chapter section discusses the capital recovery calculation as part of equipment life and replacement analysis, emphasizing the importance of considering cash flow timing in decision-making.

    Learning Practice

  • 3

    Working Out A Problem For Economic Life

    This section discusses the concepts of equipment life and replacement analysis, emphasizing the importance of considering cash flow timing in determining the economic life of machinery.

    Learning Practice

  • 3.1

    Machine Details And Cash Flow Diagrams

    This section covers the importance of cash flow analysis in equipment replacement decisions in civil engineering, focusing on the time value of money.

    Learning Practice

  • 3.2

    Estimating Equivalent Annual Costs For Years

    This section covers the estimation of equivalent annual costs for equipment, focusing on the timing of cash flows in replacement analysis.

    Learning Practice

References

8 a.pdf

Class Notes

Memorization

What we have learnt

  • Replacement analysis should...
  • Sunk costs and past estimat...
  • The economic life of equipm...

Final Test

Revision Tests