13. Estimating Equipment Cost Using Two Methods
The chapter delves into the estimation of equipment costs, primarily focusing on ownership and operating costs. It outlines two prominent methods, the Caterpillar method and the Peurifoy method, for accurately assessing these costs. Key components such as depreciation, annual usage, interest rates, and labor costs are elaborated upon to provide a comprehensive understanding of equipment management in construction.
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What we have learnt
- Estimating equipment costs involves both ownership and operating costs.
- The Caterpillar method provides a straightforward approach for cost estimation.
- The Peurifoy method emphasizes the time value of money for more accurate estimations.
Key Concepts
- -- Ownership Cost
- The total cost associated with owning equipment, including depreciation, interest, insurance, and taxes.
- -- Operating Cost
- The ongoing costs for operating equipment, such as fuel, labor wages, and maintenance.
- -- Depreciation
- The reduction in value of an asset over time, used in calculating ownership cost.
- -- Caterpillar Method
- A method of estimating equipment costs based on ownership and operating costs calculated separately.
- -- Peurifoy Method
- A method that incorporates the time value of money in the estimation of equipment costs.
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