3.2. Filter, Oil, Grease (FOG) Cost Estimation

So just add up everything the ownership cost all the operating cost and operating wages also you will get the total ownership and the operating cost following the Peurifoy guidelines.

To estimate the total cost of operating a piece of equipment like a dump truck, you need to calculate three main components: ownership costs, operating costs, and wages of the personnel operating the equipment. The total cost is found by adding these components according to the Peurifoy guidelines, which provide a structured approach to cost estimation in construction.

Think of estimating costs like planning a budget for a vacation. Just as you would tally up travel costs, lodging, food, and activities to create a total expense, in equipment cost estimation, you gather all costs related to ownership, operation, and labor to understand the full financial commitment.

The initial cost is given so it was purchased with the deliver price of 3 crores. [...] It is not permitted on the public highways.

An off-highway truck is specifically designed for tasks on construction or mining sites rather than for public roads. The truck mentioned in this estimation has an initial purchase price of 3 crores, which is indicative of its advanced features and capabilities. Companies often invest significantly in these types of specialized equipment because they provide substantial efficiency on the job.

Consider an off-highway truck like a specialized sports car; while it may be expensive, it's designed to perform in specific conditions where standard vehicles cannot compete, such as rugged terrain found on job sites.

So under the ownership cost let us calculate the depreciation first.

Depreciation is the reduction in the value of the truck over time due to wear and tear. To calculate depreciation for the truck, you subtract the tire cost from the initial price, and since the salvage value is zero, divide this amount by the useful life of the machine. This allows companies to spread the cost of the asset over its useful lifespan, providing a more accurate picture of its financial impact.

You can think of depreciation like losing value on a new car: as you drive it and time goes on, its market value decreases. Just as a car loses value each year, equipment like a dump truck also depreciates in value, which businesses need to account for in their financial statements.

Now let us move on to the operating cost estimation...

Operating costs include fuel, maintenance, and other parts of running the equipment. For example, the fuel consumption is calculated based on several factors including the truck's horsepower and fuel price. Accurate estimation requires the integration of various data points to get a holistic view of operation costs.

This situation is comparable to maintaining a household budget where you track expenses such as groceries, utilities, and maintenance for appliances. Just as these recurring costs might change based on consumption, the operating costs for equipment vary depending on usage, fuel prices, and maintenance needs.

Total hourly operating cost = ₹ 3209.29 per hour.

To determine the total equipment cost, you add the total hourly ownership cost to the operator's wages. In this estimation, you've calculated the operating cost, and after accounting for labor, you arrive at a comprehensive hourly cost for the operation of the dump truck.

This is like adding together all your monthly bills—rent, utilities, groceries—to find out how much income you need each month to maintain your lifestyle. In equipment operations, doing the same with all costs ensures that the business can sustain its equipment operation financially.

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