2.2. Value of Equipment Compared to Contract Value

Try these first

1. 1.

   Define contract value in the context of construction.

   Hint

   Think about what the contractor agrees to be paid.

2. 2.

   What is the total cost of ownership?

   Hint

   Consider all the financial aspects related to owning equipment.

3. 3.

   What should a contractor consider before purchasing high-end equipment?

   • Current contract value only
   • Future job potentials
   • Resale value only

   Hint

   Think about the likelihood of subsequent jobs after this contract.

4. 4.

   True or False: The total cost of ownership includes only the purchase price of the equipment.

   • True
   • False

   Hint

   Consider how equipment costs accumulate over its lifecycle.

5. 5.

   You are a project manager contemplating purchasing a tunnel boring machine for $5 million. The project contract is worth$3 million, and you foresee potential projects over the next 5 years that could utilize the machine. What factors should you consider in your analysis?

   Hint

   Think about how often the machine could be used in future contracts.

6. 6.

   A contractor bought a specialized piece of equipment for $1 million. After five years, its maintenance costs increase significantly. Discuss the factors that could indicate the need for replacement versus continuing to use the equipment.

   Hint

   Assess if the equipment's benefits are still outweighing the costs.