Intermediate Equipment Handbook
Intech Associates
Figure 1.1 - COSTING OF EQUIPMENT - FACTORS TO CONSIDER
These factors will affect the cost of ownership and operation of equipment, and its profitability.
Input Costs
Output / Productivity
Economic Life
Depreciation: Capital Investment
/Replacement
Obsolescence
Salvage value/demand for used
equipment
Interest: Investment Costs
Spare Parts and Consumables
Standing time (breakdowns,
workshop servicing, refurbishment)
Unproductive time (waiting for
instructions, travel to/from/between
work sites, waiting for spares/fuel,
etc.)
Productive time per year
Type & size of machine
(appropriate? flexible?)
Workshop (inc. mechanics, equipment, Ground conditions
tools, manuals, stores, etc.)
Climate
Mobile mechanical & logistical support Nature of the work
Workshop Management
Skill/motivation of
Skill/motivation of mechanical support
Operator/assistant(s)
Mobilisation (Low loader)
Condition of the Machine
Manufacturer’s local agent support
Work Planning and Organisation
Insurances and taxes
Fuels, lubricants and greases (& their
quality)
Adjustments from manufacturer’s
guidelines
Operator and assistant(s)
Accommodation/transport/payroll costs
Training (initial & ongoing)
Environmental (e.g. dusty/poor air
quality)
Standardisation (effects on
spares/skills/training)
Forex premium
Theft, losses and security
Risks and cashflow on long term
investment
Contractor cashflow: time lag
between incurring costs and
payment
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