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A short class with Sarah and her students. The other ways are under More.
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Today, we will explore operating costs which occur only when equipment is actively used. Can anyone tell me how this contrasts with ownership costs?
Ownership costs are incurred even when the equipment is not in use.
Exactly! Ownership costs remain fixed, while operating costs are variable. What do you think can contribute to these operating costs?
I think consumables like fuel play a big part.
Absolutely! Fuel, lubricants, and even the operator's wages are key components. Remember our acronym COW for Consumables, Operator wages, and maintenance.
Let’s breakdown the components: consumables and maintenance. Can someone give an example of a consumable?
Fuel and lubrication oils.
Great! And what about maintenance? What kinds of costs fall under this category?
Minor repairs that happen regularly.
Correct! Minor repairs are operational, while major ones are part of ownership costs. Let’s remember this as the 80/20 rule—80% minor vs. 20% major!
Next, we will look at estimation methods. What can you tell me about the Caterpillar method?
It's commonly used for estimating operating costs, right?
Exactly! There’s also the Peurifoy method. Why do you think these methods are vital?
They help in budgeting and cost control.
Right! Knowledge of past operating records aids in these estimates. Remember, historical data is our friend!
In the field where the engines roar, operating costs we must explore. Fuel, labor, repair on the floor, keep them tracked, and you’ll want for more!
Imagine a hardworking construction crew with their mighty excavator. Each day, they fuel it up, paying for the oil and labor—each hour it runs adds to their operating costs. But knowing how much each part costs lets them plan their budget wisely.
COW - Consumables, Operator wages, and maintenance for remembering the key components of operating costs.
POMP - Parts, Operator costs, Maintenance, and Parts, to remember the key areas contributing to operating costs.
Term
What are consumables?
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Term
What distinguishes ownership costs from operating costs?
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Costs incurred during the operation of equipment, which vary based on usage and conditions.
Costs associated with owning equipment, incurred regardless of its operational status.
Materials used and consumed during the operation of equipment, such as fuel and lubricants.
Costs incurred for the upkeep of equipment, divided into minor repairs (operating cost) and major repairs (ownership cost).
A method used for estimating equipment operating costs based on manufacturer guidelines.
Another established method for calculating equipment costs, often used in conjunction with the Caterpillar method.
This section discusses the various components that make up the operating cost of construction equipment, emphasizing their variability based on equipment usage and conditions.
Operating costs are incurred only during the usage of equipment, contrasting with fixed ownership costs. Key components include consumables, operator wages, and maintenance costs, which can vary due to usage, job conditions, and the nature of work. The section also highlights methods for estimating total equipment costs.
Operating costs are crucial in equipment management, occurring only when machinery is used. Unlike fixed ownership costs that remain constant irrespective of usage, operating costs fluctuate and depend on several variables, including machine hours of operation and site conditions. This section elucidates essential components of operating costs, such as:
The section stresses the importance of understanding these costs for estimating total equipment costs, including common methods like the Caterpillar and Peurifoy methods. By capturing data from historical usage or manufacturer guidelines, operators can predict and control these costs effectively.