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A short class with Sarah and her students. The other ways are under More.
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Today, let's define operating costs. Can anyone tell me how operating costs differ from ownership costs?
I think operating costs are only incurred when the equipment is in use.
Exactly! Ownership costs are fixed, incurred regardless of use. They remain constant annually. Operating costs are variable and depend on usage. Think of it as your phone bill versus the cost of your phone itself.
So, if a machine stays idle, we still pay for ownership but not for operating?
Right! Remember: Operating Costs = Variable costs depending on usage. Ownership Costs = Fixed costs irrespective of use. A simple memory aid could be 'O for Operating is for On duty'.
That's helpful!
Let's dive into the components of operating costs. Who can name one?
Consumables like fuel and oil?
Correct! Consumables are a significant part. They include fuel, lubricants, filters, and anything that gets used while running the equipment. Can someone list another component?
Wages paid to operators?
Exactly! Operating costs include operator wages and maintenance costs. Maintenance includes minor repairs as well. Why do low-cost repairs make it to operating costs instead of ownership?
Because ownership covers major repairs?
Spot on! Keep this in mind: ROM - 'Repairs Only Minor' belong in operational.
Now, how do we estimate these operating costs? We can gather information from past usage records or equipment manufacturers. What do you think is important in this process?
Understanding past usage helps in predicting future costs, right?
Absolutely! And manufacturers provide guidelines for specific equipment types. Remember the Caterpillar and Peurifoy methods?
They are approaches to estimating total equipment costs.
Exactly! Understanding these methods will help you manage operational efficiency well.
Job conditions can significantly influence operating costs. Who can explain why serious conditions raise costs?
They cause more wear and tear, which leads to more repairs and higher fuel usage.
Exactly! For instance, operating in a quarry is tougher on machines than on regular earth. How would you summarize this?
OPC - 'Operating Costs Go Up' in harsh conditions!
Great mnemonic! This helps ground the idea.
Costs incurred when equipment is in use, dependent on usage.
Fixed costs incurred regardless of equipment use.
Include consumables, wages, and maintenance.
Includes industry-standard methods for determining total equipment costs.
An excavator used in a quarry incurs higher operating costs due to more fuel consumption and more frequent repairs compared to one used at a standard construction site.
An aggregate crusher is expected to have higher operating costs when used in a rocky terrain compared to a sophisticated electric motor used in a stable condition.
In the operating zone, costs can climb, when machines work hard, save a dime!
Imagine a hardworking excavator in a quarry, its strength is tested; it gulps fuel by the minute, racking up costs as wear catches up, while the idle one rests, carefree.
COW - Consumables, Operating hours, Wages, help remember the core components of operating costs.
PEACE - Preventive maintenance Extends Active cost-effectiveness.
Term
Operating Costs
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Term
Ownership Costs
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Term
Maintenance and Repair
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Costs that occur only when the equipment is in use, varying based on utilization.
Fixed costs incurred regardless of equipment usage.
Products used during equipment operation, such as fuels and lubricants.
Payments made to operators for their work operating the equipment.
Costs associated with the upkeep and minor repairs of equipment.
This section discusses the estimation of operating costs associated with construction equipment, distinguishing it from ownership costs and identifying its components.
The lecture covers how to estimate operating costs for construction equipment, which vary based on usage and job conditions. Key components include consumables, wages for operators, and maintenance costs. It emphasizes the significance of understanding these costs for effective equipment management and estimation methods such as the Caterpillar and Peurifoy methods.
In this lecture, we explore the essential aspects of operating costs associated with construction equipment. Operating costs are incurred only when equipment is utilized, contrasting sharply with ownership costs, which are fixed and endured regardless of use. Key components of operating costs include consumables (fuel, lubrication oil, and minor repair costs), operator wages, and maintenance expenses.
The variability of operating costs is highlighted, stressing that it depends on equipment usage and job conditions. For instance, using an excavator in tough conditions (like a quarry) will incur higher operating costs due to increased wear and fuel consumption than in average conditions at a construction site.
Maintenance and repair costs form a significant portion of operating costs, particularly as the equipment ages. Preventive maintenance plays a crucial role in managing these costs. The lecture also covers methods for estimating total equipment costs, specifically the Caterpillar and Peurifoy methods, as well as how to derive estimates from past experience and manufacturer guidelines. Understanding and estimating these costs are crucial for effective equipment management in construction projects.