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# Operating cost

## on Jan 21, 2014

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## Operating cost Presentation Transcript

• OPERATING COST MANSOOR AZAM QURESHI
• Operating Cost of Equipment 2 Costs associated with the operation of a piece of equipment. They are incurred only when the equipment is actually used. The operating costs of the equipment are also called ‘‘variable’’ costs because they depend on several factors, such as the number of operating hours, the types of equipment used, and the location and working condition of the operation. Mansoor Azam Qureshi January 21, 2014
• 3  Fuel  Lubricants/ oils, filters, and Operating Cost of Equipment consists Mansoor Azam Qureshi grease  Repairs and maintenance  Tire.  Replacement of high-wear items January 21, 2014
• Fuel/ Lubricant Cost 4  Best to use historical data from previous projects when available  Otherwise it can be estimated based on: engine type, engine size, operating factor, atmospheric pressure and temperature.  Lubricant cost are estimated about 10% of fuel cost.  At 29.9 in of mercury pressure and 60º F fuel consumption:  – Gasoline engine: 0.06 gal per hp-hour  – Diesel engine: 0.04 gal per hp-hour. Mansoor Azam Qureshi January 21, 2014
• Fuel Consumption Factors for Some Machines 5 Mansoor Azam Qureshi January 21, 2014
• 6 Example Calculate the average hourly fuel consumption and hourly fuel cost for a twin engine scraper in Example 2.3. It has a diesel engine rated at 465 hp and fuel cost \$2.00/gal. During a cycle of 20 s, the engine may be operated at full power, while filling the bowl in tough ground requires 5 s. During the balance of the cycle, the engine will use no more than 50% of its rated power. Also, the scraper will operate about 45 min/h on average Mansoor Azam Qureshi  Rated power: 465 hp  Engine factor: 0.5  Filling the bowl, 5 s/20 s  cycle =¼ or 0.250  Rest of cycle= 15/20 x0.5 = 0.375  Total cycle =(0.25+0.375)= 0.625  Time factor, 45 min/60 min= 0.75  Operating factor, 0.625 x0.75 = 0.47  From Table : use ‘‘unfavorable’’ fuel consumption factor = 0.040 gal/hr/hp  Fuel consumed per hour: 0.47(465)(0.040) = 8.74 gal/hr  Hourly fuel cost: 8.74 gal/h x(\$2.00/gal) =\$17.48/h. January 21, 2014
• Repair and Maintenance Cost 7  May vary depending on equipment type and job conditions  Cost allocation is based on a percentage of depreciation cost.  When straight-line method is used depreciation is constant and so maintenance charge will also be constant. More realistic is that depreciation decreases and maintenance increases. The assumption is that the increase in one is offset by the decrease in the other. Factor of depreciation for last year is taken for determining repair cost of first year and so on. Mansoor Azam Qureshi January 21, 2014
• Range of Repair Cost for some Typical Machines 8 Mansoor Azam Qureshi January 21, 2014
• Example Estimate the hourly repair cost of the scraper for the second year of operation. The initial cost of the scraper is \$186,000, tire cost \$14,000, and its useful life is 5 years. Assume average operating condition and 2000 h of operation per year. Use sum of years method for depreciation. 9 Repair cost Factor= 0.90 Depreciable Cost = (Total Cost – Tyre Cost) =(186000 – 14000) =154800 Total Repair Cost = 0.9x 154800 =139320 Depreciation Factors= 5/15, 4/15, 3/15, 2/15, 1/15 Repair cost factor for 2nd year= D F of 2nd last year = 2/15 Hourly Repair Cost = 2/15x138320/2000 = 10.32/h Mansoor Azam Qureshi January 21, 2014
• Replacement Cost of high-wear items 10  The cost of replacing high-wear items, such as dozer, grader, and scraper blade cutting and end bits, as well as ripper tips, shanks, and shank protectors, should be calculated as a separate item of the operating cost. As usual, unit cost is divided by the expected life to yield cost per hour. Mansoor Azam Qureshi January 21, 2014
• Tire Replacement Cost 11  It is cost of tire repair and replacement.  Life expectancy of rubber tires is generally far less than the     life of the equipment on which they are used. Depreciation rate of tires will be quite different from the depreciation rate of the rest of the vehicle. The repair and maintenance cost of tires as a percentage of their depreciation will also be different from the percentage associated with the repair and maintenance of the vehicle. The best source of information in estimating tire life is the historical data obtained under similar operating conditions. Tire repair and replacement costs = 1,15 xcost of a set of tires expected tire life in(h) Mansoor Azam Qureshi January 21, 2014
• Range of Typical Tire Life 12 Mansoor Azam Qureshi January 21, 2014