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Module#6
Manage Equipment
26
Management
Undergraduate 1
04/22/2015

Additional Management Flashcards

 


 

Cards

Term
What is the importance of planning for construction equipment?
Definition
To ensure that activities are not delayed due to unavailability of equipment and idleness or downtown. Proper planning helps with schedule and level of usage. Avoid down times and idleness which will increase productivity.
Term
What is involved with equipment planning?
Definition
  • Selection of the appropriate type and size of construction equipment
    • Equipment availability
    • Technology advancement
    • Economic considerations, buy lease or rent
  • Operating requirements
  • Maintainance requirements
    • Predictive maintainance
    • Preventative maintainance
Term
What are some Equipment Constraints?
Definition
  • Point of delivery
  • Accessibility
  • Position of temporary facilities
  • Pattern of events
Term

What are some constraints of 

Point of delivery

Site accessibility

Sequence of events

Location of temporary facilities

Definition
  • The location and capacity of the equipment will influence the delivery point
  • Work site should be accessible through the site equipment
  • Equipment types and schedule will affect the sequence of construction activities
  • Location of temporary facilities will be impacted by the location and properties of the equipment
Term
Some factors affecting the selection of construction equipment?
Definition
  • Type of construction project¬†
    • Standard
    • Special
  • Replacement of construction equipment parts
    • availability and price of spare parts
  • Costs of owning and operating construction equipment
    • The number of projects
    • The type of projects
  • Economic life of construction equipment
    • Depreciation
    • Replacement
    • Investment
    • Maintenance
    • Obsolescence
  • Site condition
    • ground condition
    • climate condition
  • Owner requirement
    • Schedule
    • Quality
    • Safety
  • Manufacturer
    • preference to work with a specific manufacturer
  • Labour consideration
    • automated equipment
    • availability of trained labour
Term
What are the fundamental concepts of Equipment Economics?
Definition
  • Ownership cost and operating cost for running on projects
    • Critical for bidding
  • Replacement analysis
    • Buy
    • Lease
    • Rent
Term
What are Ownership Costs?
Definition
The cumulative result of cash flows an owner experiences regardles of the fact that the machine is productively employed on a project or not.
Term
What are operating costs?
Definition
The total expenses an owner experiences by working a machine on a project.
Term
What are the significant cash flows affecting ownership costs?
Definition
  • Purchase expense
  • Maintenance
  • Insurance
  • Storage
  • Taxes
  • Slavage Values
  • Tax Saving from Depreciation
Term
Definition of Purchase Expense?
Definition
Cost of acquiring the ownership of an piece of equipment. Cash outflow.
Term
The cost of insurance includes what?
Definition
  • the cost to cover fire, left and loss of equipment
  • premium payments to insurance companies
Term
Maintenance cost include?
Definition
  • Not covered in the ownership costs
  • Major repairs and overhauls are included in ownership costs
Term
What are the tax costs?
Definition
  • Commonly assessed at a percentage rate applied against the book value of the machine
Term
What are the storage and miscellaneous expenses of ownership?
Definition
  • Between jobs
  • Adverse weather conditions
  • Typical storage expenses
    • usually combined in an overhead account
    • Allocated on a proportional basis to the individual equipment
Term
What is the salvage value?
Definition
  • Value of machine at the time of its diposal. Cash inflow
Term
What is the tax savings from depreciation?
Definition
  • Depreciation will lessen the net cost of machine ownership
  • The cost saving, the prevention of a cash outflow, is a result of protecting the company from taxes
Term
What is the definition of depreciation?
Definition

A decrease in value of an asset due to wear, tear, deterioration and obsolescence.

Book value-original cost minus the sum of depreciation charged to date

Market Value-selling value (money) if sold in the free market

Term
What are typical operating costs?
Definition
  • Fuel
  • Oil changes, filters, and grease
  • Repairs
  • Tires
  • Replacement of High-Wear items
Term
What is Replacement Analysis?
Definition
Whether to buy, lease or rent equipment as it is an important financial investment decision.
Term
How are financial investment decisions analyzed?
Definition
  • Engineering Economy
    • Collection of mathematical techniques which simplify economical comparisons and help us in choosing the most economical alternative
    • Importan concept: Time Value of Money
Term
What is the objective of Engineering Economy?
Definition
  • Enable the decision-maker to:
    • Make more informed decisions
      • which of the options provide the highest net benefit when considering all life cycle costs
    • Account for the economic impact
Term
What is part of the Replacement Analysis?
Definition
  • Equipment constraints
    • Physically limited working life
    • cost-limited economic life
Term
What is the definition of Rent?
Definition
  • Short-term alternative to direct equipment ownership
  • Advantages
    • Opportunity to pick the well-suited machine for the job at hand
    • A way to test a machine prior to a purchase decision
      • to operate a specific equipment under actual project conditions
  • Disadvantages
    • Loosing the tax depreciation of equipment
    • Limited number of equipment for rent-may not be available at peak construction operation
    • Unavailability of some specialized or custom equipment for rent
Term
What is the definition of Lease?
Definition
  • An alternative to direct ownership
    • User (leasee) pays the leasing company (leasor) to use the equipment
    • The lessor always owns the equipment
  • Three different end-of-lease options
    • Buy out
    • Renew
    • Return
  • Advantages
    • Both parties can agree upon the payments structure
    • The lessor may provide the equipment management and servicing
  • Disadvantages
    • Expensive in the long run
    • High insurance costs
    • Certain limitations imposed by lessor
    • Hard to cancel:termination fees and penalties
Term
What is the advantages and disadvantages of Purchasing?
Definition
  • Advantages
    • More economical if the equipment is used sufficiently
    • Readily available at the disposal of the owner
    • Equipment is better maintained
  • Disadvantages
    • Substantial investment (ownership costs)
    • Ownership may influence to use equipment
      • beyond its economical life
      • in lieu of more modern equipment
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