A bulldozer is purchased for Rs.30,00,000/- It has a useful life of 10 years at the end of which salvage value is Rs. 5,00,000/- It has a horse power of 150 and runs on a diesel engine.

Cost of diesel is Rs.60/- per litre. Consider 20% of average investment cost towards financing, taxes and insurances. The machine works for 3000 hours in a year.

The maintenance and repair cost is 50% of depreciation. Consider lubricant cost as 20% of fuel cost. The operating factor is 0.8. The operators monthly salary is Rs. 5000/-. Consider field repair and servicing cost as 30% of depreciation cost.

What are the different factors for selection of construction equipments?

1. Owning Cost

Investment Cost

a) Avg annual investment

$\begin{aligned} &= \frac{ (n+1) + s (n-1) }{2n} \\ &= \frac{3000000 (10+1) + 500000 (10-1)}{2 \times 10} \\ &= 187500 \end{aligned}$

b) Annual Investment = 20% of 187500 = Rs.375000 /-

2. Depreciation cost

$D = \frac{C - S}{n} = \frac{3000000 - 500000}{10} = 250000$

$\begin{aligned} \text{Major repairs} &= \text{50 % of depreciation} \\ &= \frac{50}{100} \times 250000 \\ &= 125000 /- \end{aligned}$

Total owning = $375000 + 250000 + 125000 = 750000$

Hourly owning cost = $\frac{750000}{3000} = 250 / hr$

Operating Cost

$\begin{aligned} \text{a) cost of fuel } &=0.15 \times h_p \times f \\ &= 0.15 \times 150 \times 0.8 \\ &= 18 lit \end{aligned}$

Assuming cost of fuel / diesel $= Rs. 50 / lit$

$\begin{aligned} \text{cost of fuel} &= 50 \times 18 \\ &= Rs.900 / lit \end{aligned}$

$\begin{aligned} \text{b) cost of lubricant} &= \text{25 % of fuel cost} \\ &= Rs. 225 / hr \end{aligned}$

$\begin{aligned} \text{c) field repair} &= \text{30 % of depreciation} \\ &= Rs. 75000 \\ &= \frac{75000}{3000} \\ &= 25 \end{aligned}$

d) Labour cost = $\frac{6000 \times 12}{3000} = Rs.20/hr$

Total Operating Cost = Rs. 1170 / hr