CHAPTER
4
Ownership and Operating Costs
1. A tracked dozer is used about 1,500 hours per year. It cost $500,000 new and has a useful life
of 15,000 hours. Estimated salvage value after 15,000 hours of use is $95,000. Minimum
attractive rate of return is 10%.
a. What is the estimated hourly ownership cost for the dozer?
b. What do you estimate the hourly maintenance and repair cost to be if the dozer is used for
general contracting under average operating conditions?
c. The dozer is powered by a 200-horsepower diesel engine. What do you estimate the hourly
fuel cost to be, if the dozer is used in unfavorable operating conditions and diesel fuel costs
$3.90 per gallon?
d. What do you estimate the hourly cost for filter, oil, and grease to be for the dozer when used
in average operating conditions?
4 – 2
2. A contractor has purchased a single-engine scraper for $850,000 and expects to use it about
1,500 hours per year. The contractor expects to sell the scraper after using it for 12,000 hours for
$120,000. Tires for the scraper cost $8,000 for a set of 4. The scraper is powered by a 360-
horsepower diesel engine. Diesel fuel costs $3.90 per gallon.
a. What is the estimated hourly ownership cost for the scraper (less tires) at a minimum
attractive rate of return of 14%?
b. What do you estimate the hourly maintenance and repair cost for the scraper (less tires) to be
under unfavorable operating conditions?
c. What do you estimate the hourly tire cost to be under average operating conditions?
4 – 3
d. What do you estimate the hourly fuel cost to be for the scraper under average operating
conditions?
e. What do you estimate the hourly filter, oil, and grease cost to be for the scraper under
unfavorable working conditions?
4 – 4
3. A contractor purchased a grader for $400,000 and expects to use it about 1,000 hours per
year. The contractor plans to use the grader for 12 years and then realize a salvage value of
about $75,000. Tires for the grader cost $12,000 for a set of 6 tires. The useful life of a set of
tires is estimated at 3,500 hours. The grader is powered by a 135-horsepower, diesel engine, and
diesel fuel costs $3.90 per gallon.
a. What is the estimated hourly ownership cost for the grader (less tires) at a minimum
attractive rate of return of 9%?
b. The equipment repair factor for the grader is estimated to be about 50% of the hourly
straight-line depreciation for the 12 years of ownership. What do you estimate the hourly
maintenance and repair cost for the grader (less tires) to be?
c. What do you estimate the hourly tire cost to be for the grader?
d. What do you estimate the hourly fuel cost to be for the grader under unfavorable working
conditions?
e. What do you estimate the hourly filter, oil, and grease cost to be for the grader under
unfavorable working conditions?
f. What hourly equipment rate should the contractor charge a project for use of the grader if a
profit of 2% is desired from the equipment fleet?
4. A contractor has a project to construct a new motel with an underground parking garage. The
contractor has evaluated the size of the excavation required for the parking garage and decided to
remove the soil using a 3-cubic-yard excavator and 4 dump trucks. The contractor determined
the following cost data for the equipment from historical records, as shown in Table 4.10.
Equipment
Ownership Cost
Labor Cost
Excavator
$32.00/hr.
$61.00/hr.
Dump Truck
$12.00/hr.
$53.00/hr.
After analysis of the working conditions and the haul distance for the trucks, the contractor
determined that the productivity of the combined equipment fleet will be about 120 cubic yards
per hour. What is the estimated direct unit cost per cubic yard to excavate for the parking garage
and haul the soil away?
5. A contractor has a project that involves the construction of a large fill for a parking lot. After
detailed analysis of the task, the contractor selected an equipment fleet of 3 scrapers, 1 tracked
dozer to push load the scrapers, 1 grader to spread the fill material and grade the surface, and 1
compactor to compact the loose fill material dumped by the scrapers. The contractor determined
the following cost data from historical records, as shown in Table 4.11.
Equipment
Ownership Cost
Operating Cost
Labor Cost
Scraper
$175.00/hr.
$125.00/hr.
$60.00/hr.
Tracked Dozer
$65.00/hr.
$75.00/hr.
$60.00/hr.
Grader
$70.00/hr.
$45.00/hr.
$61.00/hr.
Compactor
$35.00/hr.
$24.00/hr.
$57.00/hr.
After analysis of the working conditions and the haul distance for the scrapers, the contractor
determined that the productivity of the combined equipment fleet will be about 600 cubic yards
per hour. What do you estimate the direct unit cost per cubic yard to construct the fill for the
parking lot to be?