CONSTRUCTION EQUIPMENT

MANAGEMENT (MSC)
Equipment Categories
Plant and equipment falls into three main
categories:
 Small plant (non-mechanical or mechanical)

 Large plant (non-mechanical and mechanical)

 Administrative and sundry plant

Can also be:

 Head office or

 Site based
Small plant
Non-mechanical:
 Barrows, buckets, drums;

 Spades, picks, trowels sieves, rakes;

 Ropes, chains, pullies, hoses;

 Hammers, chisels, cutters;

 Jacks, spanners, drain plugs, Saws, axes;

 Ladders, steps.

Mechanical:
 Electric rotary drills, sanders, grinders.

 Hand power saws.

Large plant
Non-mechanical:
 Scaffold

 Formwork

 Shoring hoarding,

 Trench timbering, sheeting and jacks.

Mechanical:
 Dozers; Excavators;

 Scrapers; Cranes;

 Concrete mixers;

 Transportation – Lorries, dumpers, trucks.

 Compressors; Rollers

 Pile drivers; etc.

Administrative and sundry plant
 Site hutting;
 Tables, chairs, cabinets;
 Lighting equipment and heating;
 Compounding, fencing
EQUIPMENT PLANNING
 Proper planning, selection, procurement,
installation, operation, maintenance and
equipment replacement policy plays an
important role in equipment management for
successful completion of a project.
 On projects that require extensive spreads of
construction equipment, the project schedule
and production costs are largely determined by
the level of equipment management exercised
on-site (Sears K., Sears G., & Clough, 2008)
PLANNING (CONT)
1.1 Extent of Mechanization
Management of an organization should
decide the extent of mechanization as
part of planning on any given project, &
this is a function of the following:
 Nature of work
 Completion time – equipment helps in
speedy completion of work.
 Availability of money – procurement
usually involves large sums of money.
 Manpower – Ready and sufficiently available?
 Quality and performance required – quality &
extent of mechanization directly related.
 Social objects of the project – employment
opportunities to improve the economic
conditions of the mass in addition to the
development of the area.
 Labour relations – labour unrest, strikes,
absenteeism, seasonal fluctuations and
uncertainty
 1.2 FORECASTING EQUIPMENT REQUIREMENTS
Work should be planned and scheduled to achieve
the fullest use of every equipment item. Idle
equipment costs money (Sears K., Sears G., &
Clough, 2008)
To that effect the organization’s management
should consider the following during planning:
 Number and size of equipment:

 Quantity of work.
 Project time - working days available for
completion of a project.
 Number of shifts planned.
 Matching units??
Illustration (matching units)
Gravel that is required to construct a car park is
taken from a gravel pit 15 km away. Trucks with a
capacity of 9m3 (loose material) and traveling at an
average speed of 40km/hr to and fro are to be used.
It takes 4 minutes for the trucks to unload. A loader
with a loading rate of 35m3/hr (bank measure) with
a hire rate of $155/hr will be used.
Required
Determine the number of trucks required to keep
the loader constantly working.
FORECASTING EQUIPMENT REQUIREMENTS (CONT)

 Procurement schedule (lead time)

 Need for workshops and stores
 Manpower planning – manpower to
operate and carry out repairs and
maintenance.
 Type and nature of soil/subsoil where
the equipment will be working.
 2.1 EQUIPMENT SELECTION FOR A PROJECT
 Knowledgeable company personnel, such as the
project foreman, equipment supervisor, and master
mechanic, should be consulted before final
equipment selections are made. Selection can be
considered in two aspects:
Type, size and other particulars of the
equipment.
Acquisition route

In either case the following factors have to

be considered:
 Easily
and timely availability of equipment in the
market;
 Suitability of equipment for the job, i.e. the
function to be carried out;
 Capacity of the machine - should be able to
achieve specifications required with economy.
[The volume of work vs. time allowed].
 Possibility of multipurpose – if equipment is not
likely to be used fully on one activity.
 Production cost – most efficient and economical
equipment preferred - operating cost minimum.
 Suitability of equipment for future use – useful
life vs. duration of project.
 Equipment should be easy to use and have lesser
fuel consumption, etc.
 2.2.ACQUIRING HEAVY EQUIPMENT
 There are numerous options to consider
when deciding on heavy equipment
acquisition and financing by contracting
organizations.
 Traditionally, outright purchase was the
primary way of acquiring a piece of
equipment
 In other countries the equipment rental
industry has however leveled the playing
field for contractors by minimizing the risk
associated with equipment purchase and
utilization.
Renting or leasing appropriate
equipment greatly increases the type
and size of the projects that
contractors and subcontractors can
bid and execute (Gransberg, Popescu,
& Ryan, 2006)

The main methods of acquisition can

be categorized into three:
Outright purchase;
Renting /leasing; and
hiring.
If an organization intends to
buy a fleet of say bulldozers,
which option is better, i.e.
either getting just one model
or a variety?
 Factors that Affect Choice of
Method of Acquisition?

Decision Making or Investment

Appraisal Techniques An
Essential Tool!!
Some commonly used techniques are:
Decision matrix
Sensitivity analysis
Cost benefit analysis, etc
when deciding on whether to Own,
lease, hire or even
subcontracting part of the works
which are equipment intensive
 The primary consideration in the buy, lease or
hire decision is the level of risk the
organization wishes to assume
 This risk is typically associated with financial
considerations
 The evaluation of this risk makes equipment
acquisition an important managerial
consideration;
 Along with financial considerations is how
much the equipment will be utilized for return
on investment;
 Future work volume;
 Project specific or client requirements;

 Long term organizational goals;

 Acquisition time; and

 Equipment availability,

must be considered when developing a

utilization strategy for a piece or fleet of
equipment (Gransberg, Popescu, & Ryan,
2006)
 For this reason, subcontracting part of
that work which is equipment intensive
minimizes risk and is typically very
efficient???

(ownership of particular types of

equipment accompanied by expertise and
experience, makes it cheaper sometimes)
3 PLANT OWNERSHIP COSTS
3.1 Fixed Costs
These are fixed costs arising indirectly
and are incurred throughout the period of
ownership.
These include:
 Cost of capital,
 Depreciation on the equipment,
 Taxes, Insurances and licenses
3.2 Operating costs
 Servicing costs, e.g. oil, grease and other
consumables
 Maintenance costs
 Transport /logistics charges
 Fuel
 Operators’ wages

3.3 Overhead costs

 To be considered when hiring out, plus
profit %
 Effecting Plant & Equipment Cost to
Project Cost
Plant and equipment and tools costs are
incorporated to project cost in three
different ways/categories:
a). Hand tools up to a certain value,
together with such things like blades,
drill bits and other consumables (small
tools allowance).
These can be priced as a %age of the total
labour prices as “small tools allowance”.
b). Large items of equipment that are usually shared
by a number of work activities, e.g. scaffold (based
on duration of the project, under P & Gs
section of the bill)
 Time management is very important in order
to manage these
c). Equipment for specific tasks e.g. Mixer,
Excavator
If outsourced, this type may not be kept on site for
extended periods but is hired, used for its
particular task, & immediately taken away.
Cost based on unit rates expressed as hourly,
weekly, /monthly rates for each piece of equipment.
4. PLANT MAINTENANCE
Factors Affecting Maintenance Policy?
i. Availability of funds
Planned maintenance offers the most
reliable policy but involves the setting up of
workshops, offices and stores, coupled with
a significant investment in tools and
trained staff.
ii. Nature of work
The operational problems imposed by the
nature of construction work severely
restrict the quality and amount of
maintenance provision which may be
achieved.
iii. Size of firm
 For a large national construction company with
plant spread all over a wide location a
centralized facility may be too expensive to
operate.
 Establishment of workshop facilities for
individual sites may be justified on large remote
contracts but prohibitively expensive for small
sites.
 Regionalization, where individual facilities may
be set up on large equipment intensive sites,
perhaps coordinated from a regional depot; with
a mobile workshop operating from the regional
facility offers a suitable compromise.
Workshop control
 Workshop manager is primarily responsible for
the maintenance and servicing of firm’s
equipment.
 The workshop employees will include fitters,
electricians, welders, mechanics and other
operatives.
 The workshop manager’s duties may be
augmented by a field manager to provide
advice to construction sites on the use,
operation and routine maintenance of plant
and equipment.
Asset Register
Constituted of:
 Machine Number
 Description
 Purchase date
 Purchase price
 Scrape Value
 Machine life (physical life, profit life,
economic life – exp next slide)
 Depreciation to date
 Maintenance history
 Total cost incurred for that plant
 Location
5. INVENTORY RECORD KEEPING &
MANAGEMENT SYSTEMS
 Establishing an equipment inventory
system means:
 registration (establishment of a
numbering system),
 keeping inventory records, and
 making periodic inventories of all
eligible equipment, maintaining proper
storage of the equipment, guaranteeing
security, and assigning custody.
5.1 Paper-based record keeping
 The description of the equipment as found in the
classification code
 The name of the original equipment
manufacturer
 The year of manufacture of the basic machine

 The model number and serial number

 The name of the manufacturer of the engine

 Information regarding the engine. If there are

two engines, as in a twin-engine wheel tractor–
scraper, then both should be listed
 Accessories and attachments
 Information on tires for wheeled equipment
including the axles from front to rear, the number
of tires (wheels)
 The market value of the machine, to obtain a
capital-cost curve for analytical purposes.
 Month and year of the appraisal should be
recorded.
 The purchase-order number, the name of the
seller, and the delivery date of the machine when
purchased.
 The date of disposal and the life in months.
The estimated life is recorded when the
machine is purchased and put into service.
The actual life is recorded on the date of
disposal
 A summary of the capital costs of the
machine, accessories, and tires. The
acquisition costs are broken down into cost,
freight, and taxes
 The weights are useful in figuring freight
and shipping costs.
5.2 Electronic Record Keeping
The most important features for an electronic
record keeping system are:
 Computer platform: The platform should be user-
friendly and compatible with existing
organizational hardware
 Scheduling: The scheduling function should
include the ability to generate work orders for
scheduled preventive maintenance as well as
repair orders
 Fluids tracking: The software should support the
organization’s oil and fluids analysis program
without modification
 Tire tracking: The software should maintain a
complete tire history, including tire repair, tire
type, manufacturer, or vehicle code
 Inventory: The software should support the real-
time change in equipment and repair parts
inventories, relating each transaction with a cost
code
 Purchasing: The software should create both
purchase orders and purchase requests.
 Security: The software should be secure down to
the form level
Equipment Replacement
 Payback period method
 Present value method

 Rate of return method

 MAPI (Machinery and Allied Products Institute

of Washington method)
6. EQUIPMENT LOCATION AND UTILIZATION
 The equipment manager needs to know
where each piece of equipment is at all
times.
 Real-time systems with a connection
between accountability, cost control, and
jobsite productivity factors have been
developed
 The data can be transmitted almost
anywhere on the face of the planet giving
Equipment Manager real-time status of
their fleets, facilitating routine, and crisis
decision-making.
6.1 Geographic Information System (GIS)
GIS permit the real-time monitoring of actual
equipment locations.
GIS systems come in two types:
i. Fleet Management Systems (FMS)
ii. Automatic Vehicle Location (AVL) systems
The most common functions of a FMS system
are as follows:
i) Vehicle tracking: Providing real-time location
data on each piece of equipment in the fleet
ii) Geocoding: Furnishing address information to
operators and managers to develop efficient route
planning
iii. Network topology: Developing and scheduling
vehicle route information
iv. Route logging: Recording the routes that were
actually followed as well as mileage for things
like fuel tax mileage reporting
v. Accessibility: Selecting the administrative
sites that are best for project support locations
vi. Order fulfillment: Historical record of
customer service job fulfillment
END