ARCHITECTS | ENGINEERS | How to Calculate Your Daily Construction Equipment Costs

Accurate Bidding: How to Calculate Your Daily Construction Equipment Costs

When bidding on new projects or managing existing ones, we must accurately quantify the equipment needed. This includes everything from personnel transport vehicles and utility trucks (for water supply, materials, etc.) to heavy-duty items like road machinery, cranes, concrete plants, engine-driven welders, and power generators.

To create a competitive and profitable bid, we need a precise understanding of the daily operating cost for each piece of equipment. This calculation is crucial, whether the equipment is a direct cost (like road machinery for an earthmoving task) or part of your general overhead.

This post provides a framework for assigning these costs quickly and accurately.

The Key Data You'll Need

Before you can calculate the daily cost, you must gather the following information:

• Original Purchase Value: The initial cost of the equipment.

• Salvage Value: The estimated resale value of the equipment at the end of its useful life (this can be zero).

• Useful Life: The total expected operating lifetime of the equipment, expressed in hours (use standard industry tables or your own experience).

• Annual Interest Rate: The current rate for your cost of capital.

• Annual Operating Hours: The total hours you expect to use the equipment per year (a common standard is 2,000 hours).

• Fuel Cost: Your local price per liter (or gallon).

• Fuel Consumption: The equipment's consumption rate in liters (or gallons) per hour.

• Labor Cost: The fully-loaded hourly rate for the operator (including wages, taxes, and benefits).

Breaking Down the Daily Cost (The Formulas)

With your data in hand, you can calculate the individual cost components. These formulas are based on a standard 8-hour workday.

• 1. Daily Depreciation: This is the loss of value from use.

  • Formula: (Original Purchase Value - Salvage Value) / Total Useful Life in Hours * 8 hours/day

• 2. Daily Interest (Cost of Capital): This is the cost of having your money tied up in the equipment.

  • Formula: ((Original Purchase Value + Salvage Value) / 2) * Annual Interest Rate / Annual Operating Hours * 8 hours/day

• 3. Daily Repairs & Parts: This is an allowance for maintenance (a common estimate is 50-100% of depreciation).

  • Formula: Daily Depreciation Cost * 50%

• 4. Daily Fuel Cost: The cost of fuel consumed during the workday.

  • Formula: Fuel Consumption (liters/hour) * Fuel Cost (per liter) * 8 hours/day

• 5. Daily Lubricants: This cost (for oil, grease, etc.) is often estimated as a percentage of the fuel cost.

  • Formula: Daily Fuel Cost * 40%

• 6. Daily Labor Cost: The cost of the operator and any required helpers.

  • Formula: (Operator's Hourly Rate + Helpers' Rates) * 8 hours/day

• 7. Daily Supervision Cost: An allowance for the cost of managing the equipment and operator.

  • Formula: Daily Labor Cost * 10%

• 8. Overhead Allocation: A percentage to cover general company overheads.

  • Formula: (Sum of costs 1-7) * 12%

Total Daily Equipment Cost

Finally, add all the components together to find your total daily cost.

Total Daily Cost = Depreciation + Interest + Repairs + Fuel + Lubricants + Labor + Supervision + Overheads

By filling in these values (ideally in a spreadsheet, as you noted), you can move from a rough guess to a data-driven cost. This ensures your bids are both competitive and profitable.

Thanks for reading! In our next post, we'll continue this budgeting series by diving into Overhead - Part 3.

How to Make an Estimate: Without Losing Money

How to Create an Estimate without Losing Money

Ready to create project estimates that guarantee profit? This is your complete guide.

In project management, a single miscalculation can erase your entire profit margin. For professionals in construction, engineering, or electromechanical assemblies, accurate bidding isn't just a skill—it's essential for survival.

If you're tired of underbidding projects and losing money, this video is for you.

In this step-by-step guide, you'll learn: 

✅ How to build a solid financial blueprint (a budget) for any project. 

✅ The key costs you can't afford to ignore: direct materials, labor hours, and equipment. 

✅ Proven techniques to quote prices with confidence, covering all your expenses and securing profit. 

✅ How to avoid the common pitfalls that lead to financial loss and a damaged reputation.

Stop the guesswork. It's time to create precise, reliable, and profitable project estimates every single time. Watch now to master the art of accurate estimation!

👇 Don't forget to Like, Subscribe, and hit the notification bell for more essential project management tips!

#ProjectManagement #Construction #Estimation #Costing #ProjectBudget #Engineering

Guide to Reliable Estimating

Guide to Reliable Estimation

Stop Underbidding: A Practical Guide to Profitable Project Estimates

Description: Are you leaving money on the table? An inaccurate project estimate can turn a potential win into a major financial loss.

This guide is designed for project estimators who are ready to master the art of reliable, profitable bidding. If you work in construction or electromechanical assembly, this video will walk you through the proven methods and critical checks needed to ensure your quotes are rock-solid.

Remember, a bad bid is worse than no bid at all. Let's make sure every job you win is a profitable one.

This guide is for you if you want to: • Create estimates with unwavering confidence. • Protect your business from unexpected costs. • Build a reputation for reliability and professionalism.

Dive into the full guide on our website: https://calculatemanhours.com/

#ProjectEstimation #ConstructionBidding #CostControl #SkilledTrades #Engineering #ConstructionManagement #Profitability

Cost of Excavators

 Cost of Excavators

When it comes to purchasing an excavator, there are various cost components to consider. The cost forms associated with excavators include:

1. Purchase Price: This refers to the initial cost of acquiring the excavator. It can vary based on factors such as brand, model, size, features, and attachments. New excavators tend to be more expensive than used or refurbished ones.

2. Attachments: Excavators often have optional attachments that enhance their capabilities. These attachments can include buckets of different sizes, hydraulic hammers, grapples, augers, rippers, and more. The cost of attachments will depend on the specific type and quality desired.

3. Transportation: If you are purchasing an excavator from a different location, you may need to consider transportation costs to get it to your desired location. This can involve hiring a specialized transport service or arranging for a shipping company, depending on the distance.

4. Taxes and Duties: Depending on your location and the applicable regulations, you may be subject to taxes and import duties when purchasing an excavator. It's important to factor in these additional costs when budgeting.

5. Training and Certification: Operating an excavator typically requires proper training and certification. Depending on the jurisdiction, you may need to invest in training programs or certification courses for your operators. The associated costs can vary based on the training provider and the level of certification required.

6. Maintenance and Repairs: Excavators require regular maintenance and occasional repairs to ensure optimal performance and longevity. You should consider the ongoing costs for routine maintenance, such as oil changes, filter replacements, and inspections, as well as potential repair costs for unexpected breakdowns or component replacements.

7. Insurance: It is essential to have insurance coverage for your excavator to protect against potential damages, accidents, or theft. Insurance premiums will depend on factors such as the value of the equipment, intended use, location, and insurance provider.

8. Financing: If you choose to finance the purchase of your excavator through a loan or lease, you should factor in the associated financial costs, including interest rates, down payment requirements, and any administrative fees.

Equipment cost estimation

Estimation of the real value of Construction Equipment

To estimate the daily value of equipment and vehicles on a construction project, several factors must be considered, including the types of equipment and vehicles needed, their usage rates, depreciation, maintenance costs, and any additional expenses associated with their operation.

It is important to note that these estimates can vary significantly based on location, project size, and specific requirements.
However:

A general framework for estimating the daily value of equipment and vehicles on a construction project can be provided:

1. Determine the equipment and vehicles needed – Identify the specific types of equipment and vehicles needed for the project, such as excavators, bulldozers, cranes, dump trucks, etc. Consider the quantity and size of each.

2. Research Rental Rates – Look up rental rates or leasing costs for similar equipment and vehicles in your area.
Contact local rental companies or check online platforms to get an idea of daily rental rates for the necessary equipment and vehicles.

3. Calculate usage rates: Estimate the average daily hours of usage for each piece of equipment or vehicle.
Consider factors such as the project schedule, work hours, and equipment utilization efficiency.
This will help determine the number of days each piece of equipment or vehicle will be needed for the project.

4. Depreciation: account for the depreciation of the equipment. Generally, construction equipment and vehicles have a useful life ranging from 5 to 15 years.
Divide the purchase price or current market value of the equipment by its expected useful life to calculate annual depreciation.
Divide the annual depreciation by the number of business days in a year to estimate the daily cost of depreciation.

5. Maintenance and operating costs: Consider the regular maintenance and operating expenses associated with equipment and vehicles.
This includes fuel, lubricants, repairs, insurance, registration, and any other relevant costs.
Divide the annual O&M costs by the number of business days in a year to estimate the daily O&M cost.

6. Additional Expenses – Consider any additional project-specific expenses such as transportation costs, storage fees, or specialized accessories needed for certain equipment.

7. Summarize: Add up the daily rental rate, depreciation cost, maintenance cost, and any additional expenses to estimate the total daily value of the equipment and vehicles in the construction project.

It is important to note that this estimate provides a general guide, and actual costs may vary depending on the specific circumstances of the project and the equipment and vehicles involved.
Consulting with local equipment rental companies and industry professionals can provide more accurate cost information specific to your particular project.

Notable Manufacturers

• Atlas Copco
• Bharat Earth Movers Limited (India)
• Bobcat Company
• CASE
• Caterpillar Inc.
• CNH Global
• Deere & Company
• Demag
• Doosan Group
• Fiat-Allis
• Hitachi- Hitachi, Ltd.
• Hyundai Heavy Industries
• Ingersoll Rand
• JCB
• Kubota
• Kobelco