Construction Equipment Costs & Ownership Flashcards
7 cards from real CEC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Construction Equipment Costs & Ownership flashcards as text
Which of the following best describes the 'standby rate' for rented construction equipment?
Answer: A reduced rate charged when equipment is on-site but not operating
A standby rate is a reduced charge applied when rented equipment is on-site and available but not actively being used, compensating the owner for holding the machine idle.
The 'ownership and operating (O&O) cost' method for pricing equipment use is most closely associated with which reference publication?
Answer: Caterpillar Performance Handbook
The Caterpillar Performance Handbook is widely recognized as a primary reference for calculating ownership and operating costs of heavy construction equipment.
When estimating equipment costs for a project in a remote location, which additional cost factor is most important to include?
Answer: Mobilization and demobilization costs
Remote locations require transporting equipment to and from the site, making mobilization and demobilization a significant and often overlooked cost that must be included in the estimate.
Which factor most directly affects the hourly fuel cost estimate for a piece of heavy equipment?
Answer: The engine horsepower and load factor
Fuel consumption is directly proportional to engine horsepower and the load factor (the percentage of maximum power the engine uses), making these the primary drivers of hourly fuel cost.
An estimator is comparing owning versus renting a concrete pump for a project. If the breakeven point is 1,200 hours per year, what should the estimator recommend if annual usage is projected at 800 hours?
Answer: Rent the pump because usage is below the breakeven point
When projected usage falls below the breakeven point, renting is more cost-effective than owning because ownership costs are not fully recovered over the limited hours of use.
Which of the following is NOT typically included when calculating the 'cost of investment' component of equipment ownership cost?
Answer: Daily fuel cost while operating
Daily fuel cost is an operating cost, not an ownership cost; investment cost components include interest on borrowed or equity capital applied to the equipment's average book value.
The average investment method for calculating equipment interest cost uses which value as its base?
Answer: The average of the initial cost and salvage value
The average investment method uses the average of the initial purchase price and salvage value as the base for calculating interest cost, reflecting the average capital tied up over the equipment's life.