Project and assignment on construction equipment

and plant management

1) Write a short essay about the current status of the Ethiopian construction
industry equipment management with regards to its strength and limitations.

Ethiopia has witnessed significant growth in its construction sector over the last few
years. The Ethiopian construction industry has been recognized as one of the primary
drivers of the country's socio-economic development. With a rapidly growing
population, urbanization, and infrastructure expansion projects, the demand for
construction equipment and machinery has significantly increased.

This essay aims to briefly delve into the current status of Ethiopian construction
industry equipment management, analyzing the strengths and limitations.

Strengths:

1. Government Support:

The Ethiopian government has been actively prioritizing the development of the
construction industry, with a focus on infrastructure projects. This has translated into
favorable policies and tax incentives, encouraging investment in the sector.
Consequently, the construction industry equipment management has witnessed
commendable growth and backing from the government and private sectors.

2. Collaboration with Foreign Companies:

The Ethiopian construction industry has been successful in partnering with various
international companies for the supply of equipment, technology, and investment. The
collaborations have enabled the country to procure high-quality and technologically
advanced construction machinery, boosting efficiency and improving overall
equipment management.

3. Training and Capacity Building: To meet the increasing demand of skilled

personnel in the construction industry, Ethiopia has established several vocational
training institutions. These institutions have been crucial in training and developing
the workforce crucial for the efficient management of construction equipment.
Additionally, several international training workshops and conferences have been
organized, fostering skills and knowledge exchange among industry professionals.

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Limitations:

1. Insufficient Supply of Equipment: Despite advancements, the construction

industry equipment management in Ethiopia still faces challenges in terms of
equipment availability. The demand for construction machinery surpasses the existing
supply, leading to project delays and reduced productivity. This can be attributed to
high import costs, limited local production of equipment, and financial constraints
faced by contractors.

2. Dependence on Imports:

Ethiopia relies heavily on importing construction equipment, which subjects the

industry to fluctuations in international market prices, currency exchange rates, and
import regulations. This dependency on imports can hamper the growth of the
national construction equipment industry, and consequently, the equipment
management in the long run.

3. Maintenance and After-sales Support:

The construction industry equipment management faces challenges in the

procurement of spare parts and technical support services, with a significant portion
of the imported equipment lacking after-sales services. Maintenance infrastructure,
such as workshops and trained personnel, is also inadequate, leading to inefficient
equipment usage and shorter lifespans.

4. L ack of Standardization:

The Ethiopian construction industry equipment management system lacks

standardization, leading to inconsistencies in the utilization and maintenance of
equipment. An absence of proper guidelines and regulations on equipment
management can hamper productivity, as well as lead to safety concerns on
construction sites. Conclusion: Though the Ethiopian construction industry
equipment management has witnessed considerable improvements due to
government support and international collaborations, significant limitations
persist. To achieve sustainable development in the sector, Ethiopia must address
the challenges related to equipment supply, maintenance infrastructure and
services, and the standardization of equipment management practices

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2) By visiting construction projects (building, highway, or other projects) around

Gondar city identify the types of construction equipment to be used in the projects
and describe their purpose. Also determine the productivity of each equipment to be
involved in the project referring by your lecture notes.

Project name : Gondar to Azezo Highway Company

: Rama construction PLC Category
: General Contractor Client
: Amhara National Regional State

Types of construction equipment used in the construction of Gondar to Azezo

highway project are listed below

1. Pneumatic roller (rubber tyred rollers)

 Pneumatic Tyred Rollers that use only tires contribute to the final finish of the
last layer by improving its density, reducing voids, and perfecting the finish.
 Pneumatic rollers are widely used for compaction of sub grades, bases and
bituminous mixes.
 These type of compaction equipment are suitable for soft base materials or layers
of loose soil and closely grained sands.
 It can be used for compaction of the cohesive soils with the moisture content of 2-
4% below the plastic limit.
 It is very effective for bituminous layers where the design mix has a high content
of fines.
 The end goal is to deliver a high quality compacted surface that will extend the
useful lifetime of the road surface regardless of climate conditions.

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2. Double drum vibratory roller ( tandem roller)

Machines with two vibrating drums usually provide the brute force of compaction
on the hot and mold-able asphalt layer.
Provides compaction power on the front roller and finishing capacity on the rear.
Increased profitability by completing work in less time without the need to use
multiple types of equipment.
Less number of passes to obtain the desired result compared to combinations of
equipment with a similar size.

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Double drum rollers are both powerful and fast , Because they feature both a
front and rear barrel, double drum rollers flatten surfaces twice with every
pass. The additional barrel improves efficiency, allowing crews to complete
projects in less time and companies to minimize labor costs..

3. Asphalt paver

 used to lay asphalt concrete or Portland cement concrete on roads, bridges,

parking lots and other such places.
 It lays the material flat and provides minor compaction.
 This is typically followed by final compaction by a road roller.

4. Loader

 Loaders make construction tasks easier, and they can also move materials
quickly from one point to another. 
 Used for lifting and moving soil, rocks, debris or other materials in and around
construction sites.
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 Used to excavate soft earth material.

5. Air compressor

 Cleaning surfaces: Compressed air is used to clean the surfaces before the
application of the asphalt. This ensures that the surface is free from dust, dirt,
and debris, which could otherwise reduce the bonding strength of the asphalt
layers.
 Operating pneumatic tools and machinery: Air compressors are used to power
various tools and machinery used in asphalt construction. This includes
jackhammers, pneumatic drills, and compactors, which are essential for breaking
up old asphalt or preparing the construction site.
 Spraying tack coat: Compressed air is used to spray the tack coat, a thin layer of
asphalt binder applied between layers of asphalt to improve adhesion and
bonding.

6. Water truck

 Water trucks can transport water to remote job sites.

 Distribute water for compaction or dust suppression.
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 Clean off equipment and roads, wash filter materials, and power water-driven
equipment such as pressure washers.

7. Mini dump truck

 Mini dump truck used to transport materials from its dumping station to asphalt
paver.
 It is the safest way to quickly transport loose materials from a site.
 Used to transport materials, such as sand and gravel, that are to be used within
construction.

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3) Also assess how the construction company select and acquire equipment on the
construction.

Selection of Construction Equipment by using Multi-criteria Decision Making

Methods

 Economic Consideration.

The economic consideration such as owning costs and operating fuel costs of
equipment are most important in selection of equipment. Besides, the resale value, the
replacement cost of existing equipment, and the salvage value associated with the
equipment are also important.

 Site – Specific

Site condition, both ground conditions as well as climatic conditions may affect the
equipment selection decision. For example the soil and profile of a site may dictate
whether to go for crawler-mounted equipment. If there is a power line at or in the
vicinity of site one may go for a fixed-base kind of equipment rather than a mobile
kind of equipment

 Equipment – Specific Construction

Equipment come with high price tags. While it may be tempting to go for the
equipment with low initial price, it is preferable to optimize for standard equipment.
Such equipment are manufactured in large numbers by the manufacturers, and their
spare parts are easily available, which would ensure minimum downtime.Besides,
they can also fetch good salvage money at the time of their disposal.

 Client and project – Specific

The owner/client in a certain project may have certain preferences that are no inline
with the construction company’s preferred policies as far as equipment procurement
is concerned. The schedule quality and safety requirements demanded of a particular
project may in some cases force the company to yield to the-demand of the client

 Manufacturer – Specific

A construction company may prefer to buy equipment from the same manufacturer
again and again, and that too from a specific dealer. This may be to bring in
uniformity in the equipment fleet possessed by the company or because the company
is familiar with the working style of the manufacturer and the dealer

 Labor Consideration

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Shortage of manpower in some situations may lead to decision in favor of procuring

equipment that is highly automated. Further, the selection of equipment may be
governed by the availability or non-availability of trained manpower.

Methods of Equipment Acquisition

The Acquisition of equipment by company may be governed by its policy on ‘owning’

or renting. While emphasis on ‘owning’ may result in purchase of equipment keeping
in mind, the future requirement of projects, the emphasis on renting may lead to
putting too much focus on short term benefits.

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4) Compare and contrast wheel mounted, track mounted, and crawler mounted
earth moving equipment with their selection criteria in a specific construction
project.

 Wheeled mounted earth moving equipment are easy to move, mainly for small
projects in the city, and for municipal use. Do not work in very soft places. The
wheeled type generally does simple work. On the cement floor and lawn, it will
generally not damage the road surface. The crawler track is a tool possessed by the
project, which will crush the road surface. The main purpose of the wheeled type is
not as wide as the crawler type. The use of the wheeled mounted earth moving
equipment is affected by the environment and has certain limitations. It can only do a
little work.

The crawler mounted earth moving equipment cannot drive on the road, but it can
work in a muddy place without trapping the machine. The machine is also larger and
the efficiency is higher than that of the wheeled excavator.

Crawler mounted earth moving equipment

 Are very suitable for carrying out large works in rough terrain.
 Can be used for work on soft or wet grounds.
 Can be used on sharp rocks or other adverse conditions.
 Can climb steep grades (even up to 40 percent). 
 Requires very less turning space. 
 Have very less speed for travelling. 
 Can be shifted from one site to another only on tailor's.

Truck mounted earth moving equipment

 High road speed and mobility is the main advantage. 

 Lower stability over sides and hence require counter-weight or outriggers. 
 Require more operating space. 
 Tyre's or outriggers give high ground pressure and hence it requires firm and
smooth operating locations.

Wheel mounted earth moving equipment

 Can travel at higher speeds during operations and also from one job to the other.
 Ease in operation. Operator feels less fatigue.
 Can travel on paved roads without damaging them.
 Can travel long distances at its own power, whereas crawler mounted needs
trailors.
 When work is spread over long area, these are found to be producing more
output.

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 Operation, maintenance and repair costs are less in wheeled earth moving
equipment as compared to crawler earth moving equipment.

5) Write clearly about the construction crane types, and also the advantage and
limitation of each type of cranes in the construction industry.

There are two main categories of cranes:

1. Static crane : is a permanent/semi-permanent structure fixed to the ground or

building that lifts and moves loads along a fixed path.

1.1. Tower Crane :

The tower crane supports the structures under construction. This support means
moving tools, equipment and building materials from one part to another. The crane
is usually fixed in place inside the construction site using a foundation. The device
has a horizontal lever, arm, canvas or Jib supported by a vertical metal rig. The
horizontal lever can rotate 360 degrees.

Generally, the use of tower cranes can be summarized as follows:

 Dam construction
 Bridge construction
 High-rise constructions Residential, office and commercial constructions
 Industries, power plants and factories

The advantages of tower crane are:

 Tower cranes surpass the loading and lifting capacity of any other crane in the
world.
 Their height capacity can’t be matched by any other type of crane.
 They have incredible stability and can bear the hardest tasks.
Disadvantages of Tower Crane are:

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 These cranes are very expensive and they require time, effort and money to be
shifted from one area to another.
 They have a high maintenance cost for repairs and depreciation.
 They have a major labor-intensive to install.

1.2. Hammerhead Crane.

A hammerhead crane is a heavy-duty lifting system designed to accurately and safely
interact with hefty objects. Hammerhead cranes are used on the heaviest loads on any
construction site.

Advantages of Hammerhead are

 Hammerhead Crane is a static crane with a fixed location.

 They are often used for a specific purpose.

Disadvantages of Hammerhead Crane are :

 They are difficult to set-up.

 As they are fixed to the surface, Re-installation of such a huge structure can be a
bit problematic.
 They are only used for mega construction purpose.

1.3. Telescopic Crane

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Telescopic Cranes are another form of cranes that are employed to transport heavy
goods, consisting of a large boom. The boom has got tubes fitted inside with each
other which increases the height with the help of tubes through a hydraulic
mechanism.Telescopic Cranes are the best type of cranes when it comes to
transferring objects to a high place.

Advantages of Telescopic Crane

 They can adjust the height according to the place.

 They can be used in rescue operations due to their adjustment of height.
 They are mobile in the sense that they transport goods in a flexible manner.
 They move loads with excellent precision.

Disadvantages of Telescopic Crane

 telescopic Cranes are not automatically mobile cranes

2. Mobile cranes : A mobile crane is mounted on treads or wheels and can be moved
from job site to job site. Mobile cranes are not restricted to a fixed path like a static
crane.
2.1. Crawler Crane

Crawler Crane is a type of mobile crane that moves on tracks which are called
crawlers. It can move around the site without a set-up.The tracks provide stability
enabling the crane to operate without the help of outriggers

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Advantages of Crawler Crane are :

 Crawler Crane can move on any surface of the earth, even it can move on a soft
surface due to its crawlers.
 It can be used on unprepared sites as its load is distributed in a greater area.
 Crawler Crane is powered by one engine and may consist of two or more cable
operated drums .

Disadvantages of Crawler Crane are:

 Because of the heavy weight of the Crawler Crane, these machines move very
slowly.
 It can’t be moved from one site to another easily.
 It is not cost-efficient due to its features.

2.2. Railroad Crane

Railroad Cranes move on railway tracks. They are mainly used for construction and
repair of railway tracks and their maintenance. They have three primary
purposes:Freight handling , Permanent way maintenance and Accident recovery
work .

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Advantages of Railroad Crane are :

 They are very efficient and safe as they use tracks to move.
 The loading capacity is between 15 tons to 250 tons.
 They have a rapid self-propelling system.

Disadvantages of Railroad Crane

 Railroad Crane is They can’t travel on roads or any other place, other than
railways due to their flanges wheels.

2.3. Drag line

drag-line is a mining device and is used for the removal of overburden. In response to
the dimensions and size of the open-cast mining, it can also simultaneously be used
for the transport and tilting

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Advantages of Drag line :

 It can be used as an all-purpose machine for any kind of excavation project.

 The can be used for anything from road excavation to surface mining and even
underwater excavation.
 The purpose of a drag line is to move earth and rock over long distances, hence
drag lines are also capable of moving very heavy loads.

Disadvantages of Drag line:

 The primary limitations of drag lines are their boom height and boom length,
which limits where the drag line can dump the waste material.
 Their dig depth, which is limited by the length of rope the drag line can utilize.
 a drag line is most efficient excavating material below the level of their base.
 While a drag line can dig above itself, it does so inefficiently and is not suitable
to load piled up material (as a rope shovel or wheel loader can).

6) A Cat excavator loader of 3Lm*3 heaped capacity bucket is to be used to load

blasted rock directly into a crusher of capacity (consumption) of 100Lm*3 per hour.
If the Cat Performance Manual suggests a cycle time of 1.2min for the way you
have the work setup, will the production of the loader keep up with the crusher? If
your answer YES OR NO you must set your reason or conclusion (Reason Out)

SOLUTION

NO, the production of the loader will not keep up with the crusher.

Reason: According to the given information, the loader has a heaped capacity of
3 cubic meters (Lm*3) per bucket and takes 1.2 minutes to complete one cycle.
The crusher has a consumption capacity of 100 cubic meters (Lm*3) per hour.

Let's calculate the loader's production per hour:

(60 minutes/hour) / (1.2 minutes/cycle) = 50 cycles per hour

50 cycles per hour * (3 Lm*3/cycle) = 150 Lm*3 per hour

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Even though the loader's production capacity is 150 Lm*3 per hour, the crusher's
consumption capacity is only 100 Lm*3 per hour.

Therefore, the loader will produce more materials than the crusher can consume,
and it will not be able to keep up with the crusher.

 7) The following data was extracted from a highway project in Addis Ababa.

Material: -
Silt clay with Density in Loose state = 1850 kg/ Lm3
Density in Bank state = 2181 kg/ Bm3
Density in Compacted state = 2653 kg/ Cm3

LOADER:
Loader capacity = 6.5 Lm3
Loader cycle time = 30 sec
Efficiency = 70%
Bucket fill factor = 0.9

HAULER:
Hauler capacity = 18 Lm3
Variable Time = 600 sec
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Fixed Time = 60 sec

Efficiency = 80%

Calculate the following parameters using the data given above.

A. Swell (%), Shrinkage (%), Load and Shrinkage factors.

B. Productivity of Loader in Bm3/Hr
C. Productivity of Hauler in Bm3/Hr.
D. Number of Hauler units required to balance the loader productivity @ 70%
Efficiency.

SOLUTION

A. Swell (%), Shrinkage (%), Load and Shrinkage factors.

 Swell factor = (Density in Loose state) / (Density in Bank state)

= 1850 kg/Lm3 / 2181 kg/Bm3

= 0.848

 Swell (%) = (1 - Swell factor) × 100

= (1 - 0.848) × 100

= 15.2%

Shrinkage factor = (Density in Bank state) / (Density in Compacted state)

= 2181 kg/Bm3 / 2653 kg/Cm3

= 0.821

Shrinkage (%) = (1 - Shrinkage factor) × 100

= (1 - 0.821) × 100

= 17.9%

B. Productivity of Loader in Bm3/Hr.

 
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Net Loader capacity = Loader capacity × Bucket fill factor

= 6.5 Lm3 × 0.9

= 5.85 Lm3

Loader cycle time in hours = 30 sec / 3600 sec/hr

= 0.008333 hr

Loader productivity in Bm3/hr = Net Loader capacity x Load factor x Efficiency

Cycle time

= 5.85 Lm3× 0.848 x 0.7

0.008333 hr

= 416.87 Bm3/hr

C. Productivity of Hauler in Bm3/Hr.

Hauler capacity in Lm3 = Hauler capacity × Load factor

= 18 Lm3 × 0.848

= 15.26 Bm3

Effective cycle time = Loader cycle time + Variable Time + Fixed Time

= 30 sec + 600 sec + 60 sec

= 690 sec
3600 sec/hr

= 0.192 hr

Hauler productivity = Hauler capacity in Lm3 x efficiency

Effective cycle time

= 15.26 Bm3 x 0.8

0.192 hr

= 63.58 Bm3/hr
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D. Number of Hauler units required to balance the loader productivity @ 70%

Efficiency.

Number of Hauler units required = Loader Productivity / Hauler Productivity

= 416.87 Bm3/hr
63.58 Bm3/hr

= 6.56

Approximately 7 Hauler units are required to balance the loader productivity at

70% efficiency.

8. Given the following dozer production charts, what is the average hourly
production(LCY/hr) of a straight-blade D7(with tilt cylinder) moving hard-packed
clay an average distance of 200 feet, down a 10 percent grade, using slot dozing.
The estimated material weight is 2,500 lbs per LCY. The operator is of average
ability and will work during daylight hours. Expected efficiency is 50 minutes per
hours.

A) How much time will it take to move 3,000LCY of hard packed clay, using one D7
dozer using the production rate figured out above?
B) How many D7 dozer would be required to move 3000 LCY of clay in 7 hours?

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SOLUTION

Step 1: Find the Ideal maximum dozer production rate.

Using production charts = 300 LCY

Step 2: Find the different correction factors for less than ideal conditions.

 Material – weight Correction Factor

CF = (2,300lbs/LCY )/( 2,500 lbs/LCY) =0.92
 Operator correction factor- use table provided =0.75

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 Material – Type Correction Factor- use table provided = 0.8

 Operating technique Correction Factor- use table provided = 1.2
 Visibility Correction Factor- use table provided = 1.0
 Efficiency Factor- 50 working minutes per hour / 60 minute working hour = 0.83
 Machine transmission factor- use table provided = 1.0
 Blade adjustment factor- use table provided = 1.0
 Grade Correction Factor- use chart/graph provided = 1.15

Step 3: Determine total Correction Factor

1.15 x 0.92 x 0.8 x 0.75 x 0.83 x 1.2 = 0.632

Step 4: Determine Production

Multiple Step 3 by Step 1

= 300LCY x .63 = 190 LCY

A) How much time will it take to move 3,000LCY of hard packed clay, using one D7
dozer using the production rate figured out above?

Total time (hours) = Q / (P x N)

= 3,000 LCY / (190 LCY x 1 dozer)

= 16 hours

B) How many D7 dozers would be required to move 3000 LCY of clay in 7 hours?

Total number of dozers = Q / (P x T)

= 3,000 LCY/( 190 LCY per hour x 7 hours)
= 2.25

NB : Total number of dozers = 2.25 by rounding the number up the total number of
dozer is 3(three)

9) Given the following information on a shovel/truck operation,

 Shovel production at 100% efficiency =371 BCY/h (283 BCM/h) .

 Job efficiency=0.75 
 Truck capacity =20 BCY (15.3 BCM) 
 Truck cycle time, excluding loading = 0.5 h

A) Calculate the number of trucks theoretically required and the production of this
combination.
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B) Calculate the expected production if two trucks are removed from the fleet.

SOLUTION

A) Calculate the number of trucks theoretically required and the production of this
combination.

Actual Shovel Production = Shovel Production at 100% efficiency * Job efficiency

= 371 BCY/h* 1 * 0.75

= 278.25 BCY/h

Next, we determine the truck loading time.

Truck Loading Time = Truck Capacity / Actual Shovel Production

= 20 BCY / 278.25 BCY/h

= 0.0719 h

Now, we add truck loading time to the truck cycle time.

total Truck Cycle Time = Truck Cycle Time (Excluding Loading) + Truck Loading Time

= 0.5 h + 0.0719 h

= 0.5719 h

Now we can calculate the required number of trucks.

Number of Trucks = Actual Shovel Production * Total Truck Cycle Time / Truck Capacity

= 278.25 BCY/h * 0.5719 h / 20 BCY

= 7.96

NB : Since we cannot have a fraction of a truck, we round up to the nearest whole

number: Number of Trucks ≈ 8

Production of this combination = Actual Shovel Production * Job Efficiency

= 278.25 BCY/h * 0.75

= 208.69 BCY/h

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B. Calculate the expected production if two trucks are removed from the fleet

If we remove two trucks from the fleet, there will be 6 trucks remaining.

New_cycle_time = Actual Shovel Production * Total Truck Cycle Time

(Truck Capacity * Number of Trucks Remaining)

= (278.25 BCY/h) * (0.5719 h)

(20 BCY * 6)

= 0.4136 h

Now we calculate the new production rate.

New Production = Actual Shovel Production * New Cycle Time

Total Truck Cycle Time

= 278.25 BCY/h * 0.4136 h

0.5719 h

= 201.87 BCY/h

10) Determine the probable cost per hour of a CAT 928G Wheel Loader with
145 HP capacity and with a delivered price of Birr 2.8 million. The following
conditions should be considered while establishing the hourly rental rate.

Table-1 General Conditions to be considered

Hours used per year, 2000 hr. Registration fee per two years, 3,000 Birr
Estimated salvage value, 10% of the initial The loader is to operate in Average
price condition
Cost of tires per set, 180,000 Birr Operator basic salary, 6,000 birr per month
Life of tire, 4000 hrs. Working days in a month, 26 days
Repair cost of tires, 15% of the depreciation Working hours per day, 8 hrs.
of tires
Fuel consumption per hour, 13 lt Hourly indexed rate for operator, 1.35
Cost of fuel, 20.13 Birr Insurance charge, 1% Overhead cost, 15% of the direct cost
of the initial price.
Bank Interest rate, 8.5% Profit 15% of the equipment break even
cost
Income tax, 30 % of the gross profit

Table-2 Service Cost Assumption

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Equipment Type Cost Consideration

1 Plants 33% of the fuel cost of the Diesel Engine

2 Crawler Dozer & Scrapers 30% of the fuel cost

3 Loaders, Excavators & 25% of the fuel cost
4 Asphalt distributor, Pavers & kettles kettles 25% of the fuel cost
5 Rollers & Trucks 20% of the fuel cost
6 Compressor, Gen. Sets, Mixer, etc 14% of the fuel cost
7 Non fuel consuming equipment 10% of the depreciation cost

Table-3 Repair Cost Assumption: Typical Life Time Repair Cost (% of Depreciation cost)
Type of Equipment Operating condition
Favourable Average Severe
Loader:- Track 85 90 105
Wheel 50 60 75
Motor Grader 45 50 55
Scraper 85 90 105
Tractor: -Crawler 85 90 95
Wheel
50 60 75

SOLUTION

1. Ownership Cost:

a. Depreciation Cost (Initial price - Salvage value) / (Useful life * Hours used per year)

= (2,800,000 - 280,000) / (5 * 2000)

= 2,520,000 / 10,000

= 252 Birr per Hour

b. Interest Cost: (Initial Price + Salvage Value) * 0.5 * Bank Interest Rate

= (2,800,000 + 280,000) * 0.5 * 0.085

= 131,940

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and plant management

Interest Cost per hour = 131,940 / (2000 * 5)

= 13.19 Birr per Hour

c. Insurance Cost: Initial Price * Insurance Charge / Total Life Hours

= 2,800,000 * 0.01 / 10,000

= 2800 / 10,000

= 0.28 Birr per Hour

d. Registration Cost: (Registration fee per two years / Hours per two years)

= 3000 / (2000)

= 1.5 Birr Per Hour

 Total Ownership Cost = 252 + 13.19 + 0.28 + 1.5

= 267.17 Birr per Hour

2. Operating Cost:

a. Tire Cost: (Cost of tires per set / Life of tire) + (Repair cost of tires *
Depreciation of tires)

= (180,000 / 4000) + (0.15 * 45)

= 45 + 6.75

= 51.75 Birr per Hour

b. Fuel Cost: Fuel consumption per hour * Cost of fuel

= 13 * 20.13

= 261.69 Birr per Hour

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and plant management

c. Service Cost: Fuel cost * Operating Cost Factor for Loaders

= 261.69 * 0.25

= 65.42 Birr per Hour

d. Hourly indexed rate for operater = operator salery per hour

= (6,000 Birr per month / (26 days * 8 hrs) *1. 35

= (6,000 / 208) * 1.35

= 36.92 Birr per Hour

e. Registration fee:
Registration fee per hour = Registration fee per two years / (Useful life * Hours used per
year)

= 3,000 / (5 * 2000)

= 0.3 Birr pre hour

f. Insurance cost:

Insurance cost = 1% of Initial price

= 1% of 2,800,000

= 28,000 Birr/2000hour

= 14 Birr per hour

Total Operating Cost = 51.75 + 261.69 + 65.42 + 36.92 + 0.3 +14

= 429.78 Birr per Hour

3. Overhead Cost: = Direct cost * Overhead cost percentage

= (267.17 + 429.78) * 0.15

= 696.95 * 0.15

= 104.54 Birr per Hour

4. Break Even Cost: = Ownership Cost + Operating Cost + Overhead Cost

= 267.17 + 436.03 + 104.54

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and plant management

= 807.74 Birr per Hour

5. Profit: = Break Even Cost * Profit percentage

= 807.74 * 0.15

= 121.16 Birr per Hour

6. Tax:= Profit * Income tax

= 121.16 * 0.3

= 36.35 Birr per Hour

7. Final Hourly Rental Rate:= Break Even Cost + Profit + Tax

= 807.74 + 121.16 + 36.35

= 962.75 Birr per Hour

Therefore, the probable cost per hour of a CAT 928G Wheel Loader with 145 HP
capacity and with a delivered price of Birr 2.8 million is approximately 962.75 Birr
per Hour.

NB : Note that the calculations use a standard format and the rules and regulations
mentioned.

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