Intermediate Equipment Handbook
Intech Associates
capable of wreaking financial ruin. The potential economic life of heavy
equipment is typically 10 - 20 years. It may be many years before the owner
realises in which situation he/she is without a good costing system.
If a road authority operating a force account system does not realistically value
its equipment, particularly the ownership costs, it may not be able to secure
sufficient funding to replace its fleet on a sustainable basis. The result will be an
aged or scrap fleet.
Due to the initial and ongoing work involved with accurately and effectively
costing equipment, it is suggested that organisations such as contractor’s
associations, road administrations or their associations should develop costing
databases and services on behalf of their members to provide ‘benchmark’
costs.
Finally, in an emerging or developing country, any equipment purchase
involves considerable risk. Capital is relatively scarce and expensive, and
the market for imported, sophisticated, heavy equipment and its use is
limited or irregular. This equipment has been designed for high utilisation
and relatively rapid ‘payback’ in a low-cost-finance, high-labour-cost
environment. Cheaper intermediate equipment options are proven and
available. Furthermore, careful consideration should be made before
buying any equipment and the option of hiring should be evaluated if it is
available. It should be noted that equipment hire services are used widely
in developed economies as this is determined to be the most economic
solution for many small and larger enterprises for non-continuous machine
usage.
October 2012
27