Estimating in Building Construction

64 CHAPTER EIGHT

See Figure 8.2 for the total operating cost. 

8–6 Rental Costs

If a project is a long distance from the contractor’s home
base or if the construction involves the use of equipment
that the contractor does not own and will not likely use after
the completion of this one project, the estimator should seri-
ously consider renting the equipment. In considering the
rental of equipment, the estimator must investigate the
available rental agencies for the type and condition of equip-
ment available, the costs, and the services the rental firm
provides. The estimator must be certain that all terms of
rental are understood, especially those concerning the repair
of the equipment.
Contractors tend to buy equipment even when it is
more reasonable to rent. Many rental firms have newer
equipment than a contractor might purchase. They also may
have a better maintenance program. Estimators should
check the rental firms carefully, especially when doing work
in a given locale for the first time. The price of the rental is
important, but the emphasis should be on the equipment’s
condition and service. If no reputable rental agency is avail-
able, the contractor may be forced to purchase the required
equipment.
Equipment is generally rented for a short time, and lease
agreements are arranged when that time extends to one year
or more. Rental rates are usually quoted by the month, week,
or day. These costs must be broken down into costs per hour
or per unit of work so that they may be accurately included
in the estimate and checked during construction. The rental
charge will be based on a day of eight hours (or less). If the
equipment is to be used more than eight hours per day, a
proportional charge will be added. To this must be added the
other costs of operating the equipment; usually these include
mobilization, repairs (except ordinary wear and tear), and

Total ownership cost$13.72 per equip. work hour

Total ownership cost$5.83 per hour$7.89 per hour

Total ownership costfixed costoperating cost

Lubrication cost per hour$0.26 per equip. work hour

Lubrication cost per hour($6.00$33.00)>150 hours

$16.50 per work hour$33.00

Lubrication labor2 work hours

day-to-day maintenance, as well as the costs of fuel, insur-

ance, taxes, and cleaning.

8–7 Miscellaneous Tools

Examples of miscellaneous tools are wheelbarrows, shovels,

picks, crowbars, hammers, hoses, buckets, and ropes. The

mechanics that work on the projects have their own small

tools, but the contractor will still need a supply of miscella-

neous tools and equipment. The estimator should list the

equipment required and estimate its cost. The life of this

type of equipment and tools is generally taken as an average

of one year. Loss of miscellaneous tools and equipment due

to disappearance (theft) is common, and all attempts must

be made to keep it under control.

8–8 Cost Accounting

The costs for equipment cannot come from thin air; the esti-

mator must rely heavily on equipment expense data for

future bids. Especially in heavy construction, the cost

accounting is important since the contractor has a great deal

of money invested, and the equipment costs become a large

percentage of the costs of the project. It is important that

equipment costs be constantly analyzed and kept under con-

trol. See Construction Accounting and Financial Management

by Steven J. Peterson for information on how to set up cost

accounting for equipment.

Small, miscellaneous equipment and tools are not sub-

jected to this cost control analysis and are generally charged

to each project on a flat-rate basis. The procedure for deter-

mining equipment expenses varies from contractor to con-

tractor, but the important point is that the expenses must be

determined. Generally the equipment expense is broken

down into a charge per hour or a charge per unit of work.

Field reports of equipment time must include only the time

during which the equipment is in use. When excessive idle

time occurs, estimators must check to see whether it can be

attributed to bad weather, poor working conditions, or man-

agement problems on the project. Management problems

sometimes include poor field supervision, poor equipment

maintenance, poor equipment selection, and an excessive

amount of equipment on the project.

A report on quantities of work performed is required if

a cost per unit of work is desired. Generally the work is mea-

sured on a weekly basis; sometimes the work completed is

estimated as a percentage of the total work to be performed.

This type of report must be stated in work units that are

compatible with the estimate.

8–9 Mobilization

The estimate must also include the cost of transporting all

equipment required for the project to the job and then back

again when the work is completed. Obviously, this cost will

FIGURE 8.2.Operating Costs.