step 5 truck fleet costs ©dr. b. c. paul 2000 revised 2008 note – this presentation includes...
TRANSCRIPT
Step 5 Truck Fleet Costs
©Dr. B. C. Paul 2000 Revised 2008Note – This presentation includes screen shots from the Caterpillar
Performance Handbook, Catapillar’s FPC Program, Western Mine Cost Service Costing Manuals, the U.S. Bureau of Labor Statistics Web
Site, and other materials and spreadsheets compiled by the Author
Truck Production Costs
Divided into Ownership and Operating Costs
Ownership includes• Annualized Investment Costs• Taxes and Insurance• Tax advantages
Operating Costs are Incurred as Vehicle performs service
Operating Costs
Fuel Tires Lubricants Repair Operators
Setting Costs In FPC
Use the HourlyCost Button
On Fleet Input Tab
Sub Menu Divides Owning and Operating Cost
Using Menu Requires a lot of side calculations
Latest Editions of Cat HandbookHas removed cost estimatingSections. Have to revert toEarlier issues (which we haveOnline)
Lets Go for Fuel First
Getting Fuel Consumption Rates
Info from 29th Ed Cat Handbook
Our Conditions are Medium
Our truck isA 785
We getAbout25 gallons/hr
We assumed$3.8/gal.25*$3.8=$95/hr
Input Our Fuel Cost
Lets go for the LubeFilter, Oil and Grease
Lube Oil Grease Filter
One alternative is anList of tables – QuickEstimator Table is faster
This one is from CatHandbook 25th Edition(More recent Editions Missing)
For a Cat 785 we get$1.89 for parts $0.61 for labor
Updating lube costs over double $3.5Assumed try $4Labor up about 20% try $0.73
Enter the Lube/Filter/Grease
Cat tends to be a littleLowTerex rule of thumb wasHigh and 10% of fuel
Undercarriage is a dozerOr tracked machineThing – 0 here
Repair Reserve Next
Vehicle Life Impacts Repair Costs
Cat 785 will last 40,000 to60,000 hours
Under Average ConditionsAbout 50,000
Table from Cat Handbook29th Edition (online)
Repair Reserve Tables
Repair costs jumpBeyond 40,000Hours
With life in the50,000 hour rangeWe anticipate1.5 times listed cost
$13*1.5 = $19.50
A Defect of FPC
Poor Handling of the Time Value of Money• Operating costs going up dramatically
• Last 20,000 hours bring an average over 60,000 up to 1.5 times base rate
FPC averages costs over time with no regard to where they occur in cash flow.
Inserting More Info
Lets go after the tiresNext.
Need to Get Tire Life
Where most tires wear outBut some cut is zone B
An average is 3,000 hours
If retread cost is about 1.5Times normal tire andLife is about 1.75
Cat Handbook does notGive a cost.
Western Mine Cost Service Has Books of Costs
Including Tires in theSupply section
This resource isAvailable online forStudents or bySubscription fee forCommercial users.
Find Our 150 Ton Cat 785
Lists about $16,000
(Book notes these areManufactures list and 15-25%Discount is common – tiresHowever, have almostDoubled in price)
I’m trying $30,000
A Calculation of Tire Cost
6 tires * $30,000 each is $180,000 Because of heating considerations
I’m not retreading• $180,000 / 3,000 hours = 60/hour
Adding into FPC
Now Lets Go forOperator
Western Mine Cost Service Has Labor Surveys
Production TruckDrivers gettingAbout $15.6
Another Source Is the US Bureau of Labor Statistics
Note that I can pullPay and Benefit byArea and Occupation
Industries Are Listed By NAICS Code Numbers
Find the Best Match
Looks like mineMachine operatorsIn quarries average$15.9 /hr
Comment on Estimating
In addition to books, manuals and internet sources
Remember the Buddy Network Excerpts from Trade Journals Your Companies Own Historical Cost
Records Local Union Contracts or State Wage
Scales Vendor Quotes
Cooking Our Estimate
We have $15.6 from Western Mine Cost and $15.9 from BLS• I’ll try $15.75
There are other costs• Unemployment, workers comp, social
security, vacation, health etc.• You can calculate specifically or use rule of
thumb estimating• 40-60% burden• I’ll go at low end for quarry
1.4 * $15.75 = $22.05
Input and Switch to Ownership
Hmm – Looks likeIt costs about$179/hr to run.
One of My First Issues in How Long it Will Last
Input My Knowns
I already scheduled1800 hrs per yearWith 85% availabilityIn my example
I also know the truck should last about 50,000 hours
At 1,530 hours per year that about 32 years
Getting My Truck Cost
Looks like I’ll beAbout $1,600,000For my Cat 785
Using WesternMine CostService
Price and Tires
Most Prices are Quoted at theFactory – Your have freightAnd assembly (I added a littleExtra as you saw)
Tires are a wear item so oftenThey are deducted from the priceTo avoid double counting
The Issue of Taxes and Insurance
Rule of thumb is that Tax and InsuranceAre about 5% (2.5% each) ofAverage Annual Investment(I wish they would call it average annual value)As vehicles values go down so does tax on insurance
Average value of calculation is
(N+1)/2N * Cost where N is life
Substitute and crank
33/64*$1,600,000 = $825,000 * 0.025 = $20,625
Griping About FPC
FPC does not handle time value of money
Taxes and Insurance are high in the early years and low in the late years• A mathematical average does not
show what this can do when investors are looking for a return on money
The Interest Problem
If money is borrowed most of the interest comes early• I’ll show a method for getting time
value of money into it even if FPC tries to ignore it.
From Engineering Economics Get the Interest Rate Comparison
Spreadsheet
Standard Fixed Period Compound Interest Loan
9 Interest Rate1 Number of Compounding Periods/Year
0.09 Period interest rate (as a decimal)1 Number of Payments/Year
0.09 Payment Interest Rate (as a decimal)10 Years for Loan Payoff
1600000 Loan Amount0 Down Payment Required0 Set Up Fees0 Set Up Fees Rolled into Loan0 Points Up Front 0 Points Cost0 Points Rolled into Loan 0 Points Cost
249312.1 Initial Guess for Payment
249312.1 Payment Amount249312.8 Final Payment Amount893121.7 Interest Paid
0 Fees Paid
Put in that I borrowMoney at 9% over10 years to pay forThe Truck
The Spreadsheet Gives a Yearly History of Interest
Payments
Period Debt Interest Payment Principal1 1600000 144000 249312.1 105312.12 1494688 134521.9 249312.1 114790.23 1379898 124190.8 249312.1 125121.34 1254776 112929.9 249312.1 136382.25 1118394 100655.5 249312.1 148656.66 969737.6 87276.38 249312.1 162035.77 807701.8 72693.17 249312.1 176618.98 631082.9 56797.46 249312.1 192514.69 438568.3 39471.14 249312.1 209841
10 228727.3 20585.46 249312.8 228727.311 0 0 0 012 0 0 0 0
Use Excels Copy functionAnd copy the interestColumn and paste it intoClass Assistant(Another EngineeringEconomics Spreadsheet)
Paste My Interest Cash Flow Into the Cash Flow Analyzer
in Class Assistant
Get the Total Life Cycle Cost of the Interest
A typical mine looksFor 15% rate of return
The truck goes intoAlmost immediateService – time zero
Lasts for 32 years
An equivalent streamOf interest over 32Years is $79,378
Plug it Into FPC
I could have doneThe total lifeCycle cost trick toThe InsuranceAnd Property TaxToo
At this point I know it costs me$107.85/hr to own the truck
When I Click Ok on the Subscreen I Know Have Total Hourly Cost for My
Truck
See! There it is!
That Was For My Fleet 2
Since I have Fleet 1
And Fleet 3
I can switch to thoseFleets and just typeIn my known hourlyCost for a Cat 785There.
Now I need to do thisFor Loaders!