Equipment Rates CEE 474 – Engineering Project Management
Corps of Engineers Tech Info • http://www.hnd.usace.army.mil/techinfo/engpubs.htm • Engineer Publications • Engineer Manuals (EM 1110-x-xxxx) • Design Guides • Engineering and Technical Instructions • Technical Manuals (TM-5-xxx)
Website • Region IV • http://www.usace.army.mil/publications/eng-pamphlets/ep1110-1-8%28vol4%29/toc.htm • All Regions (and other EP’s) • http://www.usace.army.mil/publications/eng-pamphlets/ep.htm
Required in Federal Contracts • Federal Acquisition Regulation (FAR) 31.105(d)(2)(i)(B) • (B) Predetermined schedules of construction equipment use rates (e.g., the Construction Equipment Ownership and Operating Expense Schedule, published by the U.S. Army Corps of Engineers , industry sponsored construction equipment cost guides, or commercially published schedules of construction equipment use cost) provide average ownership and operating rates for construction equipment. The allowance for operating costs may include costs for such items as fuel, filters, oil, and grease; servicing, repairs, and maintenance; and tire wear and repair. Costs of labor, mobilization, demobilization, overhead, and profit are generally not reflected in schedules, and separate consideration may be necessary.
Basis of Hourly Rates • The hourly rates shown in table 2-1 reflect catalog list prices of equipment manufactured in 2004 (3 years old). List prices for equipment manufactured in years other than 2004 have been adjusted to a 2004 price level using economic indexes. Ownership and operating expenses are computed using area factors, found in appendix B, which are specific to each region and volume. This hourly rate methodology assumes that equipment furnished to the job is in sound, workable condition. Furthermore, the methodology applies only to equipment that prime contractors or subcontractors either own or control. These hourly rates and cost factors do not represent rental charges for those in the business of renting equipment.
Link-Belt HC-238H II • Crane, Mechanical, Lattice Boom, Truck Mounted
Table 2-1 Headings • CAT: C90 is the category number and identifies it as Cranes, Mechanical, Lattice Boom, Truck Mounted (from appendix D). • ID No.: C90LB001 is the unique identification number for the above Link Belt crane. AM equals the manufacturer (see appendix H). 001 equals the numeric order of this unit of equipment within the manufacturer’s listing.
Table 2-1 Headings • MODEL: HC-238H II is the equipment model number. • EQUIPMENT DESCRIPTION: Specific information for each particular unit of equipment is described, such as “150 ton with a 260-foot boom” for the Link Belt crane. • ENGINE HORSEPOWER AND FUEL TYPE: The amount of horsepower and type of fuel used is stated for the main and carrier engines. The Link Belt crane carrier has a 430-horsepower engine, and the crane has a 207-horsepower engine. Both engines are diesel (D).
Table 2-1 Headings • VALUE (TEV): This column reflects the predetermined “equipment cost” used to compute the rates and is based on equipment purchased new in 2004. • TOTAL HOURLY RATES ($/HR): All ownership and operating expenses for the average condition are included. All cost elements, including fuel, are totaled in the AVERAGE column. The STANDBY column includes the hourly allowance for equipment on legitimate standby status (see section 2-27 for more information).
Table 2-1 Headings • ADJUSTABLE ELEMENTS: This column shows ownership elements and fuel costs used to develop the average total hourly rates so they can be adjusted as indicated in chapter 3. Operating costs may be determined by subtracting the ownership cost elements (DEPR plus FCCM) from the total hourly rate for the average condition. • CWT: The shipping weight of the equipment is stated in hundredweight.
Operating Costs • 2.22 Operating Cost Elements • The total operating cost is the sum of the following five elements: fuel, FOG, repairs, tire wear, and tire repair. • FOG – Filters, Oil, Grease
FCCM • FAR 31.205-10 -- Cost of Money. • (a) General. Cost of money-- • (1) Is an imputed cost that is not a form of interest on borrowings (see 31.205-20); • (2) Is an “incurred cost” for cost-reimbursement purposes under applicable cost-reimbursement contracts and for progress payment purposes under fixed-price contracts; and • (3) Refers to— • (i) Facilities capital cost of money (48 CFR 9904.414): and • (ii) Cost of money as an element of the cost of capital assets under construction (48 CFR 9904.417). • (b) Cost of money is allowable, provided-- • (1) It is measured, assigned, and allocated to contracts in accordance with 48 CFR 9904.414 or measured and added to the cost of capital assets under construction in accordance with 48 CFR 9904.417, as applicable; • (2) The requirements of 31.205-52, which limit the allowability of cost of money, are followed; and • (3) The estimated facilities capital cost of money is specifically identified and proposed in cost proposals relating to the contract under which the cost is to be claimed. • (c) Actual interest cost in lieu of the calculated imputed cost of money is unallowable.
FCCM (another definition) • As contractor management considers investment opportunities, they must consider the cost of capital required to make each investment and the potential return from that investment. To attract investment, the prospective return on investment generally must be higher than the cost of capital required to make the investment. Thus, the cost of capital is a real cost that effects investment decisions. Unfortunately, the cost of capital is not the same for all sources (e.g., owner's equity and long-term loans), all firms, or all periods of time. • The purpose of facilities capital cost of money criteria is to improve contractor cost measurement by providing for allocation of the cost of contractor investment in facilities to negotiated contracts. To assure uniform consideration, the criteria require use of the current Treasury-determined cost of money rate for all firms and all facility investments.
Standby Rate • 2.28 Standby Hourly Rate • The standby rate is computed by allowing the full FCCM hourly cost (based on a 40 hour workweek) plus one-half of the hourly depreciation. It is expressed as a formula, as follows: • Standby Rate/hr = (DEPR/hr x 0.50) + FCCM/hr • a. Paid standby shall not exceed 40 hours per week (7 calendar days) (based on a 40 hour workweek) per unit of equipment. Actual operating hours during a week will be credited against the 40 hours maximum standby allowance. • b. Standby costs will not be allowed during periods when the equipment would have otherwise been in idle status.