Optimum Equipment Life by Minimum Life‐Cycle Costs
Publication: Journal of Construction Engineering and Management
Volume 110, Issue 2
Abstract
A minimum cost equipment replacement model based on the present worth of discounted‐cash‐flow is presented. The model uses arithmetic and geometric gradients to project the expected life cycle costs of the existing machine plus future replacements to an infinite horizon and then discounts them back to present value. Trial life spans of the existing unit, plus future replacement units, are then ranged until the combination which yields the minimum present value of total costs is determined. The general methodology is reviewed and its application illustrated with a sample problem.
Get full access to this article
View all available purchase options and get full access to this article.
References
1.
J. Collier, C. A., and Ledbetter, W. B., Engineering Cost Analysis, Harper & Row, Publishers, New York, N.Y., 1982.
2.
Douglas, J., Construction Equipment Policy, McGraw‐Hill Book Company, New York, N.Y., 1975.
3.
Nunnally, S. W., Managing Construction Equipment, Prentice Hall, Inc., Englewood Cliffs, N.J., 1977.
4.
Shexnayder, C. J., Jr., and Hancher, D. E., “Contractor Equipment‐Management Practices,” Journal of the Construction Engineering Division, ASCE, Dec., 1981, pp. 619–626.
5.
Schexnayder, C. J., Jr., and Hancher, D. E., “Inflation and Equipment Replacement Economics,” Journal of the Construction Engineering Division, ASCE, June, 1982, pp. 289–298.
6.
Terborgh, G., Business Investment Policy, Machinery and Allied Products Institute and Council for Technological Advancement, Washington, D.C., 1958.
7.
Velauthampillai, P., “Construction Equipment Downtime Costs,” Journal of the Construction Engineering Division, ASCE, Dec., 1980, pp. 604–608.
Information & Authors
Information
Published In
Journal of Construction Engineering and Management
Volume 110 • Issue 2 • March 1984
Pages: 248 - 265
Copyright
Copyright © 1984 ASCE.
History
Published online: Mar 1, 1984
Published in print: Mar 1984
Authors
Metrics & Citations
Metrics
Citations
Download citation
If you have the appropriate software installed, you can download article citation data to the citation manager of your choice. Simply select your manager software from the list below and click Download.