Equipment costs significantly impact construction bids. Whether using owned or rented equipment, accurate costing requires understanding ownership costs, operating expenses, productivity, and project-specific requirements.
Equipment Cost Components
Total Equipment Cost
Total Equipment Cost = Ownership/Rental + Operating + Mobilization
Where:
- Ownership/Rental = Time-based equipment charge
- Operating = Fuel, maintenance, operator
- Mobilization = Transport to/from site
Cost Categories
| Category | Components | |----------|------------| | Ownership | Depreciation, interest, insurance, taxes | | Rental | Daily/weekly/monthly rate | | Operating | Fuel, oil, repairs, maintenance | | Operator | Labor with equipment qualifications | | Mobilization | Transport, setup, demobilization |
Owned Equipment Costs
Ownership Cost Calculation
Annual Ownership Cost:
Depreciation + Interest + Insurance + Taxes = Annual Ownership
Example:
Purchase price: $300,000
Useful life: 5 years (10,000 hours)
Salvage value: $50,000
Depreciation: ($300,000 - $50,000) / 5 = $50,000/year
Interest (8% avg): $175,000 × 0.08 = $14,000/year
Insurance (2%): $300,000 × 0.02 = $6,000/year
Taxes (1%): $300,000 × 0.01 = $3,000/year
Total: $73,000/year
Hourly Ownership Rate
Annual Cost / Annual Hours = Hourly Rate
$73,000 / 2,000 hours = $36.50/hour
Operating Costs
| Component | Calculation Method | |-----------|-------------------| | Fuel | Gallons/hour × price/gallon | | Oil & lubricants | % of fuel cost (typically 15-20%) | | Repairs | % of depreciation (varies by equipment) | | Tires | Cost / expected life | | Ground engaging | Cost / expected life |
Operating Cost Example
Excavator Operating Costs: | Component | Hourly Cost | |-----------|-------------| | Fuel (6 gal/hr × $4.00) | $24.00 | | Oil & lubricants | $4.00 | | Repairs (50% of depreciation) | $12.50 | | Undercarriage | $5.00 | | Total Operating | $45.50 |
Total Owned Equipment Rate
Ownership + Operating = Total Hourly Rate
$36.50 + $45.50 = $82.00/hour (without operator)
Rental Equipment Costs
Rental Rate Structure
| Period | Typical Pricing | |--------|-----------------| | Daily | Highest per-day rate | | Weekly | ~3-4× daily rate | | Monthly | ~3-4× weekly rate |
Rental Analysis
Compare Options:
Daily rate: $450
Weekly rate: $1,500
Monthly rate: $4,000
Break-even points:
Weekly better than daily: 3.3 days
Monthly better than weekly: 2.7 weeks
Rental Inclusions
Verify what's included: | Item | Included? | |------|-----------| | Fuel | Usually no | | Insurance | Check | | Maintenance | Usually yes | | Operator | Usually no | | Delivery | Usually no | | Attachments | Check |
Rental vs. Own Analysis
Decision Factors:
| Factor | Favors Rent | Favors Own | |--------|-------------|------------| | Utilization | Low | High (>60%) | | Duration | Short-term | Long-term | | Capital | Limited | Available | | Maintenance | No capability | In-house | | Specialty | Rare use | Regular use |
Break-Even Analysis:
Monthly rental: $4,000
Monthly ownership (including operating): $3,500
Break-even utilization: 88%
If expected utilization <88%: Rent
If expected utilization >88%: Own
Operator Costs
Operator Rate Components
| Component | Description | |-----------|-------------| | Base wage | Hourly rate for qualification | | Burden | Taxes, insurance, benefits | | Premium | Equipment-specific certification |
Sample Operator Rates
| Equipment Class | Typical Rate Range | |-----------------|-------------------| | Loader operator | $35-50/hour | | Excavator operator | $38-55/hour | | Crane operator | $45-75/hour | | Specialty equipment | $50-100/hour |
Combined Equipment + Operator
Excavator Rate:
Equipment (owned): $82.00/hour
Operator (loaded): $52.00/hour
Combined: $134.00/hour
Mobilization Costs
Mobilization Components
| Component | Considerations | |-----------|---------------| | Loading | Equipment and labor | | Transport | Distance, permits | | Unloading | Site access, labor | | Setup | Assembly, testing | | Demobilization | Reverse process |
Transport Methods
| Equipment Size | Transport Method | |----------------|------------------| | Small (<20,000 lbs) | Standard flatbed | | Medium (20-50,000 lbs) | Lowboy trailer | | Large (>50,000 lbs) | Multi-axle trailer | | Oversize | Permits required |
Mobilization Cost Calculation
Mob/Demob Cost = 2 × (Loading + Transport + Unloading + Setup)
Example:
Loading time: 2 hours × $150/hr = $300
Transport: 100 miles × $8/mile = $800
Unloading: 2 hours × $150/hr = $300
Setup: 4 hours × $100/hr = $400
One-way: $1,800
Round-trip: $3,600
Productivity Factors
Equipment Production Rates
Productivity is affected by:
| Factor | Impact | |--------|--------| | Bucket/blade size | Capacity per cycle | | Cycle time | Time per operation | | Efficiency | % of available time working | | Job conditions | Site-specific factors | | Operator skill | Experience level |
Production Calculation
Production = Capacity × Cycles/Hour × Efficiency
Example (Excavator):
Bucket: 1.5 CY
Cycles/hour: 40
Efficiency: 83%
Production: 1.5 × 40 × 0.83 = 49.8 CY/hour
Efficiency Factors
| Condition | Efficiency % | |-----------|-------------| | Excellent | 90% | | Good | 83% | | Average | 75% | | Fair | 65% | | Poor | 50% |
Job Condition Adjustments
| Condition | Factor | |-----------|--------| | Easy digging | 1.10 | | Medium digging | 1.00 | | Hard digging | 0.80 | | Rock | 0.50-0.70 | | Wet conditions | 0.70-0.85 | | Confined space | 0.80-0.90 |
Fleet Considerations
Multiple Equipment Coordination
Match equipment for efficient operations:
| Operation | Equipment Match | |-----------|-----------------| | Excavation | Excavator + trucks | | Grading | Dozer + grader | | Paving | Plant + trucks + paver |
Fleet Balancing
Excavator production: 150 CY/hour
Truck capacity: 12 CY
Truck cycle: 20 minutes = 3 loads/hour
Truck production: 36 CY/hour
Trucks needed: 150 / 36 = 4.2 → 5 trucks
Small Tools and Equipment
Small Tool Allowance
For minor equipment not individually priced:
| Method | Approach | |--------|----------| | % of labor | 1-3% of direct labor | | Lump sum | Per project type | | Detailed estimate | When significant |
Consumables
Include costs for:
- Power tool accessories
- Safety equipment
- Temporary supplies
- Fuel containers
- Small parts
Equipment Estimating Best Practices
Selection Process
- Identify equipment needs from takeoff
- Determine owned vs. rental decision
- Calculate ownership/rental costs
- Add operating costs
- Include mobilization
- Apply productivity factors
Documentation Requirements
| Information | Purpose | |-------------|---------| | Equipment list | What's needed | | Duration | How long | | Rates | Unit costs | | Productivity | Production basis | | Mobilization | Transport costs |
Common Errors
| Error | Prevention | |-------|------------| | Missing mobilization | Always include | | Wrong rental period | Match actual duration | | Ignored operating costs | Add fuel, maintenance | | Operator excluded | Include with equipment | | Productivity optimism | Use realistic factors |
Equipment Cost Summary Template
| Equipment | Qty | Rate | Hours | Operating | Mob | Total | |-----------|-----|------|-------|-----------|-----|-------| | Excavator | 1 | $82 | 400 | $45.50 | $3,600 | $54,600 | | Loader | 1 | $65 | 200 | $35.00 | $2,000 | $22,000 | | Trucks | 4 | $55 | 400 | $40.00 | $4,000 | $156,000 | | Total | | | | | | $232,600 |
Related Articles
- Labor Cost Estimation for Construction Bids
- Construction Bid Cost Breakdown Structure
- How to Calculate Construction Bid Markup
Frequently Asked Questions
How do I decide between renting and owning? Compare total costs including utilization rates. Generally, rent for short-term or low utilization (<50%), own for high utilization (>70%) and regular use.
Should I include operator costs with equipment? Include operator costs somewhere in your estimate. Whether combined with equipment or in labor depends on your cost coding preferences.
How do I price specialized equipment I've never used? Get rental quotes from suppliers, research industry rates, consult with subcontractors, or use equipment cost databases.
What's a typical small tools allowance? 1-3% of direct labor cost is common. Adjust based on project type and trade mix.
How often should I update equipment rates? Review annually at minimum. Update more frequently if fuel prices or rental markets change significantly.
