Comparative Analysis of Methodologies for Calculating the Economic Life of Construction Equipment

Abstract

The most profitable period of owning and operating a machine is during its economic life. To find the “sweet spot”, i.e. the time in the life cycle of the machine where owning and operating costs reach the minimum point, is a complicated task. It is evident that, in order to conclude with the best decision of either to keep or replace piece of equipment, repair-related cost information is indispensable, as it reflects machine’s DNA. Construction companies are currently facing an imbalance between the huge amount of owning and operating and maintenance (O&M) data that they have and the lack of solid organizational structures in order to make the best use of this knowledge. Thus, there is a dynamic that remains unused. This research highlights the advantages and disadvantages of methodologies for calculating the economic life of construction equipment and proposes a conceptual model that determines the replacement period using owning and O&M costs. © 2020, Springer Nature Singapore Pte Ltd.