CONSTRUCTION EQUIPMENT HOURLY RATES REFERENCES

ASSUMPTIONS AND METHODOLOGY

The following are average rental rates for tools and construction equipment. Rental rate Includes an allowance for hourly operating costs for fuel, oil, lubrication and maintenance (FOLM). “Machine Operator” costs are not included.

The average rental rates calculated in this database are based on the folowing assumptions:

1. The use of factors and reference ratios provided by contractors is the main way used to obtain equipment rental rates, through statistically obtained ratios that have worked properly in the past;
2. These factors, when applied to current list rate, win suggest amounts necessary to recover the total investment in equipment; and
3. These factors can be applied equally to all makes and models within an equipment class and size category, provided that the equipment is in average condition and working in non-severe job conditions.
4. The costs listed for each item assume average Working conditions and are to be used as guidelines only. When job conditions are significantly different from averege conditions, users may want to adjust the costs shown by applying adjustment formulas.

This database does not attempt to measure or describe the technical or performance characteristics of specific models made by specific manufacturers. Instead, It shows houly costs that are derived from average cost factors applied to a machine's most recent list price.
Whereas a manufacturer may rightly claim the advantages of Its products, this database should not be used to substantiate such claims.

Key Concepts & Definitions

1. Cost Recovery Rate: The amount an equipment owner should charge in order to recover equipment-related ownership and operating costs. These rates are derived from cost formulas and factors developed from field research and from analytic methods used in the construction industry.
2. Standby Rates: Standby refers to the period during which equipment is assigned to a job and available for work, but is not put into operation until needed. Under certain circumstances contractors may be entitled to payments for their equipment on standby. These payments are meant to reimburse the contractor for fixed costs such as depreciation, cost of facilities capital (CFC), and indirect equipment costs. No industry standard exists for the computation of standby rates. US judicial courts have recognized standby rates as 50% of the ownership rate, and most state DOT's have adopted the courts formula.
3. Internal Charge Rates: Rates that are calculated to determine hourly ownership costs and hourly operating costs for purposes of internal billing, bid preparation, or cost accounting.
4. Ownership Rates: The cost to own an asset per month, week, day, and hour. The ownership costs of depreciation, indirect costs, cost of facilities capital, and major overhaul are annualized and then
   adjusted to reflect the average annual working season to obtain a monthly ownership rate, from which weekly, daily, and hourly rates are determined.
5. Operating Rates: The cost to operate an asset per hour. These costs include labor and parts for routine, daily servicing of the equipment, operating expendables, fuel, lubricants, tires, and ground engaging components. The hourly operating rate assumes the equipment is in good operating condition and does not include operator's wage.