constr material management NCP23_24.doc

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Course No.: NCP 24/25

Course title: Materials and Equipment Management

Assignment No.: Three

ASSIGNMENT ON

MATERIALS AND EQUIPMENT MANAGEMENT

By

Dattatray Kashinath Shelake

Student Registration No. 28-01-11-4727-292

NATIONAL INSTITUTE OF CONSTRUCTION MANAGEMENT AND

RESEARCH

Pune

(2008)


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Table of Contents

1 INTRODUCTION.................................................................................................1

2 TASK 1.................................................................................................................22.1 OUTPUT CALCULATION......................................................................................22.1.1 LOADER of Caterpillar (434E Backhoe Loader)..............................................2

2.1.2 LOADER of JCB (MINI CX 4x4)......................................................................32.1.3 SCRAPER...........................................................................................................3

2.2 COST CALCULATION............................................................................................5

2.2.1 LOADER............................................................................................................5

2.2.2 SCRAPER...........................................................................................................6

3 TASK 2................................................................................................................83.1 COST CALCULATION..........................................................................................10

4 TASK 3...............................................................................................................12

5 TASK 4...............................................................................................................135.1 EOQ Analysis..........................................................................................................135.2 COST CALCULATION..........................................................................................14

6 ASSUMPTIONS.................................................................................................157 REFERENCES..................................................................................................16a) SODE NICMAR, Lesson Book CONSTRUCTION EQUIPMENT

MANAGEMENT, NCP 25....................................................................................16b) SODE NICMAR, Lesson Book MATERIALS MANAGEMENT, NCP 24...16c) S. Seetharaman, CONSTRUCTION ENGINEERING AND

MANAGEMENT, Fourth Edition, Umesh Publications, 2007..............................16d) Caterpillar brochures and website www.CAT.com.......................................16

e) Tata Hitachi JV brochures and website www.telcon.co.in...........................16f) http:\\mizopwd.nic.in Schedule of Rates of Mizoram state.........................16g) www.cbec.gov.in (website for central excise duty)........................................16h) Charles Atkinson, Inventory Management Review.....................................16i) Chris Hendrickson, PROJECT MANAGEMENT FOR CONSTRUCTION

Department of Civil and Environmental Engineering, Carnegie Mellon University,Pittsburgh, Version 2.1, Summer, 2003................................................................16


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1 INTRODUCTION

A new international airport is to be constructed 30km away from the city.

Project is to be implemented in phases. Phase I is constructions of one strip of

landing of 100m width. This phase is to be completed in 100 days. The main task

comprises of subtasks as follows:

1. Cutting and dozing of 100000 cum of earth of average height 0.75m

2. Transportation of 20000 cum of surplus earth from site to a dumping place

3 km away from site. Spreading is to be done on dumping site. 80000 cum

of earth is to be filled in the landing strip.

3. 3000cum of sand is to spread and leveled on site. Sand is to be brought

from a distance of 20km.

4. 150000 liters of bitumen is to be procured from refinery at Bongaigaon

Assam.

The work is to be completed in 100 days. The bitumen laying is to be

started from 60th day of starting of work. Hence we have only 59 days for

earthwork. Also sand is to be spread and leveled. Assume that task 3 will be

completed in one day, i.e. spreading of sand with 2 days required for supply of

sand. Sand supply and spreading will have one day of simultaneous working.

Total days required for task 3 will be 2 days. Also, filling of earth in landing strip

will take 6 days. So we have 50 days in hand. We aim the earthwork to be

completed in 47 days, considering breakdown and maintenance and other

unforeseen risks. The excavation, i.e. task 1 should be completed in 47 days.

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Also we will consider 8 hrs shift for working, because if 12 hours shift is

considered then maintenance and breakdown will increase. Hence to reduce that

we consider only 8 hrs shift.

2 TASK 1

The average height to be excavated is 0.75m. Thus, we can say that

heavy excavators like power shovel, backhoe and dragline are not necessary.

Further we assume that the soil stratum is only soft to hard soil and no rock

strata will be encountered.

Thus, we can say that we have three options for equipments to be used.

1. Loader of Caterpillar (434E Backhoe Loader)

2. Loader of JCB (MINI CX 4x4)

3. Motorized Scrapper of Caterpillar (621G Wheel tractor Scraper)

2.1 OUTPUT CALCULATION

2.1.1 LOADER of Caterpillar (434E Backhoe Loader)

Consider Loader of Caterpillar Backhoe loader 434E as one option.

Capacity of loader bucket is 1.15 cum. The time cycle of loader to dig and load is

5min approximately. Also the depth of digging of loader is 229mm. For 0.75m of

height we require 4 passes of digging.

We can say that the loader is loading 1.15cum of earth in 5min. Thus output of

loader per hour is 13.8cum. Total no. of days for working will be 47days.

No. of hours for working = 47 x 8 = 376 hrs.

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Output of loader per 47 days = 13.8 x 376 = 5188.8 cum

No. of loaders required = 100000/5188.8 = 19.3

We require 20 loaders for completing the required task.

2.1.2 LOADER of JCB (MINI CX 4x4)

Consider loader of JCB- MINI CX 4x4 as one option. Capacity of loader

bucket is 0.25 cum. The time cycle of loader to dig and load is 2.5min

approximately. Also the depth of digging of loader is 2540mm. Average digging

depth is 0.75m.

We can say that the loader is loading 0.25cum of earth in 2.5min. Thus output of

loader per hour is 6 cum. Total no. of days for working will be 47days.

No. of hours for working = 47 x 8 = 376 hrs.

Output of loader per 47 days = 6 x 376 = 2256 cum

No. of loaders required = 100000/2256 = 44.3

We require 45 JCB loaders for completing the required task

2.1.3 SCRAPER

Consider scraper of Caterpillar (621G Wheel tractor Scraper) as

another option. Width of cut is 3023mm. Heaped capacity is 17 cum. Maximum

depth of cut is 333mm. Consider 300mm depth to be excavated in one pass of

scraper. Hence 3 no. of passes of motorized scraper is required. Assume speed

of scraper as:

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Forward speed (kmph) Reverse speed (kmph)

5 8.9

7.6 8.9

10.9 8.9

For 3023mm width and 17 cum capacity, length of one pass of scraper will be

5.6m. Then time required by scraper will be as follows:

Forward (hrs) Reverse (hrs)

0.0056/5=0.00112 0.0056/8.9= 0.00063

0.0056/7.6= 0.00074 0.0056/8.9= 0.000630.0056/10.9=0.0005

Total time required for 4 passes of scraper in the 5.6m pass will be 0.00362 hrs.

Considering 4 passes of 300mm thickness of digging, total depth of digging will

be 0.75m. Hence, total area of digging is 100000cum/0.75m = 133333 sqm.

Consider operation factor as 50/60. Consider 300m travel to dumping site and

0.25hrs for dumping. With speed of 8.9 kmph, scraper will take 0.283 hrs for

disposal. Thus total time cycle will be 0.287hrs

Hence, area covered for 4 passes = 3.023 x (50/60) x 5.6 = 14.107 sqm in

0.2873 hrs. Hence output per hr = 49.1 sqm

No. of hours for working available are 376 hours (i.e. 47 days and 8 hrs per day).

Hence output of one scraper per 47 days = 376 x 49.1 = 18462 sqm

Hence no. of graders required = 133333/ 18462 = 7.22

Hence 8 motor scrapers are required for the work.

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2.2 COST CALCULATION

20 Loaders of Caterpillar are required and 45 loaders of JCB are required. If

loader is to be considered, it is better to go for Caterpillar loader to avoid

unnecessary confusion due to huge no. of equipments on site.

2.2.1 LOADER

Assume initial expenditure of loader Rs. 2100000. Salvage value 10% and

inflation rate 7%. Assume 7 years life of loader and 2920 hours per year of

working. As per Plant and Machinery committee, 1974, 50% depreciation for first

40% of life and 40% depreciation for remaining 60% of life is considered for

calculating depreciation. 40% life is 2.8 yrs and 60% life is 4.2 yrs. Loader is

already used for 3 yrs.

End of

year

Rate of

depreciation

Depreciation

during the year

Book value at

the year end

0 - - 2100000.00

1 375000.00 375000.00 1725000.002 375000.00 375000.00 1350000.00

2.8 150000.00 150000.00 1200000.00

3 120000.00 120000.00 1080000.00

Total = 7455000.00

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Component of cost

Details Hourly Cost (Rs)

Owning Cost

Capital cost Rs. 2100000 -

Useful life (7 yrs) 20440 hours

Depreciation per hour 120000 / 2920 41.10

Equipment

Avg investment cost per yr 7455000 / 7

1065000.00

Investment cost per hour 1065000x 0.15/2920 54.71

(Taking 15% interest rate)

Operation Cost

Notional value 2100000x (1+4x0.07)= 2688000

Hourly repair cost of equipm 2688000*.3 / 2920 276.16

Fuel and operator charges/ hr

@ 0.01 % of machine char 2100000 x 0.0001 210.00

Loader

Cost of loader for owner = Rs. 581.97 /-

Cost for using it = Rs. 527.26. Hence for digging work cost is Rs. 527.26 per

hour. Total 20 loaders are required.

Hence total cost of digging is Rs. 3964995.2/-

2.2.2 SCRAPER

Assume initial expenditure of scraper Rs. 5700000. Salvage value 10%

and inflation rate 7%. Assume 5 years life of scraper and 2920 hours per year of



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calculating depreciation. 40% life is 2 yrs and 60% life is 3 yrs. Scraper is already

used for 4 yrs.

End of

year

Rate of

depreciation

Depreciation

during the year

Book value at

the year end

0 - - 5700000.00

1 1425000.00 1425000.00 4275000.00

2 1425000.00 1425000.00 2850000.00

3 380000.00 380000.00 2470000.00

4 456000.00 456000.00 2014000.00

Total = 17309000.00

Component of cost


Owning Cost



Depreciation per hour 456000 / 2920 156.16

Equipment


3461800.00

Investment cost per hour 3461800x 0.15/2920 177.83


Operation Cost

Notional value 5700000x (1+4x0.07)

= 7296000



@ 0.01 % of machine char 5700000 x 0.0001 570.00

Scraper

Cost of scraper for owner = Rs. 1653.58 /-

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Cost for using it = Rs. 1475.75/-. Hence for digging work cost is Rs. 1475.75/- per

hour. Total 8 scrapers are used.

Hence total cost of digging is Rs. 4439056/-

Comparing loader and scraper, loader of Caterpillar seems to be more

economical. The next economical alternative will be scraper as compared to JCB

mini loader.

3 TASK 2

Task 2 is transportation of 20000 cum of surplus earth from site to

dumping place 3 km away from site. Also 80000 cum of earth is to be spread in

landing strip. Let us consider dump trucks for transporting 20000 cum of surplus

earth.

One truck capacity is 14.15 cum with travel speed 40 kmph. The lead distance is

3 km. Hence time taken for travel is

3 / 40 = 0.075 hrs

Loading time 45 min and unloading time 15min. Hence total time required is

Time cycle of dump truck = 1.075hrs

Assume 10 days required for this work. This work will be carried out

simultaneously with excavation. Hence, 20000 cum of earth to be transported in

10 days, i.e. 2000 cum per day.

Qty per day = Qty per 8 hrs = 2000 cum

Qty per hour = 250 cum.

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Output of dump truck per hour = 13.163 cum

No. of trucks required = 250 / 13.163 = 18.99

Hence we require 20 dump trucks for this part of work. For spreading of

earth at dumping site, motor grader will be used with only one pass (with

5.5kmph speed). Then output of grader per hour will be 16764 cum. Hence

spreading of earth at dumping site will be completed in 1.19hrs by one motor

grader. Output calculation of motor grader is mentioned below.

Let us consider motor grader for spreading of 80000 cum of earth in

landing strip. Suppose Tata Motor Grader TG 14 is to be used. Blade size

3658mm x 620mm x 25mm. Consider 150mm thickness to be graded in one

pass of grader. Assume 4 no. of passes of motor grader is required. Assume

speed of grader as:

Forward speed (kmph) Reverse speed (kmph)

5.23 5.58.07 13.08

12.41 28.78

18.74

Let us consider 1km pass to be covered. Then time required by grader will be as

follows:

Forward (hrs) Reverse (hrs)

1/5.23=0.191 1/5.5= 0.1818

1/8.07= 0.124 1/13.08= 0.076

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1/12.41=0.0806 1/28.78= 0.0347

1/18.74=0.0534

Total time required for 4 passes of grader in the 1km pass will be 0.7415 hrs.

Considering 4 passes of 150mm thickness of spreading, total depth of spreading

will be 0.6m. Hence, total area of spreading is 133333 sqm. Consider operation

factor as 50/60.

Hence, area covered for 4 passes = 3.658 x (50/60) x 1000 = 3048 sqm in

0.7415 hrs. Hence output per hr = 4111 sqm

No. of hours for working available are 48 hours (i.e. 6 days and 8 hrs per day).

Hence output of one grader per 6 days = 48 x 4111 = 197330 sqm

Hence no. of graders required = 133333/ 197330 = 0.676

Hence one motor grader is sufficient for the work.

Hours reqd for one grader to complete the work = 133333/4111 = 32hrs

Thus we can say that 4 days are required for completion. But considering risk of

breakdown and maintenance and unforeseen factors, we take 6 days.


Assume initial expenditure of grader Rs. 2337000. Salvage value 10% and

inflation rate 7%. Assume 7 years life of grader and 2920 hours per year of



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calculating depreciation. 40% life is 2.8 yrs and 60% life is 4.2 yrs. The grader is

already used for 3 years.

End of

year

Rate of

depreciation

Depreciation

during the year

Book value at

the year end

0 - - 2337000.00

1 417321.43 417321.43 1919678.57

2 417321.43 417321.43 1502357.14

2.8 166928.57 166928.57 1335428.57

3 133542.86 133542.86 1201885.71

Total = 8296350.00

Component of cost


Owning Cost



Depreciation per hour 133542.86 / 2920 45.73

Equipment


1185192.86

Investment cost per hour 1185192.86x 0.15/2920 60.88


Operation Cost

Notional value 2337000x (1+4x0.07)

= 2991360



@ 0.01 % of machine char 2337000 x 0.0001 233.70

Motor Grader

Cost of motor grader for owner = Rs. 647.65 /-

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Cost for using it = Rs. 586.77. Hence for spreading work cost is Rs. 586.77 per

hour.

Hence total cost of spreading is Rs. 28164.74/-

4 TASK 3

Task 3 is transporting of 3000 cum of sand from 20km and spreading and

leveling at site. Assume two days for this job. Assume dump truck of 5 brass

capacity i.e. 14.15 cum. Speed of truck is 40 kmph. Time required for travel =

20/40 = 0.5hrs.

Time cycle of truck = 1.5hrs.

Output of truck per hour = 14.15/1.5 = 9.43 cum.

Hence output for 16 hrs (2 x 8hrs) = 150.93 cum.

No. of trucks required = 3000 / 150.93 = 19.8

Hence, 20 trucks will be required. After completion of transportation of 20000

cum of surplus earth, those 20 trucks will be used to bring 3000 cum of sand to

the site.

Now one motor grader will be used t spread and level the sand on site.

Only 2 passes of motor grader will be required for this job.

Forward speed as 5.5kmph and 13.08kmph and reverse as 8.07kmph. Time

required for 1km distance with two passes is 0.3818 hrs.

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O/p per hour = 7984.11 cum. Hence, time required for spreading and leveling of

sand on site will be 0.4 hrs. Say within two hrs spreading and leveling of sand will

be completed.

5 TASK 4

Task 4 is procurement of 150000 litres of bitumen from Refinery at

Bongaigaon (Bongaigaon Refinery and Petrochemicals Limited) in Assam. The

lead time is 45 days. Storage facility at site is 50000 litres tank. The rates of

bitumen are assumed to be Rs. 23000/- per MT. The density of Bitumen of grade

80/100 is assumed to be 0.89 kg/ltr. Thus total qty of bitumen needed is 133500

kg. Hence 133.5MT of bitumen is to be ordered. Further we assume that the

inventory carrying cost of material is 15% of material cost per year. Storage

capacity at site is 44.5 MT. Hence order quantity should not exceed 44.5 MT.

5.1 EOQ Analysis

Now let us work out the Economic Order Quantity of Bitumen.

Duration of work is 30 days from 60 th day of starting work. Assume 200 working

days in a year. Hence if 150000 litres required for 30 days then for one year

quantity of bitumen needed is 1000000 litres (i.e. 890000 MT).

Hence total cost for one year = 890000 x 23000 = Rs. 204700 lacs

Hence inventory carrying cost per yr = 15 % of Rs. 204700 lacs

= Rs. 30705 lacs

Order cost will include 9% freight charges and 16 % Central Excise duty and 3 %

education cess. Consider 3% CST with availability of C Form.

EOQ = sqrt( 2AS/H)

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A = Annual qty required = 890000

S = Cost per order = (100+16+.03x16+9)x0.03 + (100+16+0.03x16+9) 100) %

of Rs 204700 lacs

Hence S = 29.24% of Rs. 204700 lacs = Rs. 59863.30 lacs

H = Inventory carrying cost = Rs. 30705 lacs.

EOQ = 1862.88 MT

Hence for our work EOQ = 279 MT. But total requirement is 133 MT. But storage

capacity is 44.5 MT. Hence order quantity will be 44.5 MT.


Order quantity = 44.5 MT

Cost per order qty(Rs) 1023500.00

Central Excise Duty@

16.48 %168672.80

Freight charges @ 9% of

Ex factory rates92115.00

Sub total 12842878.80

CST @ 3% with C Form 38528.63

Total cost per order 1322816.43

Total three orders are to be placed. Hence total cost of bitumen will be

Rs. 3968449.30 /-

Order should be placed on 14th day of start of work. But considering that 45 days

lead time is huge. If risk factor is considered, then order should be placed on the

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day of starting of work i.e. once we get the Letter of Indent order should be

placed. Second order should be placed on 10 th day of starting of work. Last order

should be placed on 20th day of starting of work. It is acceptable to allow bitumen

to stay idle in bitumen tanker than to fall short to demand. Timely completion of

project should be taken care of.

6 ASSUMPTIONS

Assume dump truck for carrying earth to be of size 5 brass, i.e. 14.15

cum. Assume truck speed 40 kmph and loading time 45 min and unloading time

15 min. Assume Motor Grader cost Rs. 2337000/- and scraper Rs. 5700000/-

and loader Rs. 2100000/-

As per inventory control review management, the inventory control cost is

15 to 35% of cost of material. As per SOR of Mizoram, bitumen 80/100 rate is

Rs. 23000/- per MT. We assume same rate at Bongaigaon as Ex Factory rate.

As per present rules, Central Excise Duty is 16% with 3% Education tax. CST is

3% with C Form and 4% without C Form. The Freight charges for supply from

Assam are assumed to be 9% of material cost. Density of Bitumen is 0.87-0.89

kg/ltr. We assume 0.89 kg/ltr.

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7 REFERENCES

a) SODE NICMAR, Lesson Book CONSTRUCTION EQUIPMENT

MANAGEMENT, NCP 25.

b) SODE NICMAR, Lesson Book MATERIALS MANAGEMENT, NCP 24

c) S. Seetharaman, CONSTRUCTION ENGINEERING AND

MANAGEMENT, Fourth Edition, Umesh Publications, 2007.

d) Caterpillar brochures and website www.CAT.com

e) Tata Hitachi JV brochures and website www.telcon.co.in

f) http:\\mizopwd.nic.in Schedule of Rates of Mizoram state

g) www.cbec.gov.in (website for central excise duty)

h) Charles Atkinson, Inventory Management Review.

i) Chris Hendrickson, PROJECT MANAGEMENT FOR CONSTRUCTION

Department of Civil and Environmental Engineering, Carnegie Mellon

University, Pittsburgh, Version 2.1, Summer, 2003

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