T here a re a nu mber of met hod s
that can be used to calculate the
1 calculations. Depreciation of assets
P L A N N I N G A N D P R E PA R AT I O N O F W O R K S
BUILDING RURAL ROADS
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Materials
Materials are a major cost item on
depreciation costs of equipment. The
chosen method is often dictated by
external factors and the purpose of the
forms an essential part of company
accounting and tax authorities will have
clear rules on how this is carried out.
When attempting to estimate the real
costs of the use of equipment, it may be
necessary to use different models.
Interest
Interest on equipment investments
is essentially the opportunity cost of
investing in equipment rather than
placing the money in an interest
accruing account. This may sound
r a t he r t he or e t ic a l, how e ve r, i n
equipment leasing schemes this item
appears as a real cost, in the form of the
charges for the leasing services.
Repairs and Maintenance Costs
Regular repair and maintenance is
necessary in order to secure a decent
availability rate and performance
from the equipment. The repair costs
will increase over time. Eventually
these repairs become so frequent
and expensive that it is no longer
worthwhile keeping the equipment.
This time is referred to as the end of
the useful life of the equipment.
The equipment will need regular supply
of fuel and lubricants. Finally, it is
common practice to include the costs of
employing a driver for the equipment as
part of the total equipment costs.
building works, including structures in
road works projects. The main material
items in relation to road works are the
inputs used for concrete and masonry
structures, such as cement, reinforcement
steel a nd a g greg ate. In add it ion,
materials costs occur in a significant
manner when the road is provided with
a bitumen-based pavement.
The amount of materials required is
calculated from the technical drawings.
Volumes of concrete are obtained
from the physical dimensions of the
structures. Reinforcement steel can
be summed up from the structural
designs. The proportions of cement
and aggregate in the concrete provide
the necessary basis for calculating the
amount of each ingredient. Similarly,
the prescribed composition of the
pavements will indicate the volumes of
bitumen and aggregate.
When assembling prices on materials it
is important to clarify whether the rates
given include the costs of transport to
site. Building materials are heavy and
bulky and therefore the costs of delivery
may be significant.
Equally, the estimates need to include
costs of form works and scaffolding.
Finally, it is important to factor in
a certain amount of spillage in the
material quantities.
When estimating material costs, it may
also be necessary to consider possible
price increases of materials and wages
during the course of the contract. Some