Abstract
Depreciation expenses represent a significant part of total expenses of construction machinery. Precise calculation of depreciation expenses is often difficult or impossible. Straight line method of depreciation, which is commonly used in the calculation of ownership costs of construction machinery, does not give accurate results. This paper analyzes methods of depreciation expenses calculation, as well as their impact on the overall expanses of construction machinery and the impact on the cost per unit of material processed.
Highlights
In order to achieve successful management of a construction company and each of the construction projects it is essential to have an adequate approach to estimating and control of the expenses related to construction machinery
The calculations are simple, and the calculations of the depreciation rates do not depend on the type of machine or location where the machine will be sold
In the middle of the work life of a machine there is no significant differences between depreciation expenses calculated by the two methods, at that moment there is the biggest difference between the residual value calculated using SOY and Straight Line methods
Summary
In order to achieve successful management of a construction company and each of the construction projects it is essential to have an adequate approach to estimating and control of the expenses related to construction machinery. Expenses of work hour increase during the lifetime of construction machinery This process continues until the moment it is economically more viable to sell than to continue using the machine. This moment is considered as the end of the economic life time of the machine which can be much shorter than the physically possible life time i.e. the period in which a machine can perform its duties. This period can be increased by appropriate and regular maintenance and service
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