Practice Test Geeks(CEC) Construction Estimator Certification Practice Test
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Construction Equipment Costs & Ownership Flashcards

7 cards from real CEC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Construction Equipment Costs & Ownership flashcards as text

  1. Which method of determining equipment ownership cost accounts for the purchase price, salvage value, and useful life of a machine?

    Answer: Straight-line depreciation

    Straight-line depreciation spreads the cost evenly over the useful life by subtracting salvage value from purchase price and dividing by the number of years, making it the most common method for estimating ownership cost.

  2. The hourly ownership cost of a piece of construction equipment is primarily based on which of the following?

    Answer: Depreciation, interest, taxes, and insurance

    Hourly ownership cost is calculated from depreciation, the cost of invested capital (interest), taxes, and insurance — collectively known as DITI costs.

  3. What does the term 'economic life' of construction equipment refer to?

    Answer: The period during which it is most cost-effective to own and operate the machine

    Economic life is the period during which owning and operating the equipment is more cost-effective than replacing it; beyond this point, rising repair costs outweigh the value of continued use.

  4. An estimator calculates the 'operating cost' of a bulldozer. Which of the following is included in operating cost but NOT in ownership cost?

    Answer: Fuel and lubricants

    Fuel and lubricants are variable operating costs that only occur when the machine is running, whereas insurance, depreciation, and interest are fixed ownership costs incurred regardless of machine use.

  5. When renting equipment for a short-duration task, which cost is typically avoided compared to owning the same piece of equipment?

    Answer: Ownership depreciation and capital cost

    Renting eliminates the ownership costs of depreciation and capital investment, making it financially advantageous for short-term or infrequent equipment needs.

  6. The Contractors Equipment Cost Index (CECI) is primarily used by estimators to:

    Answer: Adjust historical equipment costs to current price levels

    The CECI adjusts historical equipment cost data to reflect current price levels, allowing estimators to update older cost figures for use in current project estimates.

  7. A crane has a purchase price of $500,000, an estimated salvage value of $50,000, and a useful life of 10 years. What is its annual straight-line depreciation?

    Answer: $45,000

    Annual straight-line depreciation = (Purchase Price − Salvage Value) ÷ Useful Life = ($500,000 − $50,000) ÷ 10 = $45,000 per year.