CEC Construction Equipment Costs & Ownership

Question 1

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

Accepted Answer

Straight-line depreciation

Answer

Sum-of-years-digits depreciation

Answer

Double declining balance depreciation

Answer

Unit-of-production depreciation

Question 2

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

Accepted Answer

Depreciation, interest, taxes, and insurance

Answer

Fuel consumption and operator wages

Answer

Maintenance and repair costs only

Answer

Rental market rates in the project region

Question 3

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

Accepted Answer

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

Answer

The period covered by the manufacturer's warranty

Answer

The time until the machine requires a major overhaul

Answer

The maximum physical lifespan before total mechanical failure

Question 4

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

Accepted Answer

Fuel and lubricants

Answer

Insurance premiums

Answer

Depreciation

Answer

Interest on investment

Question 5

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

Accepted Answer

Ownership depreciation and capital cost

Answer

Operator labor costs

Answer

Fuel costs

Answer

Transportation to the job site

Question 6

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

Accepted Answer

Adjust historical equipment costs to current price levels

Answer

Determine the resale value of used equipment

Answer

Compare equipment rental rates between vendors

Answer

Calculate fuel surcharges for heavy machinery

Question 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?

Accepted Answer

$45,000

Answer

$50,000

Answer

$55,000

Answer

$500,000