Based from the example, what is the number of uses for which purchase and rental costs become even? Example:A construction company considers the purchase of a set of flying table forms to be used 110 times ona new project at a rate of 10 times per month. Further reuse of the forms on another project is uncertain, andthus the entire cost of the forms is to be charged to the current project. The forms cost $23/sf. Another optionis to rent the forms for $0.90/sf per month. Should the company buy or rent the forms?Solution:If purchased, material cost per use is given by Eq. [20.7]:$23/sf$0.21/sf110If rented, the forms are to be used 110/10 = 11 months, and material cost is$0.90/sf per month x 11 monthsCr2 == $0.09/sf110Therefore, the company should favor rental over purchase in this case.

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Engineering

Civil Engineering

Based from the example, what is the number of uses for which purchase and rental costs become even?

Fundamentals Of Construction Estimating

4th Edition

ISBN:9781337399395

Author:Pratt, David J.

Publisher:Pratt, David J.

Chapter18: Life-cycle Costing

Section: Chapter Questions

Problem 16RQ

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Concept explainers

Cost control

Cost control or management in property or project management is the process by which managers maintain costs under human resource management, assets, and capital expenditure to ensure that the project ends on a budget basis. Cost management depends on reasonable estimates and ongoing monitoring during the project. As a result, good cost control is essential for any construction business that wants to succeed.

Question

Based from the example, what is the number of uses for which purchase and rental costs become even?

Example:
A construction company considers the purchase of a set of flying table forms to be used 110 times on
a new project at a rate of 10 times per month. Further reuse of the forms on another project is uncertain, and
thus the entire cost of the forms is to be charged to the current project. The forms cost $23/sf. Another option
is to rent the forms for $0.90/sf per month. Should the company buy or rent the forms?
Solution:
If purchased, material cost per use is given by Eq. [20.7]:
$23/sf
$0.21/sf
110
If rented, the forms are to be used 110/10 = 11 months, and material cost is
$0.90/sf per month x 11 months
Cr2 =
= $0.09/sf
110
Therefore, the company should favor rental over purchase in this case.

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