EP 1110-1-8
(Vol. 2)
31 July 03
Mobilization and demobilization
Miscellaneous downtime
SECTION VI. SALVAGE VALUE
2.17
Salvage Value (SLV)
The salvage value for equipment is based on advertisements of used equipment
for sale as displayed in current engineering and construction magazines, manufacturer's
recommendations and the Green Guide Volumes I and II, Handbook of New and Used
Construction Equipment Values, Equipment Watch.
2.18
The Salvage Value Percentage
The salvage value percentage used for each type of equipment is listed in
appendix D under the heading SLV as a percentage of the equipment value. It is equal
for both average and severe conditions.
SECTION VII. OWNERSHIP COST
2.19
Ownership Elements
The ownership portion of the rate consists of allowances for depreciation
(DEPR) and facilities capital cost of money (FCCM). These two cost elements are
computed based on the TEV. Other ownership elements may be allowed (see
paragraph 2-3.d.). Total ownership rate per hour is expressed by formula, as follows:
Ownership Rate/hr = DEPR/hr + FCCM/hr
2.20
Depreciation
The straight-line method is used to compute depreciation.
a. For rubber-tired equipment, the tire cost index (TCI) must first be
established to complete the depreciation formula in the sample worksheet.
b. Hourly depreciation is calculated by dividing the "depreciable" value (TEV
less estimated salvage and tire cost) by the expected economic life of the unit of
equipment in hours. Expressed by formula, depreciation cost equals the following:
[[(TEV )(1- SLV )] - [(TCI)(Tire Cost )]]
DEPR/hr =
LIFE
Where:
TEV is the total equipment value found in table 2-1.
(1)
(2)
SLV is the salvage value from appendix D.
2-5
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