8/13/2019 Ncp 24

1/16

ASSIGNMENT

PGPCM-SODE

Module 11

NCP 24/25

CONSTRUCTION MATERIALS MANAGEMENT

CONSTRUCTION EQUIPMENT MANAGEMENT

SUBMITTED BY:

AJEET SINGH

REG. NO.: 213-03-11-11416-2153

SODE-PGPCM

8/13/2019 Ncp 24

2/16

ASSiGNMENT

NICMAR/CODE Office

Name AJEET SINGH

Reg. No.213-03-11-11416-2153

(PGPCM)

Course No. NCP 24/25

Course TitleCONSTRUCTION MATERIALS MANAGEMENT

CONSTRUCTION EQUIPMENT MANAGEMENT

Assignment No.

Date of Dispatch

Last Date of Receipt

ASSIGNMENT

Your Company has been awarded a contract of developing and constructing a new International

Airport 30 km away from a city. You have been appointed as Planning Engineer(Materials and

Equipment). Project is to be implemented in phases. In Phase I, one strip of landing of 100 m width is

to be constructed in 100 days. Scope of work for this assignment is only as follows:

a) Cutting and Dozing of 100,000 cum of earth. Average eight 0.75 m.b) Transportation of 20.000 cum of surplus earth from site to dumping place 3 km away from

the site (including spreading). Filling of 80,000 cum in the landing strip.

c) Bringing 3000 cum of Sand from 20 km (including spreading and levelling at site)d) Procurement of 1,50,000 litres of bitumen. Duration of work 30 days from 60 th day of

starting of work. Bitumen to be obtained from refinery in Bongaingaon Assam. Lead time up

to the site is 45 days. Storage facility available at site is 50,000 litres tank.

Estimate total cost of work and your plan of

i. Equipment PlanningProcurement and Deploymentii. Ordering and replenishing of Bitumen

8/13/2019 Ncp 24

3/16

Scope of work and description of equipment considered

Scope of work

The scope of work is clearly defined in the problem. The earthwork along with compaction, including

spreading and levelling at the dumping site should be complete by 60th

day of the start of the work

so that the site may be ready for starting the work of bitumen paving. Quantities which need to be

executed are listed in tabular form :

Sl. No Item Qty Finish By

1 Cutting and dozing 100000 Cum 55th Day (approx)

2 Filling 80000 Cum 55nd Day

3 Watering 80000 Cum 56rd Day

4 Compaction in filling 80000 Cum 57th Day

5

Testing of Compaction and

rectification of problem area

Need based 59th Day

6 Dumping 20000 Cum 59 the day

7 Spreading and Levelling 20000 Cum 59th day

Following points have to be kept in mind to clearly understand the activity schedule:

Cutting and Dozing, Filling and Compaction are not series activities nor are they parallelactivities. They are staggered in such a way the todays cutting and dozing will be filled in the

same day at the required site. Watering will follow next day and compaction will follow one

day after watering. Viewed in combination this combined set of activity will take place in a 3-

day cycle.

8/13/2019 Ncp 24

4/16

No testing needs to be done for cutting and dozing activity. However, Compaction testing isrequired and if compaction is found to be not satisfactory then another round of compaction

will follow. Hence it is necessary to complete the earthwork sufficient time before of 60th

day to allow for testing and another round of compaction, if necessary.

Fallout for not adhering to the given schedule may be as follows:-

1. Delay in Pavement works will cause either undue pressure on the Paving team to completetheir works ahead of schedule or delay in the project, both of which are not desirable.

2. It will lead to the increase in storage cost of bitumen as bitumen will be procured muchahead of start of paving work and will be required to be stock for the additional delay time.

3. Increase is deployment time of earthwork machinery thus increasing the deployment costs,operational cost and depreciation cost.

4. Also, arrangement for the machinery needed for paving work will be done before the 60 thday. Any delay will require the paving machinery to remain idle for the additional time by

which the earthwork has been delayed.

Planning for the equipment

1. The average height of the area where cutting is to be carried out is 0.75 m as mentionedabove. For cutting activity generally 4 type of equipment are available Bulldozer, Shovel,

Dragline and Clamshell. Bulldozer is generally suitable for cutting and removing earth in

cuttings which is not the case with this project hence this is not suitable equipment for this

project. Dragline maybe used for cutting at or below the level of equipment hence we will

not choose this option as well. Use of clamshell is also restricted as it is most suitably used

when the cutting is involved in the vertical range. Therefore in our case, use of Shovel

8/13/2019 Ncp 24

5/16

makes the most sense. Shovels of various sizes are available. This is an airport project, which

is generally undertaken in reasonably big cities; hence we can assume that Shovels of

various bucket sizes and makes are available whether crawler mounted or tyre mounted.

The terrain is generally flat (average ht 0.75 m) but cutting and dozing along with

subsequent filling will lead to lot of loose soil accumulated on the top surface so will choose

shovel with 1 cum bucket size mounted on crawlers.

2. As far as earth moving equipment is concerned, proximity with the city can be used toarrange for dumper truck, preferably with 4-Wheel Drive due to the specific site condition as

mentioned in para (1.). These trucks will facilitate the dumping of 20000 cum of excess soil

to the site 3 km away.

3. At the dumping site, fine and precise levelling is not a high priority so any economicalspreading and levelling method can be used. In our case we will select tractor mounted

scrappers for levelling this site.

4. Dozing at the Runway site requires good finish and precision so it is better to use Bulldozer.Also the output of Bulldozer is much more than tractor mounted scrappers. Bulldozers come

in varying blade sizes and a size of 4.0 m or larger may be used on the site for uniform

levelling.

5. Watering arrangement can be done using either the tractor-mounted type sprinklers ortruck-mounted type sprinklers. We will choose Truck mounted Sprinklers because of more

output and availability near the site.

6. It may be reasonably assumed that the soil on the main site is cohesive in nature. Withcohesive soils, Sheep-foot roller is the best alternative. Also it is required to compact 3000

cum of sand supplied on the site and in this case we can arrange for one Vibratory Roller.

8/13/2019 Ncp 24

6/16

Equipment Procurement Cost

Sl no. Activity

Qty

(cum)

Total

(cum)Type of Machinery

Output per

day

(cum)

Machines

needed

Allowance for

Beakdown Etc

(%)

Number of

Machines

to be

arranged

Procurement

Method

Cost of

machine

per month

machine

(Rs)

Hiring Cost

(Rs)

E/w Sand

1 Cutting 100000 100000 Shovel 600 3.3 20 4 Hire 75000 600000

2 Dozing 100000 100000 Bulldozer 400 5.0 20 6 Hire 60000 720000

3Dumping /

Filling20000 3000 23000 Dumper trucks 100 4.6 10 6 Hire 25000 300000

4Spreading and

Levelling20000 3000 23000

Tractor mounter

Scrapper200 2.3 10 3 Hire 20000 120000

5 Watering 80000 80000Truck Mounted Water

Tanker200 8.0 20 10 Hire 25000 500000

6Compaction

Earthwork80000 80000 Sheepfoot Roller 500 3.2 20 4 Hire 40000 320000

7Compaction

Sand3000 3000 Vibratory Roller 150 0.4 20 1 Hire 40000 80000

Total (in Rs) = 2640000

Case1: OPERATIONAL COST WITH HIRED MACHINERY

8/13/2019 Ncp 24

7/16

Equipment Running Cost

Sl

noMachine

Number of

working

hours each

day

Hourly running

cost (including

consumables

etc)

(Rs)

Allowance

for idling

(%)

Maintenance

Cost per

Hour@10% of

running cost

(Rs)

Operational

cost per day

(Rs)

Operator

Wage

(Rs/day)

Allowance

for

operator

(%)

Operator

cost per

day

(Rs)

Working

days

Cost of

operation of

each

machine

No of

machines

Total

Operational

Cost

1 Shovel 6 700 20 70 910 800 20 960 60 112200 3 336600

2 Bulldozer 8 1000 20 100 1300 600 20 720 60 121200 5 606000

3Dumper

trucks12 700 10 70 840 500 10 550 60 83400 5 417000

4

Tractor

mounter

Scrapper

12 500 10 50 600 500 10 550 60 69000 3 207000

5

Truck

Mounted

Water

Tanker

8 400 0 40 440 500 10 550 60 59400 8 475200

6Sheepfoot

Roller6 1000 10 100 1200 500 20 600 60 108000 3 324000

7

Vibratory

Roller

4 1200 10 120 1440 500 20 600 60 122400 1 122400

Total (in Rs) = 2488200

Total cost of the project = Machine procurement Cost + Machine Running Cost

= 2640000 + 2488200 = Rs 51,28,200/-

8/13/2019 Ncp 24

8/16

Equipment Running Cost

Sl

noMachine

Number

of

working

hours

each day

Hourly

running cost

(icluding

consumables

etc)

(Rs)

Allowance

for idling

(%)

Maintainance

Cost per

Hour@10%

of running

cost

(Rs)

Operational

cost per

day

(Rs)

Operator

Wage

(Rs/day)

Allowance

for

operator

(%)

Operator

cost per

day

(Rs)

Hourly

depreciation

(Rs)

Depreciation

Per day

(Rs)

Working

days

Cost of

operation

of each

machine

No of

machines

Total

Operational

Cost

1 Shovel 6 700 20 70 910 800 20 960 180 1080 60 177000 3 531000

2 Bulldozer 8 1000 20 100 1300 600 20 720 150 1200 60 193200 5 966000

3Dumper

trucks12 700 10 70 840 500 10 550 60 720 60 126600 5 633000

4

Tractor

mounter

Scrapper

12 500 10 50 600 500 10 550 45 540 60 101400 3 304200

5

Truck

Mounted

Water

Tanker

8 400 0 40 440 500 10 550 60 480 60 88200 8 705600

6Sheepfoot

Roller6 1000 10 100 1200 500 20 600 200 1200 60 180000 3 540000

7Vibratory

Roller4 1200 10 120 1440 500 20 600 200 800 60 170400 1 170400

Total (in Rs) = 3850200

Hence it will be economical to work with the company owned machinery.

Case 2: OPERATIONAL COST WITH COMPANY OWNED MACHINERY

Total Cost of Machine Operations = Rs 38,50,200/-

8/13/2019 Ncp 24

9/16

Assumptions while calculating the project cost:-

a) Machine maintenance cost is 10% of Hourly Operation Cost for all type of machines.b) Allowance of break down is 20 % for important machinery such as Shovels, Dozers etc. While

10% allowance has been made for other machines.

c) No depreciation cost is applicable for hired machinery. However, machine is to bemaintained in working conditions by the company, whether hired or owned.

d) 20% provision for accounting of sick days, Leave etc has been made for operators ofimportant machines such as Shovel, Bulldozer etc

e) 10% allowance has been made for operators of other machines such as Dumper Trucks,Watering Trucks etc

f) All machinery is locally available and can be hired at competitive rates from the nearby city.g) There is no need for replacement of machinery during the project as the operations are for a

short duration of 60 days only.

h) Machinery remains idle for sole reasons of operator unavailability and site conditions and noother circumstances will lead to idling of machinery during the 60 day period.

i) Cost of testing of quality parameters and labour cost is insignificant compared to cost ofmachine procurement and running and hence these costs are not accounted for in the

calculations for arriving at the total cost of the project.

j) There are no performance incentives for completing the tasks ahead of time.k) Cost of transportation of the machinery to the site is same whether it is hired or owned.l) Cost of transportation of the machinery is very small compared to the operational cost

hence it can be neglected.

8/13/2019 Ncp 24

10/16

Material management concepts and their applicability in given examples

LEAD TIME

Lead time is the time elapsed between the raising the material demand on site and the point

of time when the material arrives on the site for consumption.

It comprises of following:-

Time taken to raise the demand by the consuming department Time taken by Materials Management Department to decide that the material is to be

purchased.

Time taken for the selection of the supplier, negotiating and fixing the price and placingthe order.

Time required by the supplier to arrange for the material Time required for the transportation and receiving the material in the storage area Time taken for inspection and testing of material if necessary. Time required by the Materials Management Department to deliver the material on site.

SAFETY LEVELOften it is seen that due to unavoidable circumstances, the replenishing of materials get

delayed than planned time. Due to this delay in replenishing of materials, the work will be

stopped for want of material if there is no provision of Safety Level. Safety Level is the

minimum level of storage which is needed to be maintained at all points of time. Materials

should be withdrawn from the safety stock only sparing and whatever debit has been taken

should be replenished at the first opportunity. Re-ordering should be done well in advance

so that by the time the inventory levels reach safety level, the replenishment has arrived.

8/13/2019 Ncp 24

11/16

EOQEOQ is the ordering quantity for which total cost of managing the inventory shall be

minimum. It is a function of ordering cost and holding cost.

ROLRe-order level is the level of stock at which order is placed such that the stock is replenished

by the time consumption of materials brings down the stock to safety level.ROL ensures that

the safety stock is used only during emergencies.

For this particular problem, EOQ will be calculated as follows:

Economic Order Quantity (Q) is given by the formula:-

Q =

Where

A = annual demand in terms of units.

Q = Lot size ordered at a time in units.

P = Price of material per unit.

H = annual inventory carrying cost in Rs. per Rupee of the inventory.

S = Ordering cost (i.e. cost of placing one order) in Rs.

Cost of bitumen = Rs. 49.50 per litre of bitumen (source: Schedule of Rates of Indian Railway2005)

8/13/2019 Ncp 24

12/16

Assumptions made are as follows:-

Excise tax = 12%, VAT = 4%, Other taxes = 3 % - each tax applicable on basic price

Cost of Transportation = 22000/- per trip per truck containing approx 10000 litres ie. Rs

2.2/litre

Cost of loading/unloading = 2% of basis cost Inventory carrying cost = 3% of the on-site price of bitumen One time ordering cost(S) = Rs. 8000/- per order.

A = 1,50,000 litres

(P) Total cost of bitumen per litre = 49.50(1+12/100+4/100+3/100) + 2.2 + 49.50*2/100

= Rs 61.10

H = 61.10*0.03/61.10 = Rs 0.03 per litre

S = Rs 8000 per order

Hence Economic order quantity will be:-

Q =

= 25586 litres , say 25000 litres

EOQ = 25000 Litres

8/13/2019 Ncp 24

13/16

Plan for Ordering and Replenishing of bitumen

Lead time = 45 days

Consumption Rate = 150000 litres in a period of 30 days = 5000 litres per day

Number of orders = 150000/25000 = 6

Procurement Schedule may be depicted in the form of chart and graph as follows:

Day Order Qty Supply Opening

Balance

Consumption Closing

Balance

0 0 0 0 0 0

5 0 0 0 0 0

10 0 0 0 0 0

15 25000 0 0 0 0

20 25000 0 0 0 0

25 25000 0 0 0 0

30 25000 0 0 0 0

35 25000 0 0 0 0

40 25000 0 0 0 0

45 0 0 0 0 0

50 0 0 0 0 0

55 0 0 0 0 0

60 0 25000 25000 0 25000

65 0 25000 50000 25000 25000

70 0 25000 50000 25000 25000

75 0 25000 50000 25000 2500080 0 25000 50000 25000 25000

85 0 25000 50000 25000 25000

90 0 0 25000 25000 0

8/13/2019 Ncp 24

14/16

Total Inventory carrying cost =

+

=

+

= 70,912.50

= Rs 71000/-approx

Cost of Bitumen = 61.10*150000

= Rs 91,65,000/-

Total Material Cost = Material Procurement Cost + Material Carrying Cost

= 91,65,000 + 71,000

= Rs 92,36,000/-

Total cost of the project

Total cost of the project = Machinery Cost + Material Cost

= 38,50,200 + 92,36,000

= Rs 1,30,86,200/-

Logistics for conveyance of bitumen to the site

Logistics for the conveyance of bitumen should be decided as per the site conditions. In this

particular case, every day the consumption of bitumen is 5000 litres which is approximately 5 T per

day. For such infrequent use of machinery, it may be economical to use on-site machinery such as

Truck based tippers already employed for earthwork.

Total Cost of the Project = Rs 1,30,86,200/-

8/13/2019 Ncp 24

15/16

Assumptions and their Basis

The rate of bitumen is taken from Schedule of Rates2005 of Indian Railway.

Ordering cost and material handling cost is based on own work experience.

The material is replenished instantaneously after the expiry of lead time. Consumption rate is uniform i.e. 5000 litres per day. There is no planning for safety stock as supply of materials is assured and consumption rate

does not change during the project.

Cost of testing of materials is negligible and hence not accounted for in the calculation.

Recommendations:

1. Cost of mobilisation of machinery should also be included in working out the project cost asgenerally it is a sizable fraction of the total cost. However, it is difficult to work it out unless

the place where the machinery is idling is specified, route details and distance chart

provided and details of octroi charges etc are made available.

2. Cost of material testing and on-site quality control/monitoring should also be accounted forin the calculations.

3. The total storage capacity has been given as 50000 cum. However, no break-up is providedto define the safety stock out of the total capacity. This data should have been provided.

4. Storage area should be such that Supply should be taken on one side and material issuedfrom opposite site. It will ensure first-in first-out consumption such that bitumen supplied

first is used first thereby preventing wastage of material on account of expiry of shelf-life.

5. Cost calculations cannot be viewed in isolation and should be linked with activity planning.Therefore, a CPM chart should be made first and project cost should also include the

allowance for possible delay in each activity.

8/13/2019 Ncp 24

16/16

Recommended Readings

a. Construction Planning: Equipment and MethodsK.L. PEUROFOYb. Construction Equipment and PlanningDr. Mahesh Vermac. IRC: Handbook on Road Construction Machinery