Evaluating Capital Equipment Cost

June 13, 2018
When deciding which piece of equipment is right for your application, consider capital cost, maintenance cost, repair cost and wear costs, as well as the production requirements and the revenue and profits associated with each product to help determine which machine will fit your needs.

Many operators are facing situations where they have piles of unwanted materials that they are looking to reduce into concrete and asphalt aggregates without creating a high level of fines. Others are looking for ways to take similar piles and create a well-graded fines output. A discussion of which tool or tools are the right selection for any installation cannot be complete without a resolution of the actual production requirements and the associated revenue and profits per product. Before we can assume any progress in the proper equipment selection, we must decide what needs to be produced and in what quantity.

Production requirements can be expressed in many ways: tons per hour, tons per year or just tons. Production requirements must relate to something to have meaning. Once sales quantities have been determined, the production requirements can be established.

Be cautious of just dividing your production requirements by the number of hours. This will result in an average production, but may not coincide with the timing of requirement. There also may seasonal issues where certain products will move at a faster or slower pace than the average for the year. While this may all seem elementary, this is a necessary step that will also help in determining the right machine for the market requirements.

 There are many factors involved in an acquisition strategy. Consider the following two applications:

  • Limestone: A tertiary application to handle 150 tph of 2” x ½” material to produce a quality ½” output material with a minimal amount of 4 mesh minus.
  • Gravel: A tertiary application to handle 100 tph of 1” x 3/8” material to produce a graded and fractured 3/8” output material with a fair quantity of 4 mesh minus.

Capital Costs

Evaluating Capital Equipment Costs McLanahan Cone Crusher

A simple rule of thumb is this: When looking at sized machines for the same application, a cone crusher will cost three times the price of the vertical shaft impactor. That is just for the machine and does not include any structure or auxiliary equipment. Used machines, rental and availability of the machinery will affect the final acquisition cost.

Specifically for the limestone application, consider a 300-hp cone crusher or a medium-sized VSI with 300 hp. In round numbers, the VSI would cost $130,000, while the cone would come in at $350,000. With these numbers, it is not quite the 3:1 rule of thumb, but it comes close.

For the gravel application, consider a 200-hp cone crusher at a price of $300,000 versus a smaller VSI at a price of $90,000. Again, it is close to that 3:1 ratio.

Wear Costs

Almost everyone will agree that the wear costs of a cone crusher will be less than the VSI. The question is, how much less? This is where it truly becomes application and site specific. It is also a great reason to have your material tested before making your final crusher choice.

In an ideal world, we would bring in a cone crusher and a VSI and measure all of the parameters and costs before making the choice, but that is not always practical. It is then that we have to make some assumptions based on experience within the site and using information gathered from similar sites. Experience can be a great assistant when we start to estimate the wear costs.

For the limestone application, we estimated a wear life of four months on a set of shoes within the VSI while estimating a cone liner life of two years. Your experience most likely will be different from these numbers, but since they are actual numbers for a specific application, they can be used for the comparison.

The costs of the parts to be installed combined with the labor costs to install them totals wear costs of $0.01/ton for the cone and $0.05/ton for the VSI.

Again, these costs are the parts and labor against the tons produced over a 10-year period. These costs do not put any dollars in for the downtime.

In comparison, for the gravel application we estimated a wear life of two months on a set of rotor tips (in this more abrasive application, we would use an autogenous rotor rather than the open shoe table) while estimating four months on a set of cone liners. In this case, the cone calculates out at $0.09/ton and the VSI at $0.15/ton.

Maintenance Costs

These costs account for the time and materials for the regular maintenance items like oil changes, fluid levels, drive belt inspections and other regular events. This xcludes repair and wear costs. Assuming 2,000-hour years, the costs were estimated for five and 10 years using predictability software. The cone crusher predicts a maintenance cost of $0.003/ton for both five and 10 years. The VSI, meanwhile, shows a maintenance cost of $0.0026/ton for five and 10 years.

Repair Costs

This area includes all of the repair costs associated with each crusher. This is also the area where there can be great variability. Type of application, severity of duty and general operating conditions are just a few of the factors that are hard to program into any predictability software. The software uses an estimated life expectancy of the components of each machine. This is the average life expectancy of the component.

Also included is the labor to remove and install the parts, plus any machining those parts will require. If there is rebuild capability, it is factored in as well.

Another great variable in this type of software is the number of hours the equipment is to be run. If we end the hours right before a significant repair event (such as a bearing or bushing replacement), the cost per ton will be significantly less than if we end the hours just after a significant repair event.

While not enough data exists to document the exact cost differences between the two application examples we are using, the key is that the data is being analyzed the same for the cone and the VSI. It will allow us to predict the basic differences in repair costs over five- and 10-year periods for the cone versus the VSI. Individual applications would require further analysis.

The costs were estimated at 10,000 and 20,000 hours, again using the predictability software. For the cone crusher, repair is $0.06/ton for the first five years and $0.09/ton over the first 10 years. The VSI, meanwhile, reports a repair cost of $0.053/ton for the first five years and $0.078/ton for the first 10 years. Remember also that the software does not include the cost of downtime. So while there may be more instances of repair for the VSI over the cone crusher, the cost associated with each event is not as significant.

Keep this in mind as you continue the thought process of how we decide the right tool for each application. Start with the best sales forecast and revenue dollars available to you. Investigate the various options. Test and verify whatever conclusions you make. Utilize the experience that is available within your company, as well as external sources. Challenge numbers and claims that seem too good to be true.

The numbers will change depending on the material, the application and the duty. The process used, though, will be the same. Many times, a possible solution is discounted too quickly without a simple investigation of the facts and figures.

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