Equipment wear and tear/depreciation

First if this is wrong section for this question I apologize. Don’t post much here, mostly just read…

Short version of my question. Have the opportunity for a really big clearing project . 1000 acres give or take . I’ve done this kind of work , on smaller scale for a long time . All for myself though, not as a business. I’ve got older high hour equipment, that I use until something fails, then fix it and eventually get back to work .

I’ve leased equipment before, but always get killed for this scratch here, that dent there ect

so my question is this … how do you folks that do this for a living figure real cost of ownership? Obviously cost of machine, fuel ect. But factor in west and tear? Undercarriage new is great, but 5k hours not so great…. Is there a rule of thumb? Example, if you’re running a Deere 750 add $20/hr for future repairs.

hope this question makes sense, and to be more specific, really only interested in dozers and large excavators . For reference I own a Deere 700h and linkbelt 330

1000 acres ... ?!?! ... That's kind of a big job ... Like, national or regional sized contractor putting 9 D8's on.
You will be on that for 5 years running solo with two machines.

But if you want cost of ownership, check out monthly rental rates. Monthly rate, divide by 160 and you have a starting hourly cost.

Technically it’s just underbrushing
I can do about 4 acres a day with what I’ve got .
Rented a komatsu d65 a while back and avg 11 a day

I started with wore out equipment, always something needed repair .

just trying to figure out lease and pay damages, or buy low hour used then sell a little banged up when done . Already know time/fuel consumption per acre . Just don’t know how to figured normal wear when starting from new

What you are describing is usually figured from new prices and done over a specified amount of operating hours. Depreciation has multiple ways to figure it:
Tax wise it is straight line to write off usually based on some government regulation and formulae.
Market wise, it is tracking markets to see what comparable machines to yours are selling for. You would compare asking prices and auction sales to machines with similar hours, machine configurations and types of operations against your machine to give you some ball park idea of your machine's possible sale value.
Operation wise, you track your maintenance and repair costs over time and boil those costs into your production output to put together a cost benefit study for information on if that machine is making money for you or not. Using the cost to rent a similar machine for a period of time will help you make projections on the machine you own and operate. Rentals and leases do have the component of profit added into those costs, so your actual numbers would likely be less.

All this is pretty complicated stuff and why you should work with an accountant once in awhile to put these numbers together and come up with an over all financial view of your operation.

How much is a new UC for a 700H in your area including R&R?
How many hours can you get in your soil and working conditions on an UC?
That will give you an idea of your UC costs per hour.

Soil conditions, operating environment and operator all play a big role in determining a piece of irons operating cost above fuel, insurance and purchase/finance cost.

For example we had a project in Alabama chert rock that ate a set of D6N XL pads in less than 500 hours. We were putting on new teeth every 3 days on the two hoes we had on that project. The chert was heavy at 128 PCF with a good quartz rock and clay mix. Dump a load from a truck, blade it with a 953 and it would hit 98% on the first nuke test.

On the flip side our 325FL's 30" and 48" buckets are running teeth we put on them over a year ago. The soil conditions make a big difference.

A year or two ago we put a total new UC on our 953C for the tune of around $22K. At the time of install the machine had 5000 hours on it. So roughly $4 and change per hour on it but we did a couple of pad replacements, a bushing turn and a couple of sprocket segments along the way that also factor in the equation.

BTW - just because you are clearing with a machine doesn't mean it has to be damaged. Accidents happen but we've cleared many acres and tore down 1,000's of SF of buildings with only the occasional dent or scrape along the way.

Mr Jon C . That’s exactly what I’m trying to do is give info to accountant and let him tell me what makes more sense financially. But I can’t , because I don’t have an accurate figure for west and tear starting from a new machine . I’ve always started with high hour, replace worn stuff as you go . Example, put new chains on a while back. 6800ish hours . I couldn’t tell you if it was original set, or the 3rd set that had been on . Same with rollers idlers ect …

Sorry I posted a response multiple times….

I realize every job is different. Scope and conditions. I guess I was looking for just a general ballpark answer . I figured folks that own/operate for a living had some rule of thumb. Example , take cost of machine and add 10% for maintenance/repair over 5 years of real world use

I’ve put 4500 hours on the Deere, and about 2200 on the linkbelt in last 5 years. That’s pretty minimal for some of y’all I’m sure, but for a guy that does it on weekends that’s a good bit I think

Have 3 years to get it done . Pays more if done faster. Can be done fairly easily, just have to stay after it . In the end the only real difference is cost of machine use so just trying to figure it out . Appreciate the input so far

I was in the land clearing business full time/part time? for over 15 years. Except for the stump grinding part of this work, I always found it better to lease the equipment instead of own it. There are so many variables to equipment wear in land clearing, or so it seems. I would always take out their loose and damage waiver, instead of getting my own insurance. It always paid off, as damage is going to happen somewhere along the line. I guess I figured the rental places knew what their repair costs were, and could do the work inhouse. I , on the other hand, would learn repair costs the hard way, and would likely need help on large repair jobs, from them, or some other outside mechanic. I was lucky maybe, that my major clients was willing to work with me on a cost plus basis. So, whatever rental costs were, I just added a $ amount to that and figured my expenses that way. If you are using a forestry mulcher, rental is the only way to go for sure. I could talk all day about the high repair costs associated with those. However, even dozers, excavators, and skid steers will take a beating when clearing land.

What is the job worth? Some quick *rough* figuring; You say 11 acres a day with a D6 class machine. I round down to 10, that's 800 hours to clear 1000 acres. That is 20 40 hour work weeks; 5 months. What does a D6 rent for? $8,000 a month? That's $40,000 in equipment costs. Now you pay the operator for 800 hours, maybe 25-30k?
What is fuel burn on that? 8-10 gallon an hour? At current prices that's getting close to $400 a day. That's 40k in fuel. So we have $110,000 in costs. Add 30% profit and we are at $143,000. Last year I could hire a D6 for $150/hr with operator. ($120,000 for 800 hrs) But fuel costs have doubled since then.
A D6 you buy for 40k probably needs 20 or 30k in work. I am just spitballing numbers, I don't work with this class of job or equipment, but the point is the same. If this is a one off job then just rent the machine and leave the risks with the rental company. If you are trying to build a landclearing outfit, then use this job to buy the machine . . .

You aren’t starting from new so let’s start from what you have. How many hours do you have on each of your machines you are going to use? What is the model year of each?

I’ve put about 4500 hrs on the Deere
700h 06 model

2200ish on the link belt
330lx 08 model

Started with a 450g and an old poclain hoe. Dont remember the model . Put a several hundred hours on both

may not be entirely accurate, I’ve got an old friend that helped roll burn pile ect occasionally

the money Ive saved over the years doing it myself, vs hiring done for the bids I’ve gotten far exceeded cost of all the machines plus repair cost for all the work I’ve done

Acoals said:

What is the job worth? Some quick *rough* figuring; You say 11 acres a day with a D6 class machine. I round down to 10, that's 800 hours to clear 1000 acres. That is 20 40 hour work weeks; 5 months. What does a D6 rent for? $8,000 a month? That's $40,000 in equipment costs. Now you pay the operator for 800 hours, maybe 25-30k?
What is fuel burn on that? 8-10 gallon an hour? At current prices that's getting close to $400 a day. That's 40k in fuel. So we have $110,000 in costs. Add 30% profit and we are at $143,000. Last year I could hire a D6 for $150/hr with operator. ($120,000 for 800 hrs) But fuel costs have doubled since then.
A D6 you buy for 40k probably needs 20 or 30k in work. I am just spitballing numbers, I don't work with this class of job or equipment, but the point is the same. If this is a one off job then just rent the machine and leave the risks with the rental company. If you are trying to build a landclearing outfit, then use this job to buy the machine . . .

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Acoals said:

What is the job worth? Some quick *rough* figuring; You say 11 acres a day with a D6 class machine. I round down to 10, that's 800 hours to clear 1000 acres. That is 20 40 hour work weeks; 5 months. What does a D6 rent for? $8,000 a month? That's $40,000 in equipment costs. Now you pay the operator for 800 hours, maybe 25-30k?
What is fuel burn on that? 8-10 gallon an hour? At current prices that's getting close to $400 a day. That's 40k in fuel. So we have $110,000 in costs. Add 30% profit and we are at $143,000. Last year I could hire a D6 for $150/hr with operator. ($120,000 for 800 hrs) But fuel costs have doubled since then.
A D6 you buy for 40k probably needs 20 or 30k in work. I am just spitballing numbers, I don't work with this class of job or equipment, but the point is the same. If this is a one off job then just rent the machine and leave the risks with the rental company. If you are trying to build a landclearing outfit, then use this job to buy the machine . . .

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this is what I’m trying to figure out . For example, my current machine I bought for 40k . I’ve put 15k into it over the years . I’ve got several folks bugging me to buy it for more than I paid for it . Well aware we’re living in strange times, so maybe an anomaly. But essentially if I sell it, I used it for 2200 hrs, for 15k. If it got stolen tomorrow, I’m still way ahead of hiring somebody. My finish work is nowhere near what a real operator does . But I’ve gotten decent at clearing and the planning/adjusting on the fly based on how it’s going . Just trying to apply this logic on much larger scale

Also I may have misunderstood the question you were asking about hours …
Deere has 7200ish frame hours
Link belt 8200ish

neither one is in good enough shape for that kind of job I don’t think
hope one of those answers the question you were asking . Wasn’t trying to be difficult. Honestly asking for expert advice. I’ve worked for myself for years . I understand business, depreciation ect . But this is a unique business opportunity that I don’t fully understand all aspects of from an equipment consumption standpoint . So looking to learn more from experienced folks if possible

Midwayretriever said:

I’ve put about 4500 hrs on the Deere
700h 06 model

2200ish on the link belt
330lx 08 model

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Are those total operating hours or just what you have put on the machines? The dozer is sixteen years old and the excavator is fourteen years old? You are running into a time issue on hose and O ring failures. Are all the major components original? I'll run some ball parks on the excavator first. Hydraulic pumps on most excavators with factory scheduled maintenance is usually in the twelve to fifteen thousand hour range. The Isuzu engine is about the same or a little more. Undercarriages on excavators from new will run a set of chains into the five to seven thousand hour range and then new chains and sprockets can be installed keeping the old rollers, pads and maybe the idlers. That is the big costs that you are looking at and a time line. Get some ball parks for your situation and run it by your accountant.

The dozer is more problematic. Undercarriage life is about 3,500 to 4K hours. Figure it from where you are now. Maybe get someone out to measure it and give you a percentage worn spec. Engines can last into the 10K range on factory type maintenance. Lots of things can go wrong so budget your engine replacement at about 7,500 hours. I believe your machine has a hydrostatic drive train that is electronically controlled. You should budget a dozen visits from a dealer to fix electronic issues and if the pumps and motors start to give you troubles, figure a replacement machine in the 8K hour range. Get your estimates for a motor, undercarriage and dealer service calls. You will have to put in an inflation factor which will be a guess at this point. Your accountant will help you with that.

Keep in mind these are budget figures only. You are only putting a plan together so that you can bill properly in order to cover those costs if they happen. If they don't happen that way, you have more money in your pocket.

I appreciate the replies so far

I can’t speak to total hrs on machines working vs sitting idle . My hours are all working hours with vary rare exception of sitting waiting on dump truck

understand what you’re getting at with hose failures ect . I’ve fought that for a long time. This job is big enough and pays enough to lease a machine /hire real operator to help and still make a considerable amount of money . If I lease I have no choice to hire help because of time constraints with lease

if I were to buy new/low hour used there’s no time constraints for the machine . And don’t have to hire help . So there’s a very large difference in profit

maybe this is better way to ask the question I’m getting at … will use rough numbers
I go buy a Deere 850 or cat d6 . I spend 250k on a machine that has under 1k hours . I put and additional 1k hours on the machine over the next 2 years . Assuming normal wear and tear and nothing catastrophic, what kind of resale could a guy expect? Is there really not some kind of formula y’all use when buying /selling/repairing ? Or are the wear pattern/and failure points just so different that you can’t have a ballpark figure ?

I appreciate all the input either way , and again, I’m not trying to be difficult, just trying to understand how real dirt guys figure all this

You do not have a time constraint, so why don't you start with the equipment you have? If it breaks badly, then look for a replacement.

As you know, equipment prices are stupid high now. A big risk would be used equipment prices crater between the time you buy and when you finish the job.

While I'm not screaming recession, this economy has one foot in the grave, and the other on a banana peel. I am not making any purchases that I don't already have covered with cash. My guess is the land is owned by a single individual. When you buy equipment for the job, you are buying into both the customers economic survival and physical survival.

These are all legitimate points
1. Time constraints: have 3 yrs to do it that’s a long time in theory . The property is very remote . Closest spot to get a hose made is about hour and half . So even minor breakdown kills a day . I work full time so this is all done on the side so to speak . Svc trucks are nonexistent. I know one guy . He’s great, but usually a month out , from when he gets the call . Then you run into a parts issue . So considering what the job will pay, and the extra payout , it’s worth starting with a newish dozer . The hoe won’t be used heavily, mostly for stacking burn piles so can probably get by with it



understand and viability of one client . I work in a very specialized job, with very wealthy clients . I’ve got a working relationship with this family from that job . He’s seen what I’ve done over the years to my properties, and he wants the same done to theirs . It’s a little more in depth than just clear it and turn it into pasture . He wants me to turn a thicket into a golf course so to speak

he doesn’t have the time or vision to supervise this . If he just hires existing contractors, he may or may not get what he wants in the end , and he not willing to risk it .

he will front money for rental, or purchase . The amount spent ties to profit, paid out in stages . Again pretty unique . I’m the end there will be about 70k difference in my pocket on top of the deal, depending on which route we go . That’s a lot of money left on the table …

ETA… I’ve paid 2 seperate attorneys to review the contract for all this . Both have said it’s very airtight as far as me being protected . I have a client/good friend that does foundation drilling/road construction. He read over it and said he wished he got deals like that .

I have a used car that runs and gets me where I want to go. It has a moderate amount of miles on the odometer of which I put the last 40,000 miles on it. How much is it going to be worth in two years?

No one has a crystal ball to give you a pat answer. You can only speak in generalities and then choose to take or not take the risk.

Yes sir that’s a good example . All I’m looking for is general answer , if possible. When we swap our work trucks at 200k miles, they’ll generate be worth 40% of what we paid . Different slightly truck to truck, but it good rule of thumb .

if this can’t be done that way with equipment, somebody feel free to tell me it can’t . I’m just here to learn from folks that do it full time . Thank you again for all the replies

Is this a commute job, or will you leave the equipment on site and drive home? And spend the weekend there or commute?
Those costs over 3 years will add up, how much of the theoretical $70K will go into that? And when stuff breaks, which it will, will that ruin a weekend or 3? And who will fix the broken, you on site or transport from back of beyond to wherever to get it fixed?
Joe H