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(Photography: Derzsi Elekes Andor). (photo: Derzsi Elekes Andor)
(Photography: Derzsi Elekes Andor).
01.06.2016, 15:42

Equipment Total Cost of Ownership Calculator

Industry & Regulatory News

The European Rental Association (ERA) today announces the launch of a new and free-to-use ‘calculator’ that works out the Total Cost of Ownership for equipment.

The European Rental Association (ERA) today announces the launch of a new and free-to-use ‘calculator’ that works out the Total Cost of Ownership for equipment.

The calculator, created in collaboration with the Solvay Brussels School of Economics and Management, is the first of its kind. It provides a financial calculation designed to help equipment stakeholders better assess the actual cost of equipment by working out the total economic value of the investment.

Research conducted during the tool’s development exposed an industry-wide requirement for greater transparency, particularly as many businesses experience increased scrutiny over budgets in the wake of the financial crisis. Interviews conducted with senior executives in organisations across Europe, who depend upon vital equipment to deliver their products, revealed an increased pressure to drive non-core assets out of balance sheets. Their data and experiences have been used anonymously to help shape the groundbreaking model.

The Equipment ‘Total Cost of Ownership’ (TCO) calculator delivers this transparency by re-establishing a ‘true model’ for total cost of ownership with all the direct and non direct costs clearly visible. It provides a level of cost analysis not previously available publically, on a simplified and user-friendly interface. As an option, the calculator offers a completely unbiased view of buy versus rental analysis; to help equipment stakeholders draw comparisons and make informed decisions.

It is available in a website, Android and Apple App version, for user-friendly remote access. All data generated by using the Calculator will be owned and stored by the user. ERA does not store such data, and has no access to such data – the calculator has been created purely as an industry aid to drive great operational and environmental efficiencies.

Michel Petitjean, Secretary-General of the ERA, said:

Michel Petitjean, Secretary-General of the ERA.
Michel Petitjean, Secretary-General of the ERA. © European Rental Association
“Working with a team at the Solvay Brussels School of Economics and Management, we set out to reach a comprehensive and objective analysis of the total cost of equipment ownership. This groundbreaking tool is powered by one of the most sophisticated calculation models and can be applied to most compact and heavy equipment. It’s a great step in the right direction for our industry.”

 

Dirk Stukkens, from an equipment industry leader, said:

“Since the financial crisis the way customers acquire a machine has completely changed. The price of a machine used to be the dominant factor for a purchase decision; today more and more customers base this decision on how much a machine will cost them over the total duration they will use it.

“This newly developed tool allows users to calculate the so called 'total cost of ownership' in a fast and simple way as it gives access to a complete financial analysis of all equipment costs - previously held across a range of spreadsheets. It takes into account the total cost of the acquisition and all operation costs as well as costs related to replacement or upgrades at the end of the life cycle. Thanks to it being easy to use it can deliver, in a clear way, a complete picture of any capital investment in equipment. ”

 

How it works

The Calculator is available at: http://equipmentcalculator.org/

After completing a simple registration process, users can create a total cost of ownership calculation for the following types of machine:

- Wheel loader > 15 T

- Track loader > 15 T

- Wheel excavator > 15 T

- Crawler excavator > 15 T

- General construction equipment machine < 15T

Once the machinery type has been selected, the user can add ‘suggested’ and ‘added’ values into fields under the categories of ‘Investment Related Inputs’, ‘Operations Related Inputs’ and ‘Divestment Related Inputs’ to calculate an annual, monthly and daily total cost of ownership. As an option, a comparative rental cost can then be viewed by inputting data into rental inputs fields.

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