Right now I'm working on an excavation O&O and job costing/production template. I'm using CAT's performance handbook and Pipe and Excavation Contracting for rough production numbers and the right formulas (think BCY to LCY, bucket capacity, etc.). In CAT's O&O template, repair costs are treated as a fixed hourly cost throughout the duration of ownership of the machine, but I'm assuming that repairs are more end loaded, and that repair and maintenance costs are cheaper when the machine is new, but more expensive when it's closer to resale/trade-in time, but that they balance it out with the fixed cost, which isn't efficient for 2 reasons. 1. Money is worth more now because of inflation and working capital; a dollar today is worth more than it will be in 5 years. Using a linear/constant value overvalues repairs today and undervalues them later. 2. If a machine is bid $1-$3/hour in repairs more expensive than it actual is, it might make the machine less competitive than it is in reality. Repair costs should reflect the expected repair cycle of the machine so that it's being costed correctly. To better illustrate this, year 1 repair costs might be half as much as what year 5 repair costs are, and being able to use the lower repair costs of a newer fleet make reflect your competitive advantage. Likewise, we can expect more expensive repairs as the machine ages, so operation costs should be increased. This matters because repair costs and resale value change as the machine ages, and at a certain point in time, the relationship between repairs/maintenance are so that the machine is x% more expensive an hour than a new machine, but is still worth enough to make getting a trade-in or selling it smart. I figure this is going to take a lot of independent research on my own, but if some fleet managers or equipment guys could give me their 2 cents, I would be very grateful. These are based on my own assumptions, so I could be dead wrong. Anything info is useful! My goal is to have a spreadsheet template I can use to start practicing take-offs on my own and getting experience doing bids.
Several owners I know put it in a separate account, preferably money market or something that has decent interest accumulation. As for inflation yes money is worth more now than later but part prices increase with time too.
I've done the same thing once at a small coal mine using the Cat performance manual. It's a good place to start but you are correct about it being just an estimate. Maintenance costs are easy because the O&M manual sets the time intervals and you can get prices for the supplies pretty easy. Keeping in mind that now days the prices of those supplies change about quarterly and some times monthly and that you will seek out other sources. Repair costs are like buying lottery tickets. A new machine shouldn't cost anything in the first two thousand hours depending on the type of machine and their engineering development. We started with articulated trucks and were pulling transmissions in the first two months. They were under warranty but we lost production on each truck for two weeks at a time. Terrain and production engineering also have a hand in your calculations. We worked in mud for a year climbing steep grades that aren't covered in any manual. Tire costs went sky high and we found out about quartz in sand stone wearing on GET. Each one of those factors affected production in a negative way. Then the heavy rains came and we found out mining engineers from Wyoming didn't understand how holes collect rain from every hill. Lost more production. After that job I learned to put qualifiers on every statement I made. Basic rules of thumb then are that there are no predictions that can be set in stone. You use the engineering models to set up budgets to start with, monitor and adjust them as production time goes by and hope you acquire enough actual operating experience to get better at writing the next budget. I was able to put together a pretty good prediction model for valuing used equipment over time to the point of being hired by the Cat dealer as their appraiser for twelve years. I have written two books on that process. If you are interested, send me a direct message. I can tell you that for planning purposes you can figure the value of a machine after 50% of its planned life cycle to be around ten to twenty percent of it initial purchase price. Good luck and feel free to ask more questions.