So depreciation cost,

this the loss of value of equipment resulting from use and age.

There's different ways you can work out the depreciation cost.

The three main ways are the straight-line method,

the declining-balance method and the sum-of-the-year's-digit methods.

But these days, the most straightforward and the most commonly used is

the straight-line method, so we're just going to explain that one here.

So, the straight-line depreciation.

So, value decreases at a uniform rate.

This is the cost per unit of time or per unit of work produced.

So as an example, we've got an equipment cost of $12,000.

The useful life of it 2,000 hours per year and

the life span is 5 years.

It has a salvage value of $2,000.

Now remember those guidance books and

online guidance we just mentioned earlier, this is where you'll get

that information from to help build up your straight line depreciation.

So here, it's quite simple really,

the total depreciation is 12,000 minus 2,000, gives us $10,000.

So, that's the salvage value to be taken off of it.

You've got the annual cost of depreciation,

which is 10,000 divided by 5 years,

gives us a value of $2,000 per year.

Your annual costs of depreciation,

therefore is 2,000 divided by 2,000,

gives us an hourly cost of depreciation of $1 per hour.

So, cost of maintenance and repairs.

So here, you've got to take onboards your replacement parts and the labor involves.

It varies with the equipment and use.

For example, shovel excavating soft Earth versus hard clay.

So, the where repair will depend on the usage it's being used for.

Other fact is based on cost records kept by the owner and

different publications with values can be obtained.

For example, operating costs guide.

The Technical Bulletin, the Power Crane and Shovel Association.

And also of course, the EquipmentWatch.

So as I mentioned earlier, the cost of maintenance and repairs,

you get your average cost from operating cost guides.

So again, guide books and going online and here's an example here.

It's turning your rear either the useful lifespan and

the percentage total cost so per year and per hour and for

this example, it's for shovels and hoes and lifting cranes.

But your guide should have every type of machinery and

equipment on a typical construction site, which will apply to your project.