Technodiversity Glossary

See process

Cost calculations normally are made for new machines, because the investment is very high and needs precise planning for pay-back.

Written-off machines are old machines that are working longer than it was planned. Consequently, some cost elements, that are important at new machines, go here for zero. The depreciation and interest costs, for example, can very low or zero, but the costs for repair and maintenance are increasing.   

Experiences show that the repair and maintenance costs (R&M) are not unlimited. Very often there is a period, when R&M costs remain stable or even decrease for a few years, before they increase again. This is because the owner decides to stop investing in the machine and only use it for as long as it makes sense to do so.This machine can be a risk for him, but as long as it works it is cheap.

For a company that is working professionally under a high market pressure, the risk to interrupt the work due to an old machine breaking down is too high. This company tends to work with new machines only for a short period that may match the depreciation period.Then it will sell the machine on the second-hand market.

The company that buys this machine pays a low price. Depreciation and interest are low. While the costs for fuel and lubricants may be more or less the same, and also the drivers have comparable costs. But the costs for repairs and maintenance can be doubled until the total cost is equal to that of a new machine.

This is the reason, why machines often find a second life in smaller companies with lower work performance, where the owners repair their machines themselves.

(See more at TDiv PR1-C05)

See cable yarder