Effective planning for construction equipment replacement using a simulation model

The principal economic objective of a construction company should be to maximize profit or return on investment.Construction equipment constitutes a major investment for mostconstruction companies. The equipment policy especially for contractors with large investment in construction equipment has a great impact on the overall profitability of the firm. Moreover, the keenest competition in the construction industry today notonly calls for lower bid prices but also for the efficientmanagement of such vital assets as well.The accurate identification of the optimum replacement lifeshould be the main concern of the efficient equipment management. The optimum life is defined here as the lifetime over which a piece of equipment can be profitable, survive in the face of improved models, changes in methods and techniques,and other variable economic influences (16).In plain language, a contractor should not pay forconstruction equipment, the equipment must pay for itselfbyearning for the contractor more money than it costs. Acontractor who does not recognize these facts in time findshimself with obsolete equipment, and is therefore unable tocompete in the market.