For each of our 15 award categories, our Cost analysts looked at the most popular equipment series observed on the resale channel over a 12 month period between 2016 and 2017. The series were sorted by their relative popularity on the resale channel, and our analysts removed any series without a model currently in production in North America. Only equipment series which consist of at least one model were considered.
Once the data had been filtered through these rules, our analysts chose 5 of the top series as finalists, with the restriction that no award category could contain more than 2 equipment series from the same manufacturer.
Calculation of Ownership & Operating Costs
EquipmentWatch’s ownership costs are calculated according to standard Rental Rate Blue Book calculations and methodology. Using the same 12 months of data from the resale channel, analysts cleaned the results and determined the average annual utilization for each model within a series. Analysts forecasted residual values for each model within a series to represent the resale value over the five year estimation period. Along with the average annual use hours and residual values, analysts also used Original Price for each model in the ownership cost calculation alongside other standard cost factors. This calculation was run for each model within a series, once for each of the first 5 years of the machine’s economic life.
Once estimated ownership costs were estimated for every model in every eligible series, the hourly ownership costs for every model within a series was compressed using a geometric progression. This progression weights the estimated ownership costs for new models more heavily than the costs for older models within the same series. For example, the hourly ownership costs for when the model is new are weighted more heavily than the hourly ownership costs for when the asset is 5 years old.
For example, consider the following table, which shows two hypothetical equipment series (Series 1 and Series 2) and the estimated Total Cost of Ownership for all of models in the series:
|Series||Model||5 Year Total Cost of Ownership||Weight||Total Cost|
|Series 1||Model A||$50,000||50%||$25,000|
|Series 1||Model B||$40,000||25%||$10,000|
|Series 1||Model C||$35,000||25%||$8,750|
|Series 2||Model A||$50,000||50%||$25,000|
|Series 2||Model B||$40,000||25%||$10,000|
|Series 2||Model C||$35,000||12.5%||$4,375|
|Series 2||Model D||$30,000||6.25%||$1,875|
|Series 2||Model E||$25,000||6.25%||$1,563|
This results in a 5 year total cost of ownership of $43,750 for Series 1 and $42,813 for Series 2.