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T&D > Programs Areas > Forest Management > Forest Operations Textbook > Harvest System Costing Program Areas
Forest Operations Textbook

Harvest System Costing

This section provides some basic information and spreadsheets for costing as it applies to harvesting equipment and systems. The following topics are covered:

Hourly Operating Costs for Logging Equipment

Machine Cost

A very common method of determining a specific logging machine cost is to use a Machine Costing Spreadsheet . This method is very useful for predicting approximate hourly costs of a machine, or to make a cost comparison between two machines.

The spreadsheet requires you to enter basic machine costing values, which it uses to establish the (a) fixed operating cost, (b) the running cost as well as the (c) labor cost for the machine. The resulting cost estimate is per Scheduled Machine Hour (SMH), that is, for every hour the machine is scheduled to work and it includes down-time. Remember: with a spreadsheet model, the result is only as accurate as the inputs!

Go to Machine Costing Spreadsheet

Hourly cost per Productive Machine Hour (PMH) will be higher, and can be obtained by diving the $/SMH by the utilization rate. This would reflect the cost if the machine is compensated only when it is working. Also, the actual costs incurred vary not only with the final true costs associated with the spreadsheet input parameters, but also with state and federal tax laws.

System Cost

The basic approach to harvest system costing is to carefully calculate out the Hourly Machine Cost of each piece of equipment in the system and add them up. In addition, include other costs such as overhead, workshop, storage, service vehicles etc. It is also common to increase the final sum with an indirect logging cost (typically 10%) to account for miscellaneous and unscheduled costs.

Go to System Cost Spreadsheet

Logging Machine or System Productivity

Productivity not only varies greatly with the logging machine or system chosen, but also with stand and site characteristics of the harvest area. The easiest way to get an approximate idea of productivity is to find out what the system currently delivers on an average day or week. Dividing this by the number of scheduled hours provides an indicative productivity (tons / SMH). Another potentially useful source of information is published productivity studies. However, the most accurate way of obtaining reliable productivity information for a given machine or system at a given site is to carry out a time and motion study.

Researchers who have carried out production studies on harvesting systems often produce a 'productivity model'. This can be a spread sheet or a computer program that will help predict productivity based on both stand and terrain parameters. One should be careful about using 'productivity models', they are based on a given system under given conditions – but they can be very useful for comparisons.

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Determining Logging Costs

Determining an accurate logging cost for a given harvesting operation can be difficult. There are two principle factors that must be known:

Cost: Total cost of running a machine or system ($)
Production: Production of the machine or system (tons)

Dividing the cost by the production, we arrive at a unit cost of harvesting ($/ton). There are two main methods to determine logging cost, the 'Cash Flow' and the 'Machine Rate' methods.

Cash Flow Method

'Cash flow' method uses loggers past data to establish a logging rate. This is most appropriate for a harvesting contractor. He or she simply adds up all the business related costs for the last year, as well as adds up all the tons of timber delivered. By dividing the two, we have the actual average logging rate for the last year ($/ton).

This method does have its disadvantages. It does a very poor job of spreading out larger costs, such as equipment purchases or major equipment repairs (unless all equipment is leased). These large individual costs can be replaced with either an appropriate monthly depreciation or a monthly payment schedule cost. Also, forest company personnel should not have access to this information as it typically is a breach of anti-trust laws.

Machine Rate Method

Machine rate method combines two of our previously discussed sections (1) calculating hourly system costs as well as (2) estimating productivity, to predict a harvest rate. Dividing the system cost ($/SMH) by the predicted productivity (tons/SMH) will provide the harvesting rate ($/ton).

The advantage is that the Machine Rate Method is very 'transparent' – it is easy to see what values have been placed in the spreadsheet and it is possible for multi-parties to work on it together. The disadvantage is that all values are estimates, and again the output of the model is only as good as its inputs.

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Harvest System Costing Models

By combining system, stand, terrain, productivity and cost information from numerous studies, it is possible to create a more complete harvest costing model. These 'combination' models predict system costs and productivity, and therefore the expected logging rate as well. Three models are made available on this website. The first is the Auburn Harvester Analyzer. It was produced in 19XX for a Hydro-Ax 511 feller-buncher, CAT 518 skidder and a 210 Prentice loader system. The original spreadsheet calculated all volumes in Cords. This spreadsheet was converted into tons (Rien Visser, Virginia Tech) and is also available.

Hank Sloan, a long term Forest Service Logging Engineer, used all his experience and information (as well as programming skills) to create the Logging Cost Calculator. Mr. Sloan has made his model freely available on this Website, but does ask all commercial users to consider making a donation to the Tom (Doc) Walbridge scholarship fund.

The final model presented on this Website was developed by a graduate student at Virginia Tech, Kieran McDonagh. It was developed in the Stella software environment and models the flow of timber through the system. It also takes into account the trucking capabilities of the harvest system.