I \

GOVERNMENT OF INDIA
CENTRAL WATER COMMISSION

GUIDE BOOK ON USE RATE

HIRE CHARGES AND TRANSFER
VALUE OF EQUIPMENT AND
SPARE PARTS
(THIRD EDITION)

NEW DELHI
/
DECEMBER 1988
 CWC PUBLICATION NO. 40/88

I
I,.

GUIDE BOOK ON USE RATE

HIRE CHARGES AND TRANSFER
VALUE OF EQUIPMENT AND
SPARE PARTS
(THIRD EDITION)
 PREFACE

The Second Revised Edition of the Guide Book on Transfer of used

Equipment was published by Central Water Commission in 1975. Adoption of this
Guide Book was recommended during the first conference of State Ministers
of Irrigation held at New Delhi in July, 1975. This Guide ~ok has been widely
used by thr Equipment Managers not only in Irrigation and Power Sectors but
also in other sectors using Heavy Earthmoving and Construction Equipment.

In the intervening period a number of cases of disputes regarding

transfer value of equipment were referred to Central Water Commission for a
negotiated settlement. Keeping -in view the nature of problems leading to
disputes in fixation of transfer price of equipment, it was considered
necessary to make certain changes in the Guide Book. Accordingly, the matter
was placed before the Standing Committee of Senior Mechanical Engineers. The
Standing Committee in its 10th Meeting held in May, 1983 decided to revise
the Guide Book. The work was assigned to a Sub-Committee consisting of the
following:

1• Chief Engineer (0.10) , ewe, Chairman

2. Shri D .S. Sapkal, Chief Engineer,
Irrg. Deptt. , Maharashtra. Member
3. Shri K.H. Patel, Suptd. Engineer,
Irrgo Deptt. , Gujarat Member

4. Shri T.N. Murthy, Suptd. Engineer,

Farakka Barrage Project, W. Bengal. Member
5. Shri B.S. Rai, Suptd. Engineer,
Irrg. Deptt. , U.P. Member
6. Director (P&M) , ewc Convener.

The revised draft Guide Book prepared by the Sub-Committee was considered and
finalised by the Standing Committee of Senior Mechanical Engineers during its
12th meeting held at Trivandrum in September, 1986.

In this revised edition of the Guide Book the method of calculating

depreciation has been modified keeping in view the actual working conditions
and utilisation of equipment in hours vis-a-vis life in years in the Irrigation
& Power Sector and the ease in maintenance of accounts. A format of Agreement
has been designed and appended with the Guide Book to be signed at the time of
transfer of equipment by the concerned project authorities with a view to
minimise disputes at later stages. Life and repair provision of some equip-
ment which were not covered in the earlier Guide Book have also been incorpo-
rated.
 In order to streamline procedures and conditions for hiring of equip-
ment. a new chapter on "Hiring of Equipment to contractors and other private
bodies has also been incorporated in the Guide Book. In view of the enlarged
scope of the Guide Book, the Standing Committee decided to change its name
from "Guide Book on Transfer of used Equipment" to "Guide Book on Use Rate,
Hire Charges and Transfer value of Equipments and Spare Parts."

It is hoped that the Revised Edition will be found useful by the

Equipment Managers and will reduce the cases of disputes rega~ing transfer
value and use rates of equipment.

(KURIEN MAT'lliEW)
CHIEF ENGINEER (010)
NEW DEIHl CENTRAL WATER COMMISSION
 CONTENTS

CliAPTER-I
Page No ..
1. PROCEDURE FOR TRANSFER OF SURPLUS EQUIPMENT AND SPARE PARTS

1 .1 Surplus Declaration Methodology 1

1.2 Condition of Equipment 3
1.3 Book Value 3
1.4 Life of Equipment 3
1.5 Period for Computing Depreciation .(

1 .6 Scrap Value 4
Depreciation
1.7
1.8 Transfer Value
Transfer of Spares
"
4
1.9 5
1.10 General 5
1.11 Period. for taking Delivery 5
1.12 Method of Raising Debit 6
1.13 Assistance during transfer 6
1 .14 After Sales Service 6
1.15 Settlement of Disputes 6
1.16 Agreement 6,7

QiAPTER-II

2. SCHEDULED WORKING HOURS, REPAIR PROVISION AND HOURLY USE

RATE OF CONSTRUCTION PLANT AND MACHINERY
2.1 Scheduled Working Hours 8
2.2 Performance Evaluation 9
2.3 Repair Provision 10
2.4 Hourly Use Rate 10

CHAPTER-III

3. HIRING OF EQUIPMENT TO CONTRACTORS AND OTHER PRIVATE BODIES

APPENDICES
A- Life & Repair Provision of Equipment 16
B- Factors Affecting Earthmover Tyre Life 20
C- Form of Agreement for Transfer of Earthmoving &
Construction Equipment & Spare Parts 23
D- Form of Agreement for hiring of Departmental
Equipment to Contractors & other Departments 25
 CHAPTER 1 - PROCEDURE FOR TRANSFER OF SURPLUS
EQUIPMENT & S PARE PARTS

1 .1 SURPLUS DECLARATION : METHODOLOGY

1.1.1 Equipment

1 .1.1.1. The requirement of equipment vis a vis programme of works

with the Deptt. as a whole and/or a project in particular, should
be revi~ed every year, well before the commencement of working sea-
son and equipment which are not likely to be used at their present
location should be identified. Such equipment should immediately be
trans~ered to other locations/work sites where they can be gainfully
utilised. Equipment which are not likely to be used anywhere in
the ~eptt. should be declared surplus.

1.1.1.2 Each State Govt. should constitute an equipment deployment

committee to undertake such review regularly.

1.1.1.3 Equipment actually declared surplus or likely to be declared

surplus in the near future should be classified in three categories
as follCNS:

A) Equipment in good working order.

B) Equipment which can be economically put into good
working order after repairs.
C) Equipment which cannot be repaired economic~lly or
are unfit for fCrther use due to obsolescence or
other reasons.

1.1.1.4 Lists of surplus equipment classified under A and B above

i.e. equipment in good working order and equipment which can be re-
paired e~onomically should be circulated by the Project/State to
other State/River Valley Projects. Five copies of the lists of sur-
plus equipment should also be sent to Central ,Water Commission for
necessary co-ordination in expediting rehabilitation of surplus
equipment.

1.1.1.5 The lists of surplus equipment should indicate following

particulars:

a) Ser ia 1 No.
b) Project Identification No.
c) Particulars of Equipment.
i) Nomenclature (e.g. Shovel, Dozer, Dumper etc.)
ii) Make & Model
iii) Manufacturers' serial No.
iv) Details of engine

Horse PCNer
Make & Model
Serial Number

d) Capacity
e) Date of initial purchase
f) Initial acquisition cost
g) Total cumulative hours worked upto date since purchased nev
 -2-

h) Present condition of Machine i.e. Category A or B.

i) Approximate transfer value.
j) Date when equipment can be released.
k) Remarks.

1.1.1.6 If after circulation of the list of surplus equipment as

above, no response is received from any State/Project within six
months from date of circulation, the owning project should take
immediate steps for disposal of the equipment to its best advantage
e.g. disposal through DGS&D or by inviting sealed bids or public
auction depending on rules prevalent in respective States/Organisa-
tions.

1.1.1.7 For equipment classified under category IC' i.e. beyond

economical repairs, action for disposal as indicated above should
be taken straightaway without circulating the lists of such
equipment to other projects.

1.1.2 Spare Parts

1.1.2.1 The stock of Spare Parts should also be reviewed every

year~ and spare parts for equipment declared surplus/beyond
economical repair/obsolete $hould also be declared Surplus. Even
for ~quipment which are still under use, the stock of spare parts
should be periodically reviewed. Detailed lists of surplus
spare parts may be drawn up in ascending order of part numbers,
assemblywise so as to facilitate easy identification. The lists
of surplus spare parts be circulated to all projects/units holding
the subject equipment, with reference to "Directory on Census of
Equipment" published by Central Water Commission. Five copies of
such lists should be sent to CWC also to help rehabilitation of
these parts. The lists of spare parts should be prepared separately
for engine and chasis side and should indicate:

a) Category of equipment.
b) Make & Model of equipment and engine.
c) Details of spare parts:
Serial number
part number
Description
Rate
Amount
Total amount

1.1.2.2 For disposal of surplus spare parts, following order of

preference should be observed:

1) 'lhe Govt. Deptt. who take surplus equipment vill have

first preference to take the surplus spare parts.

i1) Spare parts, which are not required by Departcents taking

surplus equipment and when equipment of same make/model is world..ng
at other projects/locations in the State, should be transferred to
such projects/locations.
 -3-

iii) Surplus spare parts which cannot be rehabilitated by

above methods and for which there is no response from projects in
other states within six months of circulation of lists of suzylus
spare parts, should be disposed of immediately to the best advantage
3
of the owning project/State.

1.2 CONDITION OF EQUIPMENT

1.2.1 At the time of transfer, equipment should invariably be

in good working order. Equipment which have not completed their
stipulated life and are in economically repairable condition shall
also be repaired by the owner before its actual transfer to buyer.
However, if facilities/funds for repair are not available with the
seller, the cost of repair necessary to put the equipment in good
working order, shall be estimated as mutually agreed to.

1.2.2 Seller will keep records such as log-book, history book,

etc. ready for examination of the buyer alongwith complete informa-
tion regarding latest major repairs & overhaul carried out in the
machine.

1•3 BOOK VALUE

1 .3.1 In case of equipment purchased new_,the book value will be

f\

the purchase price plus freight, insurance, all taxes & duties, port
cl.earance-char~es. erection and commisSioning expenses & other
incidental Charges.

1.3.2 In case of equipment purchased second hand, the book value

will comprise of the purchase (transfer' price, freight, insurance,
taxes, and duties paid & other incidental charges upto erection
and commissioning of equipment including cost of overhaui/repair/
reconditioning, etc. carried out after its purchase but before it
is put to use.

1.3.3 Cost of initial spare parts will not be included in the

book vaLue, However, if additions & improvements are made to
increase utility or efficiency of equipment, the book va Lue shall
be increased by the amount spent tor such additions and improvements.

1.3.4 Book value shall not be modified due to change in market

price of equipment or due to change in exchange rate in case of
imported equipment •.

1.3.5 Cost of civil works such as foundation for generators,

foundation for batching & mixing plants, crushers, etc. if any,
equired for 'erection of equipment shall not form part of the book
value.

1•4 LIFE OF EQUIPMENT

1.4.1 Life of equipment in hours and years as given in Appendix lA'

shall be adopted.
 -4-

1.4.2.1 In case of equipment purchased second hand which have not

completed their scheduled life in hours or years at the time of
transfer, thelife will be taken as the balance scheduled life.

1.4.2.2 For equipment which have completed their .scheduled life

in hours and years and is reconditioned, the balance life will be
taken as 25\ of the original scheduled life.

1.4.2.3 The optimum life of tyres shall be taken as 6000 hrs. or

1,00,000 kms. Actual life shall be fixed taking into account
various factors effecting tyre life as given in Appendix 'B'.

1.5 PERIOD FOR COMPUTING DEPRECIATION

1.5 1
0 The period for computing depreciation shall be from the
date of acquisition till the agreed date of transfer •
•
1.5.2 The period in years and the total working hours clocked
by the equipment shall form the basis for computing depreciation.

1.5.3 Period for depreciation shall be calculated to the

nearest completed six months. Period of less than 3 months shall
be ignored & period of more than 3 months shall be taken as
completed half year.

1 .6 SCRAP VALUE

Scrap value of equipment shall be taken as 10% of original

book value (when purchased new).

1.7 DEPRECIATION

1.7.1 Depreciation of equipment ranges from book value to

scrap value. Depreciation shall be calculated based on total
hours worked with reference to life in hours and also based on years
lapsed since purchase with reference to life in years and the
actual depreciation shall be taken as the average of depreciation
based on hours and years.

1.7.2 Depreciation shall be calculated based on straight line

method of depreciation.

1.8 TRANSFER VALUE

1.8.1 When equipment are in good working order and have not
completed their scheduled life in years or hours, transfer value
shall be the book value minus depreciation worked out as per para
1.7 above.

1.8.2 When equipment are not in good working order but are
economically repairable and have not completed their scheduled
life in years or hours and the equipment are put in good working order
after such repairs before transfer, the transfer value shall not
be less than 25% of original book value. Actual transfer value
may be decid~ between buyer and seller.
 -5-
,ot
1.8.2.1 However, if the facility/funds for repair are not avail-
able with the seller, the cost of repair necessary to put the equip-
ment in good working order shall be estimated as mutually agreed
to and the estimated cost of such repairs shall be deducted from
the depreciated cost worked out as per para 1.8.1 which shall not
be less than 25% of book value and the net transfer price shall
not be less than 10% of original book value.

1.8.3 For equipment which have completed their scheduled life

in years and hours and are in good \t.'Orking
order or are reconditioned
before transfer, the transfer value shall not be less than 25~ of
original book value in case of diesel powered equipment and not less
than 33% in case of electrically powered equipment.

1.9 TRANSFER OF SPARES

The OWl.ng project is entitled to transfer alongwith equip..

ment, spare parts comprising both fast and slow moving to the extent
of 16% of original book value of equipment.

GENERAL

1.10.1 The transfer price of equipment shall be calcula~ed based

on book value of equipment when the transfer is between Government
Departments (State or Central}.

1.10.2 In case of transfer of equipment from Govt. Departments

(State or Central) to Public Sector UndertakingS (State or
Central), the transfer value shall be calculated on the basis of
current market price of similar or equivalent equipment

1.10.3 The spare parts shall be transferred at the book value

of the owning project.

1.10.4 No storage charge. and supervision charges shall be

levied on the transfer price of equipment.

1.10.5 Storage charges not exceeding 3% can be levied on the

value of spares to be transferred but no supervision charges shall
be levied.

1.11 PERIOD FOR TAKING DELIVERY

1.11.1 In case, there is no dispute about the transfer value of

equipment, the purchasing project should take delivery of machines
at the earliest but not later than four months from the date of
signing of agreement for transfer of equipment failing which the
owning Project will be free to dispose of the equipnent to its
best advantage.
 -6-

1.11.2 In case, there is a dispute regarding the transfer value

of equipment, the delivery of-equipment shall be taken by purchaser
pending settlement of the dispute and the transfer of equipment
should not be held up on this account.

1'.12 METHOD OF RAISING DEBITS

1.12.1 When the value of equipment/spare parts has been agreed to

between buyer and the seller, buyer will pay full amount of the
transfer value before taking delivery of equipment and spare parts.

1.12.2 In case of transfer of equipment and spare parts whe~e

transfer value have not been finally settled at the time of signing
of agreement and negotiation in this regard through Central Water
Commission is called for, the buyer shall pay 70% of the transfer
value indicated by seller before taking delivery of equipment.

1.12.3 The difference between the transfer price finally decided

after negotiated settlement and the price paid as per para 1.12.2
before taking delivery shall be paid/refunded within one month of
the settlement of dispute by CWC.
1.13 ASSISTANCE DURING TRANSFER
1.13.1 Seller shall provide all assistance during transfer to
the extent possible, regarding dismantling, packing, loading and
forwarding of equipment and spare parts on actual cost basis.

1.14 AFTER SALES SERVICE

1.14.1 In case, it is desired by the purchasing project after

sales service will-be provided where poss~le by the selling project
for a period of three months after equipment ar~ taken ~ver, bn
actual cost baSis, on mutually agreed terms and conditions.

1.15 SETTLEMENT OF DISPUTES

1.15.1 All cases of dispute, regarding transfer value, condition

of equipment, etc. relating to transfer of equipment shall be
referred to Central Water Commission either by the seller or by
the buyer. The decision of Central Water Commission in this regard
shall be final and biI.Ldingon both the parties.

1.16 AGREEMENT

1.16.1 The buyer and seller should sign an Agreement before the
actual transfer of the equipment to avoid difficulty at a later stage.
The agreement should inter-alia include:

i) willingness of the buyer and the seller to the transfer

-of equipment/spare parts.
ii) The brief particulars of the equipment, namely make,
model, 51. No. of equipment, date of purchase and its
value, total hours worked.
 -7-
Iue
haser The seller should furnish on ~equest to the buyer complete
t information regarding latest major repairs and replace-
ment of parts carried out in the machine.

iii) Condition of the machine:

a) machine is in working order.
d to or
b) the machine is in economically repairable condition
rts. and the seller agrees to put the machine in satisfactory
working condition before the actual transfer.
or
ling c) the machine is in economically repairable condition
;er and the estimated cost of rapairs as mutually agreed
r upon, is to be Rs. __
iY) Mutually agreed date of transfer of equipment.
v} Agreed transfer price of equipment/spare parts.
vi) Payment terms as agreed to.
vii) Clause regarding agreement of the seller and the buyer
to refer the case to ewc in case of any dispute.

A model form for the agreement is enclosed at Appendix 'Ct.

t
 -8-

CllAPTER 2 - SCHEDULED WORKING HOORS, REPAIR PROVISION AND

HOURLY USE RATE OF CONSTRUCTION PLANT &
MACllINERY.

2.1 SCllEDULED WORKING HOURS

2.1 .1 Shifts of Operation :

lWo shifts workinq is considered most economical in view of

the high cost oj Three shifts working due to low availability factor
and higher standby equipnent required. Further due att.ention for
maintenance and repairs can be given in the rema.in.ingavailable time.
Three-shif~working should, therefore, be resorted to only in emer·
gencies for specific jobs and ~~iods. Single-shift-operation
should be limited to works which are either located in difficult
terrain subjected to vagaries of weather or where these are spread
over such as in canal excavation, flood embankments, road works, etc.
only when it is difficult to provide the supporting facilities for a
two-shifts operation.

2.1.2 Plant Planning

Scheduled ,"orking hours in a year with 200 available working

days should be taken as below.

No. of Total Avail- Actual Aver- Avail- Aver- Schedul-

shifts avail- ability avail- age able age ed pro-
in lable factor able no.of Scheduled utili- duction
operation time time days/ machine sation hours
in hrs. in hrs. yrs hours factor
2x3 on
8 months
b sis
2 3 4 5 6 7 8
One shift 8 0.9 7.0 200 1400 0.85 1200
'!Wo shift!:>16 0.8 12.5 200 2500 0.80 2000
Three shfts 24 0.7 16.5 200 3300 0.75 2500

2.1.2.1 The above scheduled production hrs. are after taking into
account the availability factor and average utilisation factor and
should be taken into account for purposes of equipment planning and
calculating efficiency of utilisation without any further reduction
in hours.

2.1.2.2 Where increased or reduced number of working days are available

depending upon the tropical conditions and geographical locations of
the works or the programme of works the scheduled production hours
should be increased or decreased proportionately.
D 2.1.2.3 For old machines, scheduled product~on hours should be taken
as under:

L~fe stage of equipment Scheduled production hrs.

in hours as a percentage of scheduled
production hr s , given above.

o to 40\ 100\
40 to 75\ 80\
r of
:tor 75 to 100\ 65\
r above 100\ 40%
time.
2.1.2.4 The efficiency of utilisation for all machines in each cate-
gory be worked out w.r.t. scheduled working hours given above, inclu-
sive of standby equipment.
d
2.1.2.5 The provision of 'standby equipment shall be made as under
etc.
t:' a
Single shift 10\
Double sllift 20%
Three shifts 30%

2.1 •2.6 As the equipment planning is done on peak work requirement

the work phasing within the time during which it is required t.o be
accomplished should be such that the peak requirement of equipment
is not more than 25% compared to that of the average requirement.

2.1.2.7 There is need for planned replacement of equipment by

0--
inducting new equipment at different stages of project construction.
on
It should, however, be ensured that the new equipment inducted
spends, at least about 75\ of its life on the project.

2.2 PERFORMANCE EVALUATION

2.2.1 Performance of equipment should be evaluated in relation to

the production accomplished vis-a ...
vis the work targets set, and
scheduled production hours could be used only as a guide. However,
for the purpose of calculat~ng efficiency of utilisation. the scheduled
production hours and actual hours worked by the equipment shall be
taken into account. Production targets should be drawn at Plant
Planning· stage for each job.

2.2.2 Evaluat~on of performance and utilisation should be l~ted

to production oriented equipment only.

2.2.3 A comprehensive job deployment schedule should be drawn up

and watched all through the year to keep work abreas~ with schedule.

2.2.4 Where equipment suffer from recurring mechanical and or

structural defects or where machines are starved of essential spares,
while persistent action should be taken to keep the equipment in
working order, the deployment schedule and production targets should be
kept under constant review simultaneously. Such situations should
be brought to the notice of State Government and Central Water Commission.
 -10-

2.3 REPAIR PROVISION

2.3.1 The repair provision for various categories of equipment

over the whole life should be taken as given in Append1.x-A. Over am
above this repair provision, escalation of prices of spares might be
provided for as per para 2.3.4 below.

2.3.2 Scaling of repair provision should be as below

Ist stage 10\ of total repair provision.
2nd stage 15\ of total repair proyision.
3rd stage 25% of total repair provision.
4th stage 30\ of total repair provision.
5th stage 20% of total repair provision.

2.3.3 The repair provision could vary to the extent of about 20\
over and above the indicated provision if severity of job conditions
so demand.

2.3.4 The escalation of prices of spares could be provided for

by a notional increase of the book value @7% per year from the date of
purchase. and percentage scaled repair prOVision applied over this
notional book value to arrive at the provision for the stage under
consideration. As for instance, the scaled provision for the third
stage of operation is 25\ and if it occurs in the 4th year since
purchase of equi~ent the repair provision for the 4th year could then
be 25\ of (C+.21C)~ where C is the capital cost.

2.4 "HOURLY USE RATE :

2.4.1 The hourly use rate of equipment comprisesof the following

elements :
a) OWnership cost :
i) Depreciation.
b) Operatip~l cost ;
i) Repair charges.
ii) Operators & maintenance crew charges.
iii) POL and energy charges.
iv) Miscellaneous supplies.
2.4.2 The various elements as mentioned above should be evaluated
as below:

2.4.2.1 Depreciation:
As indicated in Chapte__.r-1.
Clause 1.7

2.4.2.2 Operational Cost.

i) Repair Charges

At relevant scaled provision taking into consideration

the escalation of prices of spares and also severity of the
job conditions over operational hours" during the year.
 ..
11·

and
i.i) Operators & Maintenance Crew Charges
be
Operators & Maintenance crew charges shall be taken as per
actual annual cost over the operational hours during the
year. Operation Crew charges should include the wages of
operators. helpers and share of supervisory staff like
Chargeman and/or Foreman. Watch and Ward, etc. Maintenance
Crew charges should include wages of Mechanics. Electrician,
Greaser" Helper_, Welder ., Fitter and share of supervisory
staff like chargeman and/or Foreman etc., The wages of
maintenance crew should be divided equally for the group
of machines to which maintenance Crew is attending.

ij i) POL & Energy Charges

The POL & Energy Charges should be taken as per actuals.

However. for purpose of estimating fuel/energy charges
following method may be adopted.

Electrically powered equipment :

In case of electrically operated equipment the energy charges

can be obtained by estimating energy consumed in Kilowatt Hour Per
hour and multiplying it by the energy rate.

Energy Consumed = BHP x 746 x x

1000
Where C is factor for category of equipment.
1
C is factor for type of duty to which it is put in use.
4
Diesel Engine Powered equipment

Fuel consumed per hour can be estimated from the following relationship.
Fuel consumption in Liters per hour 0.22 X FoH.P.' x C
3 x C
1 2
Where C1 = factor for the category of equiPment.
C
2 = factor for the type of duty.
values of C & C are tabulated below :
1 2

51.No. t Category of

1
•
•
equipnent

2
J
J
'. C1
(type
factor)
3
Light
duty
4
C

Med.
du.ty
5
I Heavy
I ,duty
6

1. Dump Truck 0.30 0.70 1.00 1.40

2. Motor Grader 0.40 0.67 1...

00 1.33
3. Excavator 0.50 0.80 1.00 1.20
4. Wheel loader 0.58 0.70 1.00 1.30
5. Motorised scraper
a) '!Win engine 0.57 0.70 1.00 1.30
b) Single Engine 0.62 0.70 1.00 1.30
 ..12-

2 3 4 5 6

6. Bulldozer 0.57 0.75 1.00 1.25

7. Dozer shovel 0.61 0.75 1.00 1.25

B. Oi.esel Generatinq 1.00 0.75 1.00 1.25

sets & Air .com-
pressors

Pneumati.call~ °Eerated EquiE!!!ent

The cost of compressed air in Rupees per cubicmeter per minute

can first be estimated by analysing ·use rate of Air Compressor
which can then be used for the equipment. Rated capacity of
equipment may be used for obtaining energy charges.

Lubricants :

The cost of lubricants can be taken as 25 to 30% of the cost

of fuel/energy depending upon type of equ.Ljment,

iv) Miscellaneous & Supglies

The hourly miscellaneous prov1s1on may be kept at 10% of

the hourly repair provision. This could be suitably increased
for machines using wire ropes, cutting edges, etc. and in
adverse job conditions.
 -13-

CHAPTER - 3 HIRING OF EQUIPMENT TO CON'mACTORS AND OTHER

PRIVATE BODIES

3.1 In the past, there were not manycontractors whoowned equipw

ment for doing major construction works and the equipment purchased
by GovernmentDepartments used to be given on hire charges or hire
purchase basis to such contractors. This practice is neither eco..
nomical nor conducive to efficient working for following reaSons

t. Wheneverequipment are j:Urchased by GovernmentDepartments

Simultaneously organisation for operation and maintenance
is created, the actual work is done by departmental men
and machines.

2. In t"..he
case of contractor's Working,the responsibility gets
divided and he can always find fault with the Department
on account of non-availability/break downof equipnent.
with the result the contractor can never be penalised for
delay. On the other hand, it may lead to his preferring
additional claims.

3. Hiring equipment to contractor is not conducive to good

and healthy working when the departmental machines are
available and organisation is geared to undertake 9uoh
works.

4. Sometimes equipnent procured by d.epartment for hiring to

contractors are not taken by the contractor thus saddling
the department with idle equipment.

In view of the above, equipment should be purchased only' for

works to be done departmentally. No equipment should normaIly be
purchased for hiring to contractors.

3.2 However, circumstances may arise when the contractor needs the
help of department by way of equipment e.g. in case of failure of his
equipment or when some equipment are required for doing a part of the
total work awarded to him for which contractcn' is not expected to
invest in j:Urchase of equipment or any other exigencies of short dura-
tion. Under such circumstances department may agree to hire the
equipment in the overall interest of work.

Wheneversuch occasions arise the hire charges of equipment

should be worked out. Apart from the elements which comprise use
rate for departmental works, various indirect costs should also be
taken into account as under:

3.2.1 Ownership Costs:

i) Depreciation: As indicated in Chapteree1.

ti) Interest on Capital Lnveatment.,
 - 14 ..
The interest charges are to be related to the average
annual cost of equipnent based on the life of equi.pnent in
No. of years. The annual cost of aquipnent is determined as
follows

Where C is the book value and tnt is the number of years of

llfe of a machine. The rate of interest per annum may be taken at
the prevalent Govt. rate at the time equipnent is given on hire.

NOTE: In order to take account of idle time ownership costs, the

total depreciation and interest charges should be multiplied by
the following factors

Monthl v basis 1.2

week~y basis 1.4
Daily oasa.s 1.6
Hourly basis 1.7

i) Repair charges as indicated in Chapter-2

ii) Operation and Maintenance Crew

Apart from the salaries of operation & Maintenance creM,

the project has to spend on their hoUSing, leave reserve, leave
salary, terminal benefits, medical facilities, etc. Therefore,
for purpose of hire charges the annual cost of operation and
maintenance and repair creM distributed over the cost of opera ...
tional hour during the year' should be increased by 50\.

ili) POL and Energy Charges

Cost of fueL/energy should be charged as per actuals;

25% to 30% of the cost of fueL/energy should be pro-
vided for lubricants

iv) Misc. Supplies :

As pe~ Chapter-2.

3.2.1.3 Supe;y\sioD Charges.

SUpervision charges can generally be fixed by the owner

of equipnent and should be a minimum of 10% of the total ownership
and operational cost as calculated above.
 15

3.2.1.4 Minimum Charges

The hire charges shall be recovered in respect of produc-

tion equipment based on actual hours or the following minimum hour
whichever is more:

Single Shift Double Shift Three Shifts

Annual basis 1200 2000 2500

Monthly basis 150 250 313
Weekly basis 36 60 75
Daily basis 6 10 12

Breakdovn or non-availability of equipment continuously for

one hour or more shall be accounted for and shall not be charged.

3.2.1.5 General: 1) An agreement should be signed between the

Deptt. and contractor laying down conditions of hiring. Format of
the agreement may be devised by the Project taking ~nto account
specified situation of hiring.

2) Operation and maintenance of equipment should not be left

to the Contractors.

3) Hire charges shall be levied from the time the equiPment

leaves tHe machinery yard of the project till it is returned back
to a place indicated by the project.

4) Record should be maintained for actual hours worked and

physical output achieved every-day.

A model form for agreement of hiring of equ:i,pment is en-

closed at Appendix - '0'.
 "16-
APPE!~ 1;""

LIFE & REPAIR PROVISION OF EQU1:l'MENT

Sl. ' Life of Repair

,
,
No. Equipment EquiQment provi .. :Rec.arks
y ~Hours sion {% ,
e , of cost
category capacity a ,
I
of
r equip-
S ment
1 2 3 , 4. , 5 6 "I

1. Excavators

Shovels & Below 1.5 cuyds 10 12,000 150

Draglines 1.5 to 3.0 12 15,000 150
cuyds (Diesel)
Above 3.0 cuyds
(Diesel) 15 25,000 150
2.5 to 4.0 cuyds
(electric) 15 25,000 150
Above 4.0 cuyds.
(electric) 20 40,000 150

Walking Dragline 20 30,000 150

Hydraulic Exca ...
vators
Below 1 cum. 10 15,000 100
oodOt-t 1 to 2 cum. 12 17,500 150
Bucket wheeled 20 40,000 150
Excavators

...
Dredger in
Fresh water
Hull
Machine
25
10 .. 60
60
Barges Hull
Machine
16
10
.. 60
60
Tugs Hull 16 60
Machine 10 ., 60

2. Dumpers

Bottom Below 20 T 8 10,000 175

Dumpers 20 T to 50 T 10 16,000 175
Above 50 T 12 20,000 175

Rear Dumpers Below 15 T 8 10,000 175

15 to 35 T 10 12,000 175
Above 35 T & 12 15,000 175
Below 50 T
50 T & Above 15 20,000 175
 - 17-

1 I 2 I 3 I 4 I 5 I 6 I 7

3. Scrapers

A. Motorised Up to 10 cuyds. 8 9,000 200

push Lo~ded
Above 10 cuyds. 10 10,000 200
Elevating &
Self-loading 10 10,000 200
B. Towed 12 15,000 100

4. Tractors

Crawler Upto 100 H. P. 8 9,000 200

Above 100 to 300 10 12,000 240
HP
Above 300 H.P. 12 16,000 240

Wheeled Upto 75 H.P. 8 12,000 200

Above 75 H. P. 10 15,000 200

5. Graders 10 12,000 200

6. Loaders
Crawler 10 12,000 200
Wheeled 10 15,000 200
Belt Loaders 16 20,000 100
Reclaimers & stackers. 20 30,000 100

7. Compactors

a) Self propelled 10 12,000 100

Sheepsfoot
rollers
b) Drawn Sheepsfoot 8 10,000 70
rollers
c) Vibratory
rollers 8 8,000 200
d) Smooth drum
rollers 8 10,000 80
e) Smooth drum
vibratory 8 8,000 200
rollers
f) Pneumatic tyred 8 10,000 100
rollers

g) Righ speed
C .:.cpactot. 10 16,000 100
 18

2 3 4 5 6 1

8. Water SErinklers 10 16,000 120

All sizes

9. Canal trimmer and 16 20,000 100

lining equiI!!!ent.
Above 200 cuyds/Hr.

10. Drilling EQuigment

1• Drilling JUmbo
a) Pneumatic 8 12,000 100
b) Hydraulic 10 15,000 120

2. Rock Bolting Jumbo

a) Pneumatic 8 12,000 100
b) Hydraulic 10 15,000 120

3. Air Tracks/Drilling 8 8,000 SO

equipment

4. Drills
a) Blast hole drills 10 10,000 80
b) Core Drills 8 8,000 80
c) Wagon Drills 8 8,000 80
d) Tricone rotary
Drills 10 10,000 80

11• Air ComEressors

A. Diesel compressors
i) Portable upto 8 10,000 100
300 cfm.
ii) Portable Above 10 12,000 100
300 cfm.
B. Electric Compressors
i) Portable upto 10 16,000 80
300 cfm.
ii) Portable Above 12 20,000 80
300 cfm
iii) Stationery 20 30,000 80

12. Blowers 12 80

13. Cooling:Plants
i) Aggregate Cooling Plant 20 40,000 75
ii) Ice Plant 20 40,000 75
14. Batching and Mixing
plant
i) Cement Handling Batching and
Mixing plant 18 30,000 75
ii) Transit Mixers/Agicating cars 10 10,000 120
iii) Portable concrete mixers 5 6,000 80

-
 19

2 3 4 5 6
15. Aggregate Processing Plant
a) Upto 100 T capacity 10 20,000 10O
b) Above 100 T capacity 15 30,000 100
16: Stone Crusfter (Elect) 15 20,000 200
17. Sftot-crete Macftines 5 6,000 10O
18. Concrete Pumps 5 8,000 10O
19. Raise Climbers 15 18,000 120
20. Pumps
i) Diesel Engine driven above 10 HP 8 10,000 100
ii) Electrical upto 40 HP 12 20,00Q 70
21. Well Points 12
22. Cranes
20,000
° 100
i) Mobile (Pneumatic wheeled)
Upto 15 tons 10 12,000 150
Above 15 tons 12 15,000 150
ii) Crawler Mounted
Upto 10 tons 10 12,000 120
Over 10 tons 12 15,000 120
iii) TOW'ercranes 20 30,000 120
iv) Truck mounted crane 10 16,000 175
23. Trsns,PQrt Eaui~en t
A) Heavy Transport Vehicles
a) Trucks & Highway Dumpers 10 2,00,00 Kms 175
b) Tractor Trailers
upto 10 T 10 2,50,000 Kms 175
Above 10 T 12 20,000 Itts. 175
B) Ligftt Transport Vefticles
i) Jeeps
ii) 1,60,000 Kms. 175
Station Wagons
iii) Cars
iv) Ambulance Cars
C) Aerial Transport
i) Ropeways
20 40,000 70
ii) Cableways
D) Rail Transport
Locomotives
Diesel 10 16,000 120
Electrical 22 40,000 100
Wagons 20 30,000 70
Rail Cars 20 30,000 70
24. Diesel Generstion Sets
Upto 50 '¥YA 10 20,000 100
above 50 K!VA 15 30,000 120
 .. 20 -

APPENDIX 'B'
FACTORS AFFECTING EARTHMOVER rnu: _LIFE

Group I-MAINTENANCE INCLUDES INFLATION

Excellent 1.1

Average 1.0
Poor 0.7

very bad 0.4

Group IIeMAXIMtM SPEEDS

15 KM per hour 1.2

30 KM per hour 1.0
45 KM per hour 0.8

60 KM per hour 0.5

Group lII-cuRVES

None 1.1
Moderate 1.0
Severe,single wheels 0.8
$evere, dual wheels 0.7

Severe. tandem ~eels 0.6

Group IV-SURFACE
Snow packed. no road exposed earth 3.0

Hard packed earth 1.0

Soft earth or sand maintained 1.0
Gravel ~oad. well maintained 1.0
Soft earth. some rock 0.9

Mud. ordinary 0.8

Gravel road, poorly maintained 0.7

Mud, abrasive or with rock 0.5

Blasted Rock

Soft Coal 0.9

Soft shale or limestone 0.7

Granite. gneiss. trap, ba-salt hard

sh~le or limestone 0.6

Slate or Schist 0.4

Lava, hard surface 0.3

Obsidi~ volcanic glass flint 0.1

i
.... ,
-
-
~-;-- --
 ...21 ...

Black TOE

Clean, wet
Cold weather 1.4

Hot weather, 750F to 100 F 1.2

Very hot, Over 1000F 0.8

Group V ...LOADS 0.5

Recommended by Tyre and

Rim Assembly
Full load
50% underload 1.0

20% underload 1.2

10% overload 1.1

20% overload 1.0
40% overload 0.8

Group VI - WHEEL POSITION 0.5

Trailing

Front (non-driving) Driving 1.0

Rear dump 0.9

Rear dump tandem 0.8

Bottom dump 0.7

Scraper , self-propelled 0.7

0.6
Group VII .. GRADES, DRIVE TYRES ONLY
Level firm surface
6% maximum 1'.0

10% maximum 0.9

1 5 % maximum 0.8
25% maximum 0.7

LOOOE or Slippery surface 0.4

1 0 % maximum
15% maXimum 0.6

Group VIII-MISCELLANEOUS CONDITIONS 0.4

AND COMBINATIONS
Favourable, or counteracting
NONE 1.5
Unfavourable 1.0
Very unfaVourable 0.8
0.6
 - 22 ..

Following is an example showing hOoi the tyre life would be

worked out ~n relation to particular factors chosen from the above
table, as applicable for a particular job, where the tyred equipment
may be in use :

Optimum tyre life 6000 hrs. or 1,00,000 KM.

Example

To determine the ty.re life with the following condition

of working.

1. Maintenance, average 1.0

2. Speed 45 :KM (maximum) 0.8
3. Curves, moderate 1.0
4. Surface, soft earth, some rock 0.8
5, Load, 20% overload 0.8
6. Wheel positj')n, Driving Bottom dump 0.7
7. Grades, 10\ maximum firm surface 0.8
8. Misc. condition, none 1.0

Tyre Life ( 6000 hrs. or 100000 KM) x

1.0 x '0.8 x 1.0 x 0.8 x 0.8 x 0.7 x 0.8 x 1.0 - 1720 hrs.
or 28672 xm,
 -23-
A'PPENDIX 'C '

FORM OF AGREEMENT FOR TRANSFER OF EAR'l'HMOVJNG

& CONSTRUCTION EQUIPMENT AND SPARE PARTS

This agreement made this day of one thousand,

nine hundred and ~between~ _
__________________________
_.hereinafter called the seller, of the
first part and. ~hereinafter called
the buyer, of the second part.

Whereas the owner desires to transfer the following surplus

equipment and/or spare parts.

Brief PartiCffilars of Eqyipment

1.
2.
3.
4.
B. Spare parts as per list enclosed.

And whereas the buyer has agreed to take the above equipment
and/or spare parts.
I,t is hereby agreed to by the seller and buyer hereto as
follows:

1. The transfe'r of equipmp."'"'.t

and/or spare parts shall be governed
by the terms and conditions as specifi·ed in the Guide...Book on Use
Rate HJ.re Charges and Transfer Value of Equipment and Spare Parts
issued by Govt. of India, Central Water Commission.

2.
will be The effective date of transfer of equipment
_ and/or spare parts

3. The seller will furnish to the buyer complete information

regarding latest major repairs and replacement of parts carried out
in the machine.

4. The present condition of equipment has been examined and the

equipment are in good working order.
OR

The equipment are not in good working order but are economi--
cally repairable aId the seller agrees to Plt the equipment in satis-
factory working condition before actual transfer.

The machine is in economically repairable conditions and the

estimated cost of repairs mutually agreed upon is Rs. _

5. The finally agreed transfer price of equipment is as undaz s

Brief PaWCffilq.;rsof Equipment Transfe;r Pri.::e
1.
2.
3.
4.
 -24-

It has not been possible to arrive at mutually agreed

transfer value of equipment and seller and buyer agree to transfer
the equipment pending final settlement of transfer price, of equip..
mente The tentative transfer value of equipment as indicated by
seller is as under:

Brief Particulars of Eqgipment Tentative Transfer Value

1.
2.
3.
4.

Simultaneously, it is also agreeQ to refer the case to

Central Water Commission for a negotiated settlement and the decision
given by Central Water Commissio~ shall be final and binding on both
the parties. The buyer and seller shall refer the case to ewe inde-
pendently stating their case. In case of failure of either party
to refer the case to ewe or provide required i.nformation to ewe ..
ewe will be ~ree to take ex-parte decision.
6. The total agreed amount of transfer value i.e. Rs. _
____________________ will be paid by demand draft drawn in favour
of. on. __

Bank payable at.~~--------------------~ before taki.ng delivery

of equipment and/or Spare Parts.

Pending final settlement of transfer value.. the buyer will

pay 70\ of the tentative transfer value of equipment before taking
deUvery of equipment. The amount of Rs. will be
paid by Bank Draft in favour of yable at
___________________________ • The difference. between the price paid
and final transfer value decided after negotiated settlement shall
be paid/refunded within one month of settlement of dispute by CWC.

7. Assistance in dismantaling packing and forwarding J etc. will

be provided by seller on actual cost basis.

8. Delivery of equipment and/or spare parts will be taken before

__________________________ failing which the seller will ~ free to
dispose of the equipment to its best advantage.
 -25-
APPENDIX '0'

FORM OF AGREEMENT FOR H IRING OF DEPARTMENTAL

EQUIPMENT TO CONTRACTORS & OTHER DEPARTMENTS

This agreement made this day of one

Thousand nine hundred and between the
President of India/Governor of he~einafter re-
ferred to as "the Govt." which expression shall unless excluded by
or repugnant to the context include his successors in office and
assigns of the one part and hereinafter re-
ferred to as "the Hirer" which expression shall unless excluded by
or repugnant to the context include his heirs~ etc. of the other
part.

Whereas upon the application of the Hirer~ the Govt. has

agreed to give on hire all and singular~ the equipment more parti-
cularly described in the schedule hereunder written for the period
and on the terms and condition hereafter appearing.

It is hereby agreed as follows:

1. The Government shall let and the hirer shall take on hire
from Govt. all and singular the equipment as specified in
the schedule hereto for use of work regarding _
______ a.t for the period
of days/months/years from
the day of

2. The period of hire shall be continuous and shall commence

from th~ day the said machinery leave the Govt. yard at _
_________________________ , .and continue till their ~-
turn to the said yard.*

3. The hirer shall furnish a Bank Guarantee to the extent of

25\ qf the book value of the equipment simultaneously with
the execution of this agreement as security d~posit for the
due and proper performance of the terms and conditions of
the Agreement. The Bank Guarantee will be released by
Govt. after the equipment are returned to the Govt. in
good working condition.

4. The hourly hire charges of equipment shall be as under:

S.Nos De.s.cription of equipment Hourly hire charg~
i) (Re.)
il)
iii)
iv)

The Govt. reserves the right to revise the rate of hire

charges after giving one month's notice.

5. The hire charges shall be recovered based on actual hours or

the following minimum hours whichever is more.
*The Governmene will however, have the option to ~t~h~~~ra--w--th--e--s-a-1-·d---
equipment from the hirer as and when required for other urgent/
priority works.
 -26-

S;Lngle shift Double shift Threeshifts

i) Yearly basis, 1200 2000 2500
ii) Monthly basis 150 250 313
iii) Weekly basis 36 60 75
iv) Daily basis 6 10 12

Continuous breakdown or non-availability of equipment for one

hour or more shall be accounted for and shall not be charged. If the
machinery is required to be shifted to store or workshop. the cost of
such transport will be recovered from the hirer. The Hirer will have
option to terminate the contract if any equipment under repair reaches
Govt. store or workshop.

6. The equipment shall be operated, maintained and repaired by

the departmental crew only.

7. In case any infra facilities like temporary sheds etc. are

required to be provided by the Deptt. in connection with hiring of
equipment to the hirer the cost of such infra facilities will be
recovered from the hirer.

8. The cost of transportation of operational & maintenance crew,

POL spare parts, etc. an~ TA/DA, if any, payable to the operation
and maintenance crew shall be recovered from the hirer.

9. If any, repairs are necessary due to any reason other than

normal wear & tear, i.e. due to negligence on the part of hirer, the
actual or estimated cost of repairs will be recovered from the hirer.

10. Any loss or damage to the machinery and equipment will be

made good by the hirer at his cost.

11. In case of departmental contractor, the hire charges shall be

paid by the hirer every month or alternatively shall be recovered from
their monthly bill of won done. However, in case of other departmentsl
contractors, the estimated cost of hire charges shall be deposited in
advance before the equ!pment is taken on hire.

f2. The authorised representative of the contractor shall counterM

sign the log books every day. The contractor shall provide details of
total work done by the equipment everyday to the Engineer ..in-charge.

1~. In Case of any dispute arising out of this agreement, decision

of the Engineer-iJ1o.oChargeshall be final aIXl binding.

HIRER ENGINEER-INwCHARGE
CWC PUBLICATION NO. 40/88

PR\CE : Rs. 13.00

Designed & Printed at Publication Division of Central Water Commission
R.K. Puram, New Delhi-110066. No.40/aa 1500 Copies