How can I estimate the cost of moving one ton of earth one kilometer?
I am early in the process of making a radical invention of equipment for moving earth. At the moment I am having trouble estimating the cost of moving one ton of earth one kilometer in a setting where thousands of tons are moved. Getting the earth into the truck does not need to be included as it would be the same with or without my invention. Rough estimates without any references are alright as I have no idea on how to go about estimating this.
If you, instead of explaining me how I could estimate this, could tell me where I could obtain the real numbers, I would be delighted. I have tried asking companies, but they want all the details before they can make any rough indication of the price, and I do not want to deceive them to think that I would really buy the service from them.
Cost Market Research Cost Estimation
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Don't "decieve them", engage them. Tell them why you want the information. Give them something in return, even if it is just sincere thanks. – Kenneth Vogt 13 years ago
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@Kenneth Vogt. That's funny. If they help me succeed, I will ruin their business. I guess they will appreciate my sincere thanks when realizing how sincere it was. – David 13 years ago
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@David, sometimes we assume a competitive stance when it could be collaborative one. I don't know your industry specifically and it is perhaps a staid one but that doesn't mean you are the only forward thinker. Perhaps you can partner with an established player. – Kenneth Vogt 13 years ago
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One more question that should be closed. – Tim J 13 years ago
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@Tim Did you just down-vote all the answers to this question? I don't mind down-voting the question, but why all the answers? – David 13 years ago
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@Tim Maybe this question should be closed. It is certainly directly relevant for my startup and cost-estimation is relevant for startups in general and this is a good example case (moving earth is something everyone understands). If it should be closed, it would be because it partially draws upon knowledge, which the average entrepreneurs usually have. – David 13 years ago
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@DonWallace I really agree! – David 13 years ago
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@Tim Just one more mind that needs to be opened. This is a good question about strategies for determining costs and also for collaboration. just because it doesn't involve monetising a blog doesn't make it irrelevant to startups. Is this site about information or is it about censorship? – Cad Bloke 13 years ago
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I would vote to close this question, unless it's rephrased to be more general. One can use the earth moving as an example to ask a more generic business question. – Alain Raynaud 13 years ago
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This is not a startup question - thus the vote to close and downvote. – Tim J 13 years ago
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@CAD I am also not a big fan of the "SEO", web, blog monetizing startups. What I didn't like was the original question that basically asked other people to do the work for him. This person is supposed to be in the business of moving earth and revolutionizing the industry. If he can't show in-depth knowledge or find out how to get that information no one is going to take him seriously. This is a minor issue to work out - and coming here to get answers shows a lack of desire (IMO) That is the reason for the downvote and close suggestion - not because it wasn't about a website. – Tim J 13 years ago
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To the OP - why don't you hire a mining consultant for this - since you are still doing market research. You are going to need a domain expert eventually anyway. Pay for a few hours of consulting and you might actually learn something. – Tim J 13 years ago
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@Tim. That's a fair enough answer. Thanks for taking the time to respond. For the record, I agree with your reasoning. – Cad Bloke 13 years ago
6 Answers
You can ask somebody how much it will cost to do it. This is called "market price" and can differ significantly to what you estimate analytically. It can vary from place to place.
"and I do not want to deceive them to think that I would really buy the service from them" - This seems wrong to me. The only real price is the price they will give you knowing all the details and believing you will buy the service from them, not some hypothetical price.
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One thing with market prices is that I might develop this and try selling, but then realize that the companies had huge margins. They would then lower their prices and I might realize that I have no cost benefit whatsoever. I guess that it is still by best bet, though. – David 13 years ago
It would cost nothing ; meaning you're lack of clearly stated assumptions might lead to an example such as mine, which is to say I could move a ton of earth to one spot for free given I had somewhere to put it.
I could think of a million scenarios, which might not be what you mean.
More importantly than just a clear set of assumptions, also you need:
- The estimated demand for that approach within the market you would be able to service,
- The cost to change to that from your new approach from the old one,
- The cost to acquire new users of your 'method',
- Etc.
Will it cost a million dollars? No. Will it cost $1? No. Then probably you are in this range. The question is of narrowing down this range to have a somewhat confident estimate. Try breaking this down into an "objective hierarchy" like structure - "Move 1 ton earth 1km" at the top and branch out to what all contributes to achieving this. Do this recursively on each 'node' unless you think you are 'satisfied' with the attributes involved that would help you 'cover' the costs. These attributes should be able to tell you what to measure and you'll probably have a rough idea of their ranges. But if you still want to estimate the ranges you can ask your peers/colleagues to help you on that - but do this with this exercise:
For each estimate E let's say you have the following choice:
- You win $1000 if your estimate is correct (i.e., within the range you suggested)
- You spin a wheel: 90% chance you'll win $1000 and 10% chance you'll win nothing.
If you chose the former it means you are more confident about your estimate and you may need to narrow your range (overconfident estimate).
If you chose the latter it means you think the gamble has a higher chance of payoff and you need to widen your range (under-confident estimate).
Ideally you should be indifferent between the two. It takes some time getting used to but it is a good sanity check. It's underlying concept is in utility theory where you are to choose between the sure thing and a gamble and based on that you understand the 'utility' of that attribute. This approach has just been modified for the masses by Doug Hubbard and advocated in his book "How to measure anything" :) He calls it being 90% confident with your estimates (and hence the 90-10 gamble)
It's a good sanity check to base your estimates and easily understandable...try it and see if it helps!
As the saying goes, "It depends, on a lot of factors, Some in your Control and some beyond".
- It depends on the Terrain (Ease of the Trucks, Dozers, and other equipment to move around)
- It depends on the Scale (Volume, That you are moving)
- It depends on the Economy at the Time (Transportation Cost)
- It depends on the Distance you are moving (You use different means to move)
- It depends on the Geographic location (Not all places on the earth, got the same value to resources, labor, and material)
In spite of all those, "It depends" The factors that go into estimation are more or less the same around the world. Revealing cost to most companies, would be to let their cat out, The only Number that you can get reliably, Is the Price.
Best route would be to breakdown the costs (Variable and Fixed) to the component level, and then throw a dart to get the cost. You will then better appreciate the eco system, and your invention can then target a particular part of that whole system...
My 2 Cents. :-)
This question has no answer. It depends on
- where you are because of the cost of labor,
- what equipment do you have to use, which in turns depend on
- topography, also
- how long do you need to move it.
I mean, if you have to move 1 tone 100km you may do it differently from the way you would do it if you have to move it only 1km. There is probably an average somewhere, but it would be just that, an average to estimate costs. They probably know that average, but don't want to tell you.
Also, the chances that you are going to disrupt a market that you don't know seems a long shot. Plus, instead of thinking you are going to make the competition go broke, you may want to engage the competition to buy your idea. That way they may give you more info, you can get financing easily since you already have clients, and everybody is happy. Just a thought.
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I asked HOW can I estimate. You have to agree that it is possible to estimate such a thing. I do agree, that there are a number of influencing factors. In estimates, one usually makes assumptions with regards to unknown factors. – David 13 years ago
I could move one ton of dirt one kilometer with a pickup truck and shovel. I think you're asking the wrong question. Figure out the cost of moving thousands of tons.
Go somewhere where they're loading dirt into trucks. Count how many truckloads per hour they can load. Guess how long it will take them to drive 1 km, dump and return. Determine how many trucks you will need.
The numbers for my area:
A standard 10 wheel dump truck can carry 20 tons*
The hourly rate for the truck is about $70 (minimum 4 hours + 2 hours to get to/from site)
Then do the calculations.
*although they are actually loaded by volume, not weight. Some materials are heavier, some are lighter. And there's different types of trucks for different conditions. That might be why they're asking you for so many details.
