History of Machine
This need of experience data creates the necessity of a means for gathering and preserving the data, and the machinery record above referred to serves the purpose. Therein should be set forth the complete life history of the machine—not only the original cost and the additional data given above, but also the time and cost of all replacements and all information relevant thereto and, as a memorandum, the cost of maintenance, repairs, up-keep, etc. The record is not complete without the data as to repairs. A periodic statement should also be made as to any abnormal conditions under which the machine has been operated, such as overtime, overload capacity, etc. Where possible, the output of the machine in units of product should be included in the record. Where a group or battery of similar machines is operated, the average experience of all of them is the best possible data on which to base future estimates of depreciation.
The more life histories available, the more reliable will be the average obtained therefrom. After making due allowance for changed conditions of operation, this average should prove a reliable forecast of future experience. After all, an estimate of depreciation is in many respects very like an insurance charge, and the time may come when the life histories of a sufficiently large number of machines will provide a very reliable basis for estimate at any given time of the expected life of a machine when operating conditions are known.
Standards of Operation
One phase of the modern efficiency movement relates to the study of machine operation. This has helped in the study of depreciation, in that standardized methods of use have been established. These comprise a standard speed of operation, proper periods of rest, correct methods of throwing in the power, the proper adjustment of parts for each machine; and for each kind of machine tool, the proper degree of hardness to which the cutting edge must be tempered, the speed of cutting, and the number of operations before resharpening—all these standards have been established, resulting in an average performance of maximum efficiency which may be called the normal operating conditions of the machine. Where such studies have been made and where the set standards are uniformly observed, a very reliable basis is furnished for forecasting the future. To insure the observance of these standards a permanent card should be attached to every machine, giving all the information essential to standardized operation. A copy of this standard should be made a part of the record in the machine ledger.
Abnormal Operation
To make the periodic revision of the estimate of depreciation accord with the fact or rather with the best possible estimate of the fact, any abnormal operation of the machine should be considered. Thus, if the machine has been worked overtime, say on a three-shift day instead of one-shift, or if it has been crowded beyond its capacity, if repairs have not been made when they were needed, if the wage policy has been changed from a per diem or per hour basis to a piece-work basis—all these points must be considered.
Machines which are seldom used require careful consideration. It is oftentimes necessary to include in the equipment special machines for infrequent operations and processes. The normal operation of such must be estimated for each particular factory and depreciation based on such use.
All of the foregoing points must be taken into account in connection with the operation of both machines and power equipment. In the case of the power machinery, a consideration of kind and quantity of fuel, manner of feeding and cleaning, quality of the boiler water, etc., with the set standards, forms the basis for a revision of depreciation rates and estimates.
Map of Machine Location