Executive Summary:\u00a0\u00a0<\/b>Equipment cost within an estimate is one of the most common areas to make large scale adjustments in a bid\u2019s price. It is also a large component of a heavy\/civil construction company\u2019s bid and balance sheet. Because of these reasons, it is vital to know what your fleet is costing you. Start to take action on better estimating these costs.<\/p>\n
Why companies own equipment.<\/b>\u00a0\u00a0<\/span>A lot of construction companies own their own fleets of equipment for several reasons:<\/span><\/p>\n How companies calculate equipment costs.<\/b>\u00a0\u00a0<\/span>I\u2019ve heard it a hundred times from companies \u2013 we do that \u201cdifferently\u201d.\u00a0\u00a0<\/span>\u201cThat\u201d could mean a lot of things and it definitely includes the calculation of rental (internal cost to a company) and its associated operating expense.<\/span><\/p>\n Some companies use \u201cwhat the owner gives them\u201d which is often times based on historical costs that have won projects but have no direct correlation to actually incurred maintenance costs.<\/span><\/p>\n Many companies use a set rate for hourly rental and do not have a rate for operating costs.\u00a0\u00a0<\/span>The proper way to account for the true cost of equipment is to include:<\/span><\/p>\n The benefit of having a two-component cost at bid time is to permit the estimator to incur a daily\/monthly rental but to only incur operating expense when the gear is actually operating.\u00a0\u00a0<\/span>So, as an example, if you have a dozer on your job for six months, but it is sitting for two of them, the true cost of the equipment is the full six months of rental plus only four months of operating expense.<\/span><\/p>\n I ran into another company that set the operating expense to 50% of the rental rate.<\/span><\/p>\n Suggestion.\u00a0\u00a0<\/span><\/b>Be consistent.\u00a0\u00a0<\/span>Pick a measure and make it consistent.\u00a0\u00a0<\/span>A lot of people shun using Blue Book Rates, but I disagree.\u00a0\u00a0<\/span>Yes, using these rates can make it hard to win work (they\u2019re too high).\u00a0\u00a0<\/span>However, the advantage is consistency.\u00a0\u00a0<\/span>Starting with a base value which is traceable over time and somewhat predictable will allow you to more easily maintain your database of equipment costs.\u00a0\u00a0<\/span>Also, like it or not, it may actually be correct since there\u2019s a team over at equipmentwatch.com that is living and breathing the generation of, and defense of, all the numbers they publish.<\/span><\/p>\n<\/span>","protected":false},"excerpt":{"rendered":" Executive Summary:\u00a0\u00a0Equipment cost within an estimate is one of the most common areas to make large scale adjustments in a bid\u2019s price. It is also a large component of a heavy\/civil construction company\u2019s bid and balance sheet. Because of these reasons, it is vital to know what your fleet is costing you. Start to take […]<\/p>\n","protected":false},"author":3,"featured_media":104508,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","iawp_total_views":0,"footnotes":""},"categories":[109,99,50,38,57],"tags":[58,132,60],"yoast_head":"\n\n
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