It’s important to have a standard format for your equipment rate calculation that is understood and well-known across your organization. Mike Vorster, creator of the Construction Equipment Management Program (C.E.M.P.), recently led a session at HCSS’s Solutions Summit where he shared an example of an Owning & Operating Rate Calculator with attendees. Two key assumptions, expected life and expected utilization, govern everything else in the owning cost calculation. And the portion of the calculator covering operating costs includes items such as fuel, wear parts, preventive maintenance (PM) service, and others. Adding in overhead and other indirect costs, the Rate Calculator brings everything together for an estimated rate per hour.
As you utilize Mike’s Owning & Operating Rate Calculator, he suggests keeping this in mind: “Your rate does not depend on the way you crunch the numbers, but the quality of the estimates you put in it that count.”
