CONSTRUCTION FLEET BURDEN AND OVERHEAD — THE TRUE COST OF COMPANY VEHICLES.
A contractor who answers “what does your truck cost” with the monthly payment is understating the real cost by a factor of 2–3x. Insurance, fuel, maintenance, registration, and depreciation are all fleet costs. When they are not in the overhead rate, they are being paid from project margin without being recovered in the bid price. Across a fleet of 8 vehicles, that understatement runs $80,000–$120,000 per year — permanently absorbed from net profit on every project, year after year.
The fix is a fleet cost inventory that calculates true annual ownership cost per vehicle and allocates it correctly — to overhead for non-project vehicles, to direct job cost for project-assigned equipment. The overhead rate updates. The bid rate updates. Future projects recover the real fleet cost.
THE TRUE COST OF A COMPANY TRUCK OR PIECE OF EQUIPMENT — NOT JUST THE PAYMENT.
What Fleet Ownership Actually Costs Per Year
A company truck with a $650/month payment costs $7,800/year in principal and interest. It also costs: comprehensive insurance at $2,400/year, registration and plates at $300/year, fuel at $4,200/year at average utilization, maintenance and tires at $1,800/year, and depreciation at $6,500/year on a $32,500 truck depreciating over 5 years. Total annual ownership cost: $23,000. Cost per month: $1,917. Most contractors who are asked what their truck costs answer with the monthly payment — $650. The real number is 3x that. When that gap exists across 8 company vehicles, the fleet burden in overhead is understated by $101,600 per year.
Vehicles Sitting in Overhead vs Vehicles Allocated to Jobs
Company vehicles that go to specific projects should be tracked as direct job expense on those projects. A superintendent truck that is 100% on one project belongs in that project's direct cost. A shop truck used across all projects belongs in overhead. The error is treating all vehicles as overhead regardless of project assignment — which inflates overhead and understates direct job cost simultaneously. The overhead rate becomes higher than it should be. The job-level margin becomes lower than it should be. Both numbers are wrong in ways that compound at bid time and at closeout.
How to Build a True Cost-Per-Day for Field Equipment
For equipment deployed to specific projects, the cost allocation should use a true cost-per-day: (annual depreciation + annual insurance + annual maintenance + annual fuel) divided by productive days per year. That cost-per-day is the internal equipment charge rate. When equipment is deployed to a project, the charge rate goes to the project as direct cost. The equipment ownership cost in overhead is reduced by the amount charged to projects. The result is accurate job-level margin that includes the real cost of the equipment deployed to each project.
THREE STEPS FROM PAYMENT TRACKING TO TRUE FLEET COST IN THE OVERHEAD RATE.
The bid rate correction: Most contractors who go through this exercise for the first time find their real overhead rate increases by 2–4 points due to underaccounted fleet burden. That increase is real cost that was being absorbed from project margin on every job. Correcting the overhead rate at bid time recovers it going forward — without changing what the business actually costs to run.
FREQUENTLY ASKED.
