GETTING EQUIPMENT COST ONTO THE JOB.
Allocation is a separate problem from rate building, and it's the one that fails more often. Three bases are available: hours run, days on site, or a percentage of the labor cost on that job, and each of them needs a field document behind it or the allocation becomes a monthly plug somebody enters from memory. The charge posts to the job and credits an equipment account, the actual ownership and operating costs post to that same account, and the balance left over is your over or under recovery. That balance is the number nobody looks at, and it's the one that tells you whether the rate is right. Whatever isn't recovered stays in overhead, which means every job on the report reads better than the work really did.
A subcontractor can build a defensible charge rate and still get nothing out of it, because a rate that never reaches a job is a spreadsheet. The reason it doesn't reach the job is almost always upstream in the field, where nobody was asked to record which machine was on which job for how long. So the office allocates by memory at month end, the numbers move around between jobs, and the first time anybody notices is when two similar jobs report margins twelve points apart for no reason anyone can explain.
WHAT IT MEANS.
Equipment cost allocation is the mechanism that moves the cost of owning and running a machine out of a company-wide pool and onto the specific jobs that used it, using a charge rate applied to a measured quantity of machine time.
The three bases aren't interchangeable and the choice should be made per class of equipment rather than once for the whole fleet. Hours run suits a machine whose cost is dominated by consumption and wear, like a pump or a compressor that either runs or doesn't. Days on site suits owned iron whose cost accrues whether it moves or not, which is most of a dirt fleet. A percentage of labor cost suits small tools and consumables that nobody is going to track individually and that scale with crew size anyway.
Whichever basis is chosen, the rate has to be built before it can be allocated, and the rate build is a separate exercise covered on its own page. This page assumes you have a defensible daily or hourly cost for each machine already. The problem in front of you is getting it onto jobs and proving it posted correctly.
WHY THE COST NEVER REACHES THE JOB.
The field doesn't record machine time, so allocation is a plug
Crews report labor hours because payroll depends on it, and nobody chases them for machine hours because nothing visible breaks when it's missing. So at month end somebody in the office assigns equipment cost across jobs from recollection and from where the machines probably were. That number isn't wrong by a little. It's wrong per job, in both directions, which is worse than leaving it in overhead where at least it's honestly unallocated.
Nothing reconciles what was charged against what it cost
Charges go out to jobs and real costs come in as payments, fuel invoices, and repair bills, and in most books those two never meet in one account. Without the comparison there's no way to know whether the rate is high, low, or right, so the rate stays at whatever somebody set years ago. The reconciliation is a single account balance read once a month, and it's the only feedback the rate ever gets.
Whatever isn't recovered stays in overhead, flattering every job
Unallocated equipment cost doesn't disappear, it sits in the overhead pool. That makes the overhead rate higher than it should be and every job's direct cost lower than it really was, so bids get priced with too much overhead and jobs get reviewed with too little cost. Both numbers are wrong in the direction that feels good, which is why this one survives for years.
WHAT IT LOOKS LIKE IN DOLLARS.
Take one excavator with a charge rate of $650 per day on site. In a month it gets charged to jobs for 42 machine days, so $27,300 goes onto jobs. The actual ownership and operating cost for that machine in the same month, meaning the payment, insurance, the replacement reserve, fuel, and one repair, totals $34,000. The account is under recovered by $6,700, and that $6,700 sat in overhead. One balance, read once, tells you the rate or the utilization assumption is off.
Say that same rate was built assuming the machine gets charged to jobs 200 days a year. Over twelve months it only gets charged for 140 days. The rate itself was fine, and recovery still comes in at 70 percent, so 30 percent of that machine's annual ownership cost was absorbed by overhead. Two causes give the same answer: the machine really is idle 60 days more than assumed, which is a fleet size question, or those days happened and nobody recorded them, which is a field reporting question. The fix is different for each, and you can't tell them apart without the count.
HOW THE CHARGE GETS ONTO THE JOB.
Owned iron goes on days on site, consumption driven equipment goes on hours run, and small tools go on a percentage of job labor cost. The choices get documented so the treatment is the same on every job and across every year, which is what makes two jobs comparable. Changing the basis mid year without recording it's how a trend line becomes fiction.
Machine, job, and either days on site or hours run get captured on the same daily or weekly document the crew already submits, and it gets treated as required rather than helpful. This is the whole install. Everything downstream, the charge, the account, the variance, and the job margin, is arithmetic once the field data exists, and it's all guesswork until then.
Charges to jobs credit one equipment account and real ownership and operating costs debit the same account, so the balance at month end is the over or under recovery in one number. It goes into the monthly close and the CEO report rather than being calculated when somebody wonders. A number that appears every month gets managed. A number somebody has to go and build doesn't.
Every month the balance gets read and attributed to one of three causes: the rate, the recorded days, or a repair that belongs to a different period. Once a year the rate gets rebuilt with the real days and the real costs from the closed year, so it stops drifting. The true-up is also where a fleet that's too large for the work becomes visible, because a machine that can't recover its own cost over a full year is telling you something about the fleet and not about the rate.
THE OUTPUTS, NAMED.
FLAT MONTHLY FEE. NO SURPRISES.
Three tiers, priced by your trailing twelve month revenue. Which one you're in depends on how much of the work you want off your desk. No hourly billing, no payroll, and no add-ons.
Pricing
| Last 12 months revenue | Monthly fee |
|---|---|
| Up to $1M | $1,900 to $2,900 |
| $1M to $3.5M | $2,600 to $3,900 |
| $3.5M to $6.5M | $3,800 to $5,700 |
| $6.5M to $9.5M | $5,100 to $7,100 |
| $9.5M to $12.5M | $6,100 to $8,500 |
| $12.5M to $15.5M | $7,400 to $11,000 |
| $15.5M to $18.5M | $9,400 to $13,500 |
| $18.5M+ | Quoted individually |
Range reflects the three tiers below. Which one you're in depends on how much of the work you want off your desk. No payroll. No hidden line items.
You stop guessing.
You get the CFO work. Job costing built against the way you estimate, a 13 week cash forecast, monthly WIP, and a meeting every month that ends in decisions rather than a report.
Your bookkeeper keeps doing the books.
You stop touching the books.
Everything in Core, and we run the bookkeeping and the controllership as well. Nobody in your office is answering coding questions or chasing a reconciliation at month end.
We do the books. No payroll.
Every job shows its margin while it's still running.
Everything in Executive, plus the job costing and WIP platform set up, loaded with your cost codes, and managed for you every month. You never have to learn it.
We do the job costing.
FREQUENTLY ASKED.
