Hello, Responder! I have a new query regarding the cost breakdown of paying an employee $26 per hour. Let's factor in additional costs such as workers' compensation at 5.25% and unemployment at 6.12%, then input the total into the spreadsheet mentioned earlier. I realize now that this figure should be automatically included in the Machine cost spreadsheet. It seems like refining this process will be an ongoing task.
I make it a point to set aside $1 for maintenance and repairs for every $1 spent on fuel. This strategy has proven to be effective in budgeting for vehicle expenses.
As powerjoke wisely suggested, setting aside $1 for maintenance and repairs for every $1 spent on fuel is a smart practice. Adding another dollar for replacements can also be beneficial, although it may be easier said than done. For example, consider a 320C machine that consumes 5 gallons of fuel per hour, equating to around $18 per hour depending on fuel prices. If you operate the machine for 5000 hours over 5 years, that totals to $90,000, a substantial amount for a down payment on a newer model.
Setting aside $18,000 annually for repairs and maintenance should be sufficient to cover routine services and major component replacements. The challenge lies in saving an additional $36 per hour above all other expenses. While this may be daunting, it is a worthwhile goal to strive for.
Starting a business in 2008 amidst economic challenges, it has been a struggle to generate retained earnings. However, with increasing business volume and a growing base of repeat customers, the outlook is promising. Despite the initial hardships, the journey of entrepreneurship reinforces the value of perseverance and hard work in pursuit of success.
I completely agree with Oxbow's initial statement. Rental rates can be quite high when using equipment extensively throughout the year. However, I have found that they are a useful benchmark until you reach a certain threshold of annual usage. In my experience reviewing job and equipment costs, I have found that dealer rental rates are generally difficult to beat. These rates serve as a reliable estimate for budgeting purposes. Nevertheless, owning and maintaining your own equipment is still a viable option. It is important to note that full-time utilization is key if you opt for monthly rental rates.
During my 11 years as a shop foreman, I attempted to outperform rental rates with my maintenance and repair strategies. While I succeeded a few times with certain equipment, such as wheel loaders, drum rollers, and graders, I consistently struggled to do so with hydraulic excavators, tracked dozers, crushing equipment, scrapers, and highway trucks. It's important to remember that rental rates are not the only expenses incurred when renting equipment - damage is inevitable.
Instances of damage can include fuel tank replacements, steps on scrapers, truck fenders, doors, hoses, bucket shanks, grilles, lights, and alarms. It is crucial to factor in potential damages when considering rental options. Ultimately, renting equipment can be cost-effective, but it is essential to account for additional costs related to wear and tear.
As a new company that specializes in stream channel restoration and mine reclamation, we rely on renting equipment to meet the specific demands of each project. Our resources are limited, so purchasing all the necessary equipment is not feasible. For example, one project required a 330D, 2 730's, and a D6N, while another needed a 320E, a 324 long reach, and 938 loader. We prioritize safety by ensuring our operators communicate through radio and watch out for each other during operations.
Fortunately, our rental equipment is well-maintained and low-hour, with minimal maintenance costs aside from regular greasing. In case of breakdowns, our dealership provides prompt assistance, even arranging a replacement machine on short notice. The rented equipment is dry and leak-free, meeting agency guidelines for working in sensitive environments like streams.
Given the variety of projects we undertake, renting equipment remains the most cost-effective and practical solution for us at present. While owning specialized equipment might be ideal for consistent work, renting aligns better with our current needs and budget constraints. Rest assured, we prioritize efficiency and safety in all our operations to deliver successful outcomes.
If you're interested, I can email you the spreadsheet I mentioned earlier. Feel free to reach out for further information. Thank you for your understanding and consideration. Oxbow.
Looking for a 10-yard highway dump truck with operator in the northwest? actioninc offers this service for around $90 per hour, including the operator. It can handle legal loads of 12-13 tons, but keep in mind that it may not be able to compact 10 yards of material. Just a word of caution when considering this option. Contact theironoracle for more information.
Thank you for sharing valuable information, we appreciate it!
Keep a detailed machine log for each piece of equipment. Record daily activities such as location, tasks performed, fuel consumption, oil usage, repairs, and maintenance. At the end of the year, analyze the actual costs to operate each machine and adjust rates accordingly. By maintaining comprehensive historical cost data, you can make informed decisions about managing your machinery efficiently.
I am seeking guidance on effectively managing expenses and tracking information within my company. I juggle multiple roles such as mechanic foreman, operator, computer technician, and job site foreman, making it challenging to monitor costs consistently. Despite my efforts to simplify the process, I struggle to get my mechanic and other team members to keep accurate records of their work and purchases.
One of my main concerns is determining our actual cost per hour for equipment and monitoring how it increases over time. This information is crucial for deciding when to replace equipment based on rising costs per hour. Despite creating a user-friendly folder with forms for tracking work and expenses, my mechanic has not been fully compliant with the system. This lack of detailed record-keeping hinders my ability to calculate accurate cost per hour figures.
The program I contributed to and utilized operated as follows: 1) Assign a unique number to each machine. 2) Workers log their time on the machine on their time card (only paid for accurately recorded time). 3) All purchase invoices should include an equipment number, made mandatory with parts suppliers. When multiple machines use the same part, assign an average equipment number or alternate between machines. The key is to create a paper trail without overspending on tracking expenses. Upon returning from a job, input all information into a cost report program to generate a number for accounts payable purposes. Don't forget to include shop overhead costs that aren't listed on time cards or invoices. Consider that an employee may cost three times their hourly wage due to various overhead expenses. This approach helps differentiate costs between different roles in the shop. For instance, a head mechanic may cost $90/hr while a helper costs $36/hr, totaling $126/hr. The average cost for high-quality work is $63.50/hr. Moving on, what accounting software do you currently use?
Let me clarify that when I refer to "my company," I am actually talking about the company I am employed by. We utilize QuickBooks for our accounting needs, but I have found that it is not the best solution for keeping track of equipment. Initially, I created programs in Excel to manage everything, but found it to be a slow process. I then attempted to use Access to build databases, but my lack of expertise in Access hindered my ability to utilize its full potential.
I eventually invested in fleet management software, which proved to be a wise decision as it streamlined my equipment tracking process and saved me time. Currently, our equipment is identified by unique numbers, and every purchase requires a purchase order with the corresponding equipment number. However, a challenge arises as most purchase orders are not visible to me due to their primary function of preventing unauthorized charges. Additionally, issues arise when our tire maintenance is outsourced, resulting in situations where I am unaware of flat tires being addressed promptly.
Another challenge I face is getting my colleague to complete necessary paperwork. Despite providing him with a comprehensive binder containing all required forms for tracking maintenance and repairs, his failure to fill out the paperwork hinders the effectiveness of our system. As the primary individuals responsible for maintenance work, our collaboration is crucial for the success of our tracking efforts.
As I strive to improve our equipment tracking system, I encounter resistance from others in the company who do not prioritize this aspect of our operations. The owner's focus is primarily on the overall profitability of the business, rather than the detailed tracking of equipment costs. However, I believe that having a thorough understanding of our equipment expenses on a per-unit basis would greatly benefit the company. This information could inform pricing strategies, determine the optimal timing for equipment replacements, identify cost-saving opportunities, and enhance overall decision-making processes.
I'm sorry if I am taking over the original poster's conversation, I can create a new one if preferred. I believe my contribution is relevant to the topic of the original post.
Having a negative attitude when trying to implement policies or work practices without full support from the owner can be a frustrating experience, as I learned from my previous job. Despite my efforts to establish and enforce policies, there was a constant struggle and lack of consistency, ultimately leading me to leave and start my own business. It is crucial to have the owner's backing before making any changes.
Furthermore, I noticed that there may be redundancies in your work processes. For instance, instead of creating a separate program for machine costing, you can utilize QuickBooks to track expenses for each piece of equipment. This involves setting up accounts with subcategories such as tires, oil, parts, fuel, payments, and insurance. By allocating costs to specific equipment during payroll, you can generate detailed reports for each unit and calculate the cost per billed hour accurately. This information is essential for budgeting and planning equipment replacements.
It is important to understand the true equipment costs in order to accurately estimate job costs and improve production reporting. Without a clear picture of expenses, it can be challenging to run a successful operation. Considering the challenges faced during the last recession, it is crucial for businesses to have a strong grasp on their financials to survive economic downturns.
The company has been established for over 30 years, but there are some gaps in tracking individual equipment costs. The boss relies on experience and competitor rates to estimate operational costs, but tracking costs for each piece of equipment can be challenging. Production reporting, particularly in terms of man hours for specific jobs, is not consistently monitored. Despite this, the company has a good grasp on job completion times based on past experience.
The process of tracking equipment costs using software like QuickBooks can be complicated due to bulk purchasing of parts for servicing multiple pieces of equipment. The mechanic maintains a digital inventory of parts and updates quantities as needed. Work orders are created for each servicing job, including parts used and labor hours. Communicating specific costs for parts like filters and fluids across various equipment poses a challenge, but the mechanic efficiently manages the tracking process.
Billing is done based on the equipment's hour meter readings, ensuring accurate invoicing. The company, while not large, manages 76 pieces of equipment across different categories. Despite the size of the company, there are limitations in tracking equipment costs separately due to resource constraints. While considering improvements in cost tracking, the priority is to maintain accuracy and efficiency without overhauling existing processes.
Although the company's owners excel at estimating costs, there is a personal motivation to enhance cost tracking for future management responsibilities. The owners are supportive but content with the current system, appreciating the dedication of employees like the writer. Overall, the writer expresses loyalty and admiration for the company and its leadership.
I agree with the sentiments expressed about the importance of tracking individual equipment expenses. As we expand our equipment inventory, investing in a fleet management software program may become necessary. While I currently use Quickbooks, it is disappointing that machine hours cannot be seamlessly integrated to calculate cost per hour. Currently, I rely on a basic Excel spreadsheet for tracking expenses, which involves tedious double entry of receipts that I loathe.
If you're in need of a reliable fleet management software, I recommend checking out TATEMS. After trying out a few others, I found that TATEMS tracked everything I needed without any unnecessary features. While it's not perfect, it's a pretty solid program with no noticeable bugs after using it for over a year. Although there are a couple of annoying aspects that I wish would be improved, overall, TATEMS has been a valuable tool for my fleet management needs. Please note that I have no affiliation with the product.
Impressive discussion on equipment and job costing processes. It is crucial to track the total equipment cost through accounts receivable. Whether it's for a new office computer, a business trip, or equipment for a job, every expense must be entered into the correct cost account. By ensuring that every invoice has an equipment number assigned, you can accurately track expenses and calculate the cost per hour of machine operation. This analysis helps in making informed decisions regarding equipment replacement. It is essential to keep detailed records, including equipment numbers, for accurate cost allocation. Consistent use of numbers for tasks, locations, and equipment ensures precise cost estimation for future jobs. Payroll administration also plays a significant role in managing labor costs effectively.
Thank you for the recommendation, briscoetab. I will definitely research it. Also, I'm curious if anyone has experience with the popular TV advertising product, NeatDesk. This innovative device not only scans receipts but also helps users organize them efficiently on their computer.
I appreciate your input, theironoracle, but I am still struggling to grasp how to effectively manage my inventory of parts and fluids. While we do track our expenses as you suggested, there are often instances where secretaries inquire about purchase orders and their corresponding items. For instance, our tire department requires a PO with equipment numbers, a process known by the secretary but not by me. The challenge lies in the lack of detailed breakdown of information for individual equipment. I estimate that I hold around $10,000 worth of stock, consisting of various items like air hoses, lights, batteries, fluids, and more. While I can assign some items to specific equipment, many remain unassigned at the time of purchase. Perhaps a meeting with the boss and secretaries to review our inventory tracking methods is necessary. Although we monitor job costs and equipment expenses, the breakdown to individual equipment is lacking. It's possible that our current system aligns with your suggestions, and I simply haven't realized it yet. I may be the one hindering our ability to accurately track equipment costs due to a lack of understanding in assigning items to each piece of equipment. Apologies for rehashing the topic, but I am eager to learn the correct procedures for inventory management. I value the advice provided thus far and respect if this discussion is concluded. It's possible that I am overlooking your solutions, and I appreciate your patience. Thank you.
I empathize with your frustrations about the oil and filters in your inventory that haven't been used for a specific machine yet. It can be challenging to allocate these items efficiently without complicating things further. Distributing them evenly across all machines in the fleet may not accurately reflect each machine's operating costs. I appreciate the detailed insights shared by everyone, and it's clear that this topic sparks interesting discussions. If managing stock and equipment was straightforward, we wouldn't have such engaging conversations on this thread.
I have been considering the idea of reselling equipment to myself, which could potentially complicate matters. However, I find it easier to monitor individual equipment costs at my level and then track the overall equipment cost in the accounts payable system. Despite my efforts, it has not been easy to manage this process, which is why I am reaching out for help. All our equipment expenses are recorded in accounts payable, but for items not yet assigned to a specific piece of equipment, I simply label them as "shop/equipment" on purchase orders. This way, accounts payable can identify it as an equipment cost, even if the specific equipment is not specified. I have systems in place to track all of this, but sometimes I struggle with keeping track due to the paper trail or employee oversight.
I have been reading this article with great interest. When I first entered the industry, the companies I worked with would combine all equipment costs into one account for management purposes. These costs were then broken down into categories such as fuel, repair parts, maintenance items, tires, ground engaging, capital costs, and insurance. Surprisingly, the issue of cost management seemed to be more prominent among the mechanic staff rather than the engineering team.
In my experience managing a shop, I learned that payroll and cost management are two distinct functions. Reconciling the cost per hour for individual machines proved to be a challenge, as the clerical staff in both the main office and my office had difficulty communicating. My goal was to have operators and mechanics submit detailed time sheets with information on fluids added, downtime reasons, hour meter readings, and parts used.
Although Quickbooks now provides a way to easily set up a stock account for tracking supplies, in the past I had to manually input job costing information, resulting in hours of additional work each month. Interestingly, equipment dealerships were the only businesses I encountered that tracked labor costs directly, as they were compensated based on labor hours and parts sales. This system, I believed, could benefit any company.
Overall, I sympathize with the challenges you are facing. Setting up a stock account in Quickbooks can streamline the process of tracking supplies and even aid in monitoring pilferage.
I was curious about the rates for renting a bobcat or mini excavator in my area, typically around $75 per hour. For example, if you were to work on a small residential project and spend 8 hours grading at $75 per hour, the total cost would be $600. However, after factoring in expenses like fuel for the truck and equipment, fuel for the tractor, and potentially paying an operator, there may only be around $350 left. How do contractors generate profit with these pricing models, considering expenses for maintenance and insurance, especially if they aren't working at this capacity every day?
A Dozier operator recently raised concerns about the profitability of taking on small residential jobs in the area, where a Bobcat or mini excavator typically rents for $75 per hour. Despite billing at this rate, factoring in expenses such as fuel for truck and equipment, operator fees, maintenance, and insurance leaves little profit margin. The question remains: how do contractors make money with such low prices when not working consistently? This dilemma is commonly faced by contractors bidding on small projects, as general contractors often disclose paying similar rates. Is it sustainable to continue working at such low rates, or is there a better approach to pricing jobs in this competitive market?
Dozierman, when it comes to bidding on small jobs, it's common for general contractors to offer low pay. While it may seem counterintuitive, established companies often take on smaller hourly jobs like digging basements to maintain cash flow while working on more lucrative contract jobs. If a company primarily focuses on small hourly tasks, they need to work long hours and days to make it financially viable. This valuable insight on equipment replacement and financial decision-making is priceless. Thank you to everyone for sharing their knowledge!
If you consistently focus on small hourly tasks, it's crucial to dedicate at least 6 days a week for 10 hours a day to maintain a steady flow of work. This seems to be a common challenge in the residential sector, where many contractors specialize in smaller projects. Despite my efforts to transition into the commercial market, I have yet to find a successful entry point. While I appreciate the general contractors who provide me with work, I am still in search of more lucrative opportunities.
Hello Oxbow,
I realize this may be a stretch since your post is from 2 years ago, but I was hoping you could share that spreadsheet on rental rates with me. I've been struggling to create a similar spreadsheet for the past month!
We operate a construction equipment rental/sales/service business and I am aiming to streamline our operations in light of the economic challenges we've faced. Your assistance would be greatly appreciated.
Thank you in advance =)
Steph
Kindly send me the spreadsheet to the email address provided, [email protected]
IDODIRT has requested to receive the spreadsheet at the email address mentioned. The requested spreadsheet has been sent as per the request.
Hey Oxbow, could you send another copy to my email address: [email protected]? During the winter, I dedicate a significant amount of time to analyzing costs, production rates, and estimating data. Thank you for your help!
I would greatly appreciate it if you could also forward a spreadsheet to me at[email protected] for tracking expenses. It seems like a fantastic tool to monitor costs. Thank you once more.
Could you please send me a private message with the information? I would greatly appreciate it if you could also provide me with one. Thank you.
Bliz requested that Oxbow send an additional spreadsheet to [email protected] During the winter months, Bliz spends a significant amount of time analyzing costs, production rates, and estimating data. JBGASH also expressed interest in receiving the spreadsheet at[email protected], as it is an effective tool for tracking expenses. It is important to customize the spreadsheet with your own numbers, as rental rates may vary depending on factors such as construction season length and rental terms. Oxbow apologized for forgetting to attach the spreadsheet and promised to resend it.
User movindirt expressed interest in receiving a file via private message but unfortunately, I am unable to attach files in PMs. I have sent you a message, so if possible, please provide me with your email address so I can send it to you that way.
Could you please share the spreadsheet you use via email, Oxbow? I am eager to try it out and see how it can benefit my projects.
I would appreciate a copy of Oxbow as well. Thank you.
Elman1 requested a copy of the spreadsheet from Oxbow, while Jatreecompany inquired about receiving it via email. If interested, please send a direct message with your email address and I will gladly provide you with the spreadsheet.
Can you please provide me with a copy of the Oxbow spreadsheet you use? Thank you. My email is [email protected]
Kaboom requested a copy of Oxbow's spreadsheet. Email sent. If you are looking for a spreadsheet template for tracking purposes, feel free to reach out to [email protected]