Fuel is one major part of operating a machine. We would never tell you it is not an important cost to track. However, it is only one part of many important parts that make up the true cost on owning and operating machinery and vehicles.
We see many excavating companies which have no good way to accurately track their fuel costs and use. These companies have not invested in fuel delivery and tracking systems or take advantage of fuel refueling services. When a company is small and has one machine and one job or project at a time, fuel delivery and tracking may be less of importance. As a company grows, fuel tracking needs to grow in importance.
One reason that fuel use is such an important cost, is that the volume in liters or gallons of fuel used has a direct effect on other costs. For example, the more fuel you use, The more you will spend on:
- Motor oil
- Hydraulic Oil
- Grease
- Other Liquids
- Service Labor
- Support Vehicle Costs
- Breakdown Parts
- Repair Labor
- Ground Engaging Tools
- Used Machine Value or Equity
One of the biggest problems we see is the machine owner who is not aware of the vast change in the job or project cost of fuel use with different types and places of machine use. It is possible for a machine to always burn the same amount of fuel per hour. However, it is highly unlikely. Many estimators try to use a flat rate per hour for all types of work with a machine. This can be done but it runs a huge risk of over-estimating or under-estimating project cost.
Getting to cost needs to be an estimator's number one (1) job. Winning estimates is definitely job number two.
If the machine owner has not provided the correct tools and management for accurately tracking the fuel that a machine uses, under different job conditions, it is not the estimators fault that he does not take the correct cost into account.
Here are some of the major facts that an estimator needs to know in order to correctly estimate job cost.
- Specific Project Work Items
- Soil or Material Geological Conditions
- Soil or Material Temperatures
- Soil or Cut Depth
- Machine Ownership Cost
- Machine Operating Cost
If you are guessing at the machine operating cost for fuel, you are on your way out of business. It always amazes us to see how often people believe that Operating cost is one number that does not change very often.
Your cost of a machine changes on almost every job and may change as often as once a week. So why are you waiting once a year to change your prices?
Dan Rooks
www.DecisiveCost.com
