Fleet and Equipment Usage Data can Help Improve Project Budget Estimates
Construction and renovation companies have a lot of factors to consider regarding project budgeting. One way to more accurately predict contract estimates is by using historical asset usage data, including duration of use across job types and the associated costs.
When drafting a bid for a project, companies have to consider every aspect of the project’s expenses, including hard costs like materials and equipment, general costs, and soft costs. On top of that, a profitability number needs to be set, and contingencies need to be in place for things like unexpected expenses, changes in scope, and remobilization fees. The closer a project estimate comes to actual project costs, the smoother the job is likely to be. “Inadequate budgeting may lead to omissions, errors, delays, and even incompletion,” explains national contractor Buildrite Construction. “Note that [a] budget – even if not completely finalized – may later be used as an effective tool for measuring how the project is performing at a given point.”
In addition to using a budget for project management, holding onto and analyzing estimated and finalized budgets for past projects is a great way to understand discrepancies in estimates and calculate more closely appropriate budgeting for future projects. Construction budgeting software company, Billd, recommends analyzing past budgets to create more accurate estimates: “You shouldn’t stop looking at project budgets after completing your construction project. By adjusting future estimates to align with your actual construction costs, you will drastically improve the quality of your estimates and the win rate of your bids.”
When looking at the time and costs associated with contract mobilization for project budgeting, a large chunk of that should be geared toward ensuring fleet assets, including vehicles, equipment, and tools, are lined up and ready to work. Mobilization time and costs relating to transportation, fuel, off-road equipment, and tools can be better calculated through historic usage data for similar contract types.
Assessing Fleet Costs
While contract mobilization hinges on multiple departments across the business, the reliability of fleet assets can impact the entire job. Thanks to the rise in available fleet solutions, such as fleet management software (FMS), construction and renovation companies can comprehensively monitor any aspect of operating their fleet assets, including service histories, asset use, fleet utilization, asset availability, and total cost of ownership (TCO), all of which can feed into fluctuations in project budgeting. Fleet solutions take all collected data and automatically render it actionable through customizable reporting, allowing for clearer insights into fleet-related project costs.
By monitoring the asset usage and fleet costings related to specific projects, contractors can get a better idea of appropriate budgeting for future projects, including asset insurance costs, fuel spend, usage cost per day or hour, and maintenance and repairs (if applicable). Improving data visibility around fleet assets helps companies easily determine which assets are available, in the shop, sitting in the lot waiting to work, in use on other contracts — including to whom the asset in use is assigned — and whether assets for specific project types will need to be leased/procured. Integrating fleet solutions with other business solutions can provide the added benefit of finance and accounting-related fleet data transparency for improved budgetary estimates.
Usage data consists of several key metrics, the most prominent being odometer readings (or engine run hours), operational idle time and power take-off usage, and fuel consumption. While these metrics can be hard to track and analyze manually, FMS and other fleet solutions automatically track, consolidate, and aggregate this data for more accurate insights. This is especially beneficial for companies working with subcontractors that use your assets, as it allows you to compare asset assignments against usage data to ensure that if you’re billed for 40 hours, it’s because the subcontractor worked 40 hours. “We utilize a lot of the data — utilization data, first ignition time, last ignition time — every day, because [the subcontractors] get paid hourly rates,” explains Fleet Manager, Bryan Abbott. “So we see the correlation between what they charge us every month versus the hours that the vehicles actually run every month.”
By tracking and analyzing historic fleet usage data, construction and renovation companies can get a better understanding of fleet costing per job/contract, helping to more accurately account for that aspect of project budgeting.
Rachael Plant is a content marketing specialist for Fleetio, a fleet management software company that helps organizations track, analyze and improve their fleet operations.
*Featured Image Courtesy: Fleetio