Guide to Calculating Ownership and Operating Costs of Department of Transportation Vehicles and Equipment: An Accounting Perspective (2020) / Chapter Skim
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Pages 7-18
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7 3. METHODOLOGY FOR FLEET COST ACCOUNTING This chapter provides a detailed methodology and examples for fleet accounting in state DOTs.
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8 Table 1. Summary of direct costs in fleets by category Cost Description Fixed Variable Capital Operational Avoidable Unavoidable Accessory equipment1 Costs of additional equipment after receipt (such as radios, emblems, warning lights, and GPS units)
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9 3.1.2. Indirect Costs Indirect costs, while straightforward to define, are more complex in practice and fleet managers may disagree on how best to distinguish between direct and indirect costs (Government Fleet 2014)
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10 Table 2. Summary of indirect costs in fleets by category Cost Description Fixed Variable Capital Operational Avoidable Unavoidable Improvements to operations space Physical enhancements or repairs to any operations and support spaces (office, shop, and parking spaces)
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11 The DOT fleet managers who were interviewed for this Guide shed light on how state DOT fleets treat indirect costs in their shop rates. Figure 3 shows the fraction of the state DOTs that add each given indirect cost to their shop rate.
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12 several guidance materials (Joyner 2000, APWA 2008, and APWA 2016)
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13 • Determining fleet cost recovery rates • Identifying program strengths and weaknesses Cost accounting calculations need to be structured to directly address these six tasks. Many fleet management guidebooks describe the fleet activities as "business lines" -- a term that evokes an image of a private fleet attempting to generate revenue.
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14 function, the costs of the facilities, consumable materials associated with parts, and the cost to support utilities dedicated to this activity.
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15 In this step, the fleet manager should answer several types of questions: • How are equipment cost and usage data tracked, collected, and stored? • Which cost codes, bill codes, charge codes, or cost centers are used within the fleet and by the wider DOT?
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16 When more dissimilar units are grouped together, there will likely be more variances in the reporting. Accordingly, each fleet must determine the appropriate balance between class granularity and having enough units of each type/subtype to support useful reporting.
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17 3.3.6. Step 6: Apply Markup for Contingencies Experienced fleet managers understand the need to expect the unexpected, such as when equipment price inflation rates exceed other inflation measures.
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18 DOTs have also repeatedly faced situations where poor state economics or natural disasters have cause freezes in fleet replacement or even diversion of fleet replacement funds. While these situations cannot always be forecasted, they can be anticipated with contingency planning.
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