Overhead expenses for the Rate Period are specified using the “Overhead Cost Estimate” sheet.

The purpose of the “Overhead Cost Estimate” sheet is to model the cost and timing of those expenses associated with the employment of the fleet as a whole; for example, general and administrative expenses incurred to manage the fleet.

Overhead Allocation Status #

Here you can examine the current status of the allocation of overhead to the machine employment cost estimates for each machine in the fleet.

Overhead is allocated to individual machine employment cost estimates using the Employment Cost Factors sheet. Overhead allocation status is automatically displayed in that sheet to assist in the allocation process.

Under-allocated overhead is not recovered. If the fleet performs as modeled, under-allocated overhead will result in a DEAD LOSS for the Rate Period.

Over-allocated overhead RAISES charge rates – which raise bid prices – which reduces bid success.

General & Administrative Expenses #

Specify here all those G&A expenses associated with the management of the fleet – as specified in the Equipment List – that are to be recovered through the charge rates for the listed machines.

IF ALL G&A expenses are recovered when bidding jobs through the overhead component of the bid prices for the work do NOT list any expenses here. Otherwise, you will recover the listed costs TWICE, once through equipment charge rates and once through bid prices.

Other Overhead Expenses #

Specify here all OTHER or NEW expenses associated with the management of the fleet – as specified in the Equipment List – that are to be recovered through the charge rates for the listed machines.

IF ALL OTHER OVERHEAD expenses are recovered when bidding jobs through the overhead component of the bid prices for the work do NOT list any expenses here. Otherwise, you will recover the listed costs TWICE, once through equipment charge rates and once through bid prices.

Non-Pay Equipment Cost #

Here you can examine the automatically created list of machines whose cost recovery method is [Non-Pay Equipment] in the Equipment List’s Administration property set.

The total cost reported for all NPE for the Rate Period is recovered by allocating it to other machine’s estimated cost for the Rate Period as a percentage of the total cost.

The allocation process is accomplished in the Employment Cost Factor sheet.

Tips #

• Treat maintenance equipment as Non-Pay equipment, so its cost is recovered through the charge rate associated with the employment of every machine in the fleet (i.e., those machines whose CRM = “Charge Rate”).

• If certain pieces of maintenance equipment are required for certain machines exclusively, treat them as Non-Pay equipment and take note of their estimated cost for the Rate Period. Then allocate that amount to ONLY those machines benefiting from the subject maintenance equipment. Alternatively, spread that amount between the machine employment costs estimates of the benefitting machines by adding to each machine’s operating cost estimate an “other operating cost – monthly” or “other operating cost – hourly” cost item.

• Use the Auto-Allocate command in the Ironworks Toolbar to automatically calculate overhead to all Machine Records in proportion to their contribution to the fleet’s total direct cost.