Determining the actual costs of owning and operating your equipment is one of a contractor's greatest challenges in bidding. Jobs must be bid with equipment costs in mind, and the items included and methods used must be acceptable in costing claims. There are several elements of ownership cost:

  1. Depreciation is universally recognized as a construction cost, yet precise determination of the actual loss of value from use or obsolescence is, for all practical purposes, impossible.
  2. Interest on investment recognizes the time value of the money a contractor has invested in equipment.
  3. Taxes on personal property are a cost element of owning construction equipment.
  4. Insurance is an element of ownership cost which should be included in any standard equipment rate.
  5. Storage and handling costs may or may not enter into a computation of the standard or average cost of owned equipment.
  6. Major repairs and overhaul costs on owned equipment are usually incurred between jobs and charged to repairs and maintenance as they occur.