Cost Recovery Rate Updates: Control the costs you can
What costs can you control?
The squeeze on construction firms is real in 2021. As anyone with even a passing curiosity on the topic knows, prices of inputs are up dramatically year-over-year. A recent ConstructConnect article on the topic laid out the stunning details: in May 2021, not a single construction material from the Producer Price Index (PPI) declined on either a month-over-month or year-over-year basis. Diesel fuel up nearly 200%, softwood lumber up 154%, iron and steel scrap up nearly 77% year-over-year, just to name a few.
These increases come as the final demand construction PPI (otherwise referred to as the bid price index) rose just under 3% year-over-year.
So now more than ever, construction firms and their equipment managers need to have laser focus on the costs they can control: their equipment.
Continually updating and optimizing to provide the most accurate rates
EquipmentWatch is your trusted partner for equipment cost recovery and internal charge rates. Our analysts work tirelessly to ensure we are continually evaluating our processes and inputs so you can have the most accurate and realistic rates. In this trying time for construction finances, we are happy to announce a robust update to our ownership and operating rates effective July 1st, 2021. These updates include:
- Bumps to fuel rates: Since our last update at the beginning of 2021, gasoline has jumped 42% while diesel has increased 29%
- Expanded model coverage: With the addition of 482 models, EquipmentWatch now has cost recovery coverage for over 28,000 models
- COVID-19 impacts on cost factors: With project delays and cancelations that we have been seeing over the past year, our analysis has revealed reductions in equipment annual use hours which directly impact hourly operating costs
- Equipment values: With demand for equipment picking up just as dealer inventories are low and production of new equipment has been slowed, values for some equipment types have understandably been impacted and increased
- City adjustment expansion: We have greatly expanded our city-level cost adjustment capabilities, adding 49 cities; we now have coverage for all U.S. state capitals and have expanded the city-level reach into Canada allowing for more granular adjustments
- Weather factor expansion: Earlier this year, we announced that we had added weather-related data to our regional cost adjustments; now we are happy to announce we have expanded the use of weather-related data to the city level, which helps account for more localized precipitation, average temperature, and weather anomalies that impact jobsite accessibility, terrain, and conditions
Adapting to an ever-changing construction equipment landscape
Traditionally, we have provided these large-scale updates to our customers twice per year. While this pace has served our customers well over the years, given the clip of changes we are seeing and the after-effects of the COVID-19 economy that we are all experiencing, we have decided to accelerate our updates to once-per-quarter. With twice as many updates per year, you can have absolute confidence that EquipmentWatch is providing you with the most up-to-date cost recovery and internal charge rates available.
Our mission for over 50 years has been to simplify the reimbursement process in extra work situations by providing charge rates for equipment that are accurate and realistic. In addition to Cost Recovery, it is more important than ever to accurately account for equipment costs when estimating for a project. The EquipmentWatch Internal Charge Rate Calculator enables contractors to leverage industry benchmarks and compare against their fleet’s unique attributes to bid more competitively, and ensure you remain within budget.