How to calculate construction owning and operating costs

Updated Sep 12, 2019

Calculating Owning and Operating Costs for Construction Company

Owning costs = purchase price of machine + financing + taxes – disposal price (what you get for that machine when you resell it).

Operating costs = labor + fuel + maintenance + replacement costs of tires, tracks and other components + overhead.
Add the owning to the operating costs and you have your O&O costs. At first, you’ll have to estimate these numbers, like how long you’ll keep the machine, how much it will bring at resale, what the future maintenance or component replacement costs will be. If you bought the machine from a dealer, they should be able to help you calculate a lot of these long-term costs.

The more experience you have at this, though, the more accurate your estimates become. The magic starts to happen when you boil it down to costs per hour. With that you can set your hourly equipment rates and turn in razor sharp bids on any project.

Don’t be surprised to find labor and fuel are your two biggest costs. The actual price of the machine over time, by comparison, is small. So it behooves you to invest in any machine technology that conserves fuel or increases the productivity or both.

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