This is the second blog concerning equipment estimate costing. The following are two more statements that if they occur in your company they should at least be discussed.
Statement: “We can zero out equipment costs in an estimate since we own our equipment”. This is one of most dangerous assumption that can directly impact a construction companies’ financial stability.  A company getting work heavily discounting equipment ownership will find themselves with worn out equipment making it difficult to meet a project’s schedule since the equipment is always breaking down. When a company owns equipment they have to recover not just the ownership cost but the major repairs that will be in the future.  I hear this mainly where good accounting methods are not in place where owned equipment is charged to the job.
Statement: “Equipment Watch (Bluebook) rates are not accurate”. Where I usually hear this is at companies that have little or no equipment cost history. They can’t back up this statement. Equipment Watch has been around for many years and from my experience closely follows outside rental prices. Their historical costs are more accurate than you think.  I recommend checking out their website and reading their information on equipment cost theory.   LINK    If you do force account work for public entities this is the standard for most agencies for charging equipment costs.
Another good resource is Mike Vorster’s book “Construction Equipment Economics”. Check out www.cempcentral.com for more information on available resources.
My suggestion is to develop documentation on how equipment rates were set for your estimates and keep it updated. Remember inflation ticks away at around 3% a year.