About equipment cost recovery

Cost recovery is the process of charging all the costs of owning and operating a piece of equipment to ongoing projects.

The 8-3 Equipment window can help to remove the guesswork associated with recovering equipment costs, as follows:

• Use the Cost Recovery Worksheet tab of the 8-3 Equipment window to enter the cost of owning and operating the equipment for a resource consumption period, as well as the estimated use for the resource consumption period.

  Estimate the expected use and costs based on records from previous years. Do not include the cost of labor in the operational costs because job costs created in Sage 100 Contractor include the equipment operator’s time. It is a good idea to review the cost recovery rate every year and make adjustments. If you discover that the equipment use is considerably higher or lower than expected, evaluate the cost recovery rates sooner.

  Use the calculated Total cost to operate and the Cost for idle/standby per unit amounts to determine appropriate cost recovery and billing rates.

• Use the Cost and Billing Rates tab to enter cost recovery rates and billing rates to charge projects for Operated, Idled, and Standby equipment costs.

  Through the cost recovery rate, you post the costs for owning and operating equipment to the job. The accounting transaction posts a debit to the Job Expenses account in the Direct Expense range, and a credit to the Equipment Revenue controlling account in the Equipment/Shop Expense range. The transaction increases direct expenses and reduces overhead expenses, resulting in a more realistic view of job profits. At the same time, Sage 100 Contractor creates a job cost record and an equipment revenue record.