How do I track equipment costs by job?
Equipment costs come in three forms and each requires a different tracking approach.
Rented equipment is the easiest. When you rent a trencher or scaffolding for a specific job, that cost goes directly to that project. Record it when you receive the invoice and assign it to the job. No allocation required because the rental exists only for that work.
Owned equipment is where tracking gets more complex. You can’t charge the full purchase price to one job because the equipment serves multiple projects over its useful life. The standard approach is calculating an internal rate based on the equipment’s depreciation plus maintenance costs, then charging each job based on hours or days of use.
For example, if a skid steer cost $45,000 and will last about 10,000 hours, that’s $4.50 per hour in depreciation alone. Add average maintenance costs and you might land at $7 or $8 per hour. When the skid steer runs 40 hours on a project, you allocate around $300 to that job’s equipment costs. This requires someone to log equipment usage at each job site, which adds overhead but pays for itself in accurate job costing.
Small tools and consumables like saw blades, drill bits, and fasteners can be tracked directly if purchased for a specific job. For general purchases used across multiple projects, treat them as overhead and allocate based on job size or labor hours. Construction job costing systems typically handle this with a standard markup or allocation formula.
In QuickBooks or similar accounting software, use the class or project feature to assign equipment costs. Each job gets its own class, and every expense or allocation gets tagged accordingly. At the end of a job, you can pull reports showing exactly what equipment costs hit that project versus your original estimate.
The payoff is knowing your true job profitability. A job that looked profitable on paper might actually be underwater once you factor in the 80 hours of excavator time that never got charged. Contractors who track equipment costs per job bid more accurately and catch unprofitable patterns before they become expensive habits. A San Diego bookkeeper familiar with construction accounting can help you set up the tracking system and internal rates so the process becomes routine rather than a quarterly headache.
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