Whole of life is a projection of future costs. Calculating budget costs using first principles instead of historical costs eliminates budgeting for, and therefore locking in, existing inefficiencies.

Why is whole of life cost important?

Tracking actual whole of life costs vs budget whole of life costs allows fleet managers to adjust internal hire rates to reflect full cost recovery of plant and equipment.

Correct job costs, and competitive cost delivery of services, is the desired outcome.

How do you calculate whole of life costs?

The elements of whole of life costs include:

• Purchase price
• Resale value
• Opportunity costs
• Fuel and oil
• Repairs
• Maintenance
• Insurance
• Registration
• Administration overhead.

Knowing whole of life costs, the fleet manager can provide:

• Annual maintenance budget
• Annual replacement provision
• Annual operational costs
• Internal recharge rates.