Fleet Cost Allocation Process

 

Fleet Cost Allocation Process

NV Energy is looking at updating the method in which vehicle costs are allocated to all the users. We are asking other fleets (in particular investor owned utilities) to identify their allocation process in hopes of adopting best practices. Some of the areas we are considering is charging most fixed costs (PM maintenance, lease/depreciation, licensing, etc.) costs directly to using department. We are also considering direct charging fuel to each department through an allocation process.

Here is NV Energy’s allocation process.
NV Energy establishes a budget for the total 184 spend. We then divide this budget by all our vehicles to establish a “monthly rate” for each vehicle, trailer, and equipment. This rate is charged to each department on the basis of 160 hours a month. The cost is charged to each department through an allocation process that is based on the department’s labor distribution. There are two methods in which this is done. If a vehicle(s) is assigned to an individual, the cost of THAT vehicle is divided up amongst all the charge accounts the employee charges his time to, 100%. All the remaining vehicles that are not assigned to an individual, the total of all the vehicles costs are divided amount the entire departments labor distribution and allocated out to all the charge accounts the whole department charges to. This is for all productive time codes. Most non-productive time codes are excluded from getting vehicle charges, such as sick leave, vacation, safety meetings, etc.

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We use a chargeback system. All users are billed monthly by vehicle for all fixed costs (lease, depreciation, license, etc) and they are billed for all fuel, repairs and maintenance. The variable billing is done daily from any fuel or work order transactions that are completed that day. The using department sets up a cost dristribution for each of their vehicles that charges get billed against. If you need more information or want to discuss call me.

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Central Hudson Gas & Electric accrued the monthly vehicle expenses, repairs, fuel, depreciation, etc. and “cleared out” the accrual on a monthly basis to the various operating areas that are assigned the vehicles and equipment. The operating areas complained that they could not plan for, or control these expenses. So, just recently we changed our accounting process and now these costs stay in Transportation’s budget. Not sure how its going to work out.

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OG&E (Oklahoma Gas and Electric) uses a clearing process much like Central Hudson. Vehicle are assigned to a BU Cost Center all costs flow through and are charged to the individual BU. We have an activity rate for our mechanic hours that includes all the overheads.