Purpose

Equipment is one of the Item Types in Aspire which can be used to assemble costs that need to be considered when building an estimate as well as costs that can be applied to Work Tickets. Items are an important part of how Aspire costs jobs. It’s recommended to understand which costs are able to be estimated and captured in the system. When costs are clearly defined, you will have a better understanding of what job costing numbers mean in your Aspire system.

Aspire compares Estimated Costs to Actual Costs by Item Type on the Work Ticket level. These numbers can be displayed on a higher level of reporting but the Work Ticket is the most granular.

Now that we know how Work Tickets interact with Items, those Items need to be costed to specific Work Tickets so they can be registered in Aspire and part of the analysis for each Work Ticket, Opportunity, Property and Branch.

Items are costed to Work Tickets in two ways. They can either be costed by allocating an Inventory Item or through a Purchase Receipt. Both processes involve Accounts Payable, either with the initial purchase of the Inventory Items at a cost and quantity or by a direct purchase that goes to A/P.

Company owned equipment can be connected to Administrative staff or property. A good example of this would be a company that has a fleet of equipment that they own and is available for their operations staff to use as they see fit.

As a result, this equipment should not be allocated by an estimator to a specific Opportunity or Work Ticket, forcing the operations team to make a specific decision.

In the same way, Aspire uses Total Man Hours to estimate and provide targets for hours on a specific Opportunity or Work Ticket, the operations team can make the decision about how many people are actually put on that job based on the need.

The best way to capture the costs of company owned equipment is to include them in the Markups on Services. This can be done by assigning a higher Labor Markup to Service Types that have equipment-heavy Services within them.

This allows you to charge a higher hourly rate for those Services since you’ll include the equipment use cost that will be used. Now, the estimator can be confident that owned equipment is being captured and there is no need to cost the owned equipment down to the Work Ticket.

Owned equipment then becomes part of your Overhead in your budget and will not be tracked within Aspire. If your markups have been set properly based on a budget for the fiscal year, the cost recovery for all overhead should be able to happen, including owned equipment.

The costing of owned equipment to the Work Ticket can present some challenges.

As mentioned earlier, the Purchasing process in Aspire involves A/P. Not all costs of owned equipment go through A/P and not within the timeline that would be required to maintain cash flow due to completed Work Tickets.

Costs like fuel and repairs do have A/P, but with bulk fuel tanks at the yard and repairs being unpredictable from a timing standpoint, this can present challenges.

Here’s an example: When purchasing a bulk fuel order for the yard, would the purchasing department know how to spread that cost across all Work Tickets and for a certain period of time? Would a repair on a piece of equipment be able to be directly attributable to certain Work Tickets in the past? This creates unnecessary Admin time for these costs.

If we were to use the Purchasing function, there are administrative costs associated with clearing those purchases from the accounting system each time they come over.

By clearing those out of your accounting system and keeping them in Aspire, the End of Month Purchase Receipt reconciliation process will always be out by the value of Purchase Receipts created for company owned equipment.

Another solution to this might be to cost the equipment at a value per day or hour. This is because the data from that piece of equipment historically has presented an average cost for a period of time. This means you will need to use the Inventory feature within Aspire to eliminate creating an A/P record for all of those purchases since they aren’t legitimate A/P charges.

📌Note: As part of the Inventory quantity and value reconciliation at the End of Month, there is no visibility into the different Item Types that make up Inventory. There would need to be additional administrative time to separate out what is an Equipment Allocation vs. what is Material.

You can use Pivot Reports to complete this process, but a change in the Journal Entry would be required.

The other drawback to using Inventory and allocating a certain value is that it has the potential to be inaccurate. The reality for that piece of equipment might be that there have been more or less repairs and resulting in inaccurate costing at the end of all that effort.

Another major piece of the relationship between Aspire and your accounting system is that there should be symmetry. If the reporting coming out of Aspire is not the same on the Gross Margin level as the reporting coming from the accounting system, it breeds complacency in job costing and using your system.

The goals that are set in Aspire for Gross Margin might be reached in Aspire but won’t be displayed in your accounting system or vice versa.

As you use Aspire you should begin to understand profitability and where costs are coming from. It also helps allow the managers using the system to have the data they need to make good decisions.