Guide to Calculating Ownership and Operating Costs of Department of Transportation Vehicle and Equipment Fleet

State departments of transportation (DOTs) utilize a variety of vehicles and equipment to ensure the safe, reliable, and efficient operation of the roads and other facilities for which the agency is responsible. From plowing snow to mowing right-of-way to clearing debris to dealing with the storm damage to patching pavement cracks and potholes, a DOT’s fleet and equipment comprise an important public asset. While the precise composition of a DOT’s fleet and equipment inventory depends on the state’s geography and characteristics of the transportation system, taken together the expenditures for purchasing, customizing, operating, maintaining, repairing, and replacing vehicles and equipment are substantial, essential, and complex for any agency. A DOT makes these expenditures to acquire vehicles and other equipment and fuel, modify equipment to meet the agency’s specific requirements, administer the use of equipment in operations, perform routine and preventive maintenance tasks, replace worn or broken parts, repair damage, and to provide such services as procurement and cost accounting. In addition, the wear and tear of usage and aging and the unavoidable obsolescence caused by advancing technology and rising public expectations may warrant spending to replace vehicles or other equipment even if they still seem functional. However, the equipment purchased may be in service for many years, used by more than one operating unit, and employed in support of multiple functions such as pothole repair and snow removal. There are more ownership and operation costs than those related to purchases and other capital expenditures. Cost in this context is a potentially complex accounting concept that is not easily measured or calculated. Calculating the cost of having a snowplow ready and using it to clear a highway, for example, requires consideration of not only the initial vehicle purchase price, but also subsequent expenses (for example, customization or “upfitting” by addition of agency decals or a GPS device, replacement of worn parts, insurance or other risk-management spending, provision of storage and shop facilities, and depreciation charges to account for loss of value to wear and obsolescence). In addition, expenses an agency pays for maintaining and administering a spare parts inventory, processing and storage of data on equipment usage and service delivery, and compensating personnel responsible for preparing reports required by other state or federal agencies contribute to the total cost of owning and operating fleet and equipment. Effective management of a DOT depends on having a good understanding of these various costs, how they are affected by equipment use and aging, when in the future they are likely to be incurred, and how they may be affected by deferral of spending and technology change. Knowledge of these costs allows DOTs to understand and communicate how spending can influence system and agency performance. Calculating costs requires adaptation of fundamental principles and conventions of management accounting to address the specific conditions of a particular enterprise, product, or service. Successful freight transporters, vehicle leasing companies, and other private-sector owners and users of fleets and equipment have found ways to calculate their costs and manage their businesses to ensure that they can remain profitable. DOTs also have a need to calculate costs, but they lack such seemingly straightforward measures as profitability to gauge their performance and must rely on public-sector funding and budgeting mechanisms that may not be linked to costs incurred. There is no widely accepted methodology and little guidance for adapting and applying such sound management principles to the specific characteristics of DOTs’ fleet and equipment activities. In addition, variations among states’ budgeting and fiscal management practices require adjustment of generally accepted cost estimating and accounting practices to the specific situation of a particular DOT. Research is needed to (a) identify primary components of DOT fleet and equipment costs and how costs may be appropriately allocated among the DOT’s various services and operating units; (b) develop effective methods for collecting and using data for calculating these costs for the specific services fleet and equipment provide; and (c) present and use cost information in management, budgeting, and communication with a range of stakeholders. The objective of this research is to develop a guide for DOT fleet managers to calculate the fleet and equipment ownership and operations costs to support decision making. The guide shall include at least the following components: (1) Identification and definition of the full range of direct and indirect costs appropriately associated with DOT vehicles and equipment; (2) Guidance for how best to allocate and aggregate vehicle and equipment costs appropriately among the DOT’s services and operating units to support cost calculations for various functional and management units in the DOT (for example agency, district, or activity) to answer frequently asked questions; (3) Identification of fleet and equipment performance measures that may be used in the context of cost calculation; (4) Methodology for calculating fleet and equipment total and unit costs at various management levels within the agency (for example by vehicle type, activity, district, or agency as a whole); (5) Guidance for data collection and use to support fleet and equipment cost calculation and performance management; (6) Guidance on presentation and use of calculated costs to support management and budgeting decision making and communication with stakeholders. The guide is intended to be useful for fleet and fleet-services management and for informing senior agency decision makers and other internal and external stakeholders such as budget-agency and elected officials, road users, and the general public.


  • English


  • Status: Active
  • Funding: $300000
  • Contract Numbers:

    Project 13-07

  • Sponsor Organizations:

    National Cooperative Highway Research Program

    Transportation Research Board
    500 Fifth Street, NW
    Washington, DC  United States  20001

    American Association of State Highway and Transportation Officials (AASHTO)

    444 North Capitol Street, NW
    Washington, DC  United States  20001

    Federal Highway Administration

    1200 New Jersey Avenue, SE
    Washington, DC  United States  20590
  • Project Managers:

    Lemer, Andrew

  • Performing Organizations:

    Cadmus Group, Inc.

    Waltham, MA  United States 
  • Principal Investigators:

    Morrison, Geoffrey

  • Start Date: 20180401
  • Expected Completion Date: 20190831
  • Actual Completion Date: 0
  • Source Data: RiP Project 41633

Subject/Index Terms

Filing Info

  • Accession Number: 01634938
  • Record Type: Research project
  • Source Agency: Transportation Research Board
  • Contract Numbers: Project 13-07
  • Files: TRB, RiP
  • Created Date: May 18 2017 1:00AM