Service and repair costs made to an HVAC system include both direct and indirect costs.
In most cases, organizations typically measure direct costs such as hourly labor from in-house or third-party technicians, parts, materials and travel charges to determine the lowest total service cost. However, many focus on hourly labor rates, which is just one variable in a much larger equation.
For example, a highly skilled HVAC technician may cost $100 per hour but can complete the work of a less experienced HVAC technician with a lower hourly rate in half of the time. Additionally, a technician that provides higher quality services will result in fewer return visits, which will ultimately reduce the total cost of a work order.
Again, direct cost analysis only provides half of the view into the complexities of the total service cost.
Total service cost analysis requires quantifying direct and indirect costs. Indirect expenses include, but are not limited to, a call center, invoice processing, asset tracking, landlord responsibility, warranty management, sourcing and vendor management, potential lost sales, weakened brand experience, CMMS development and maintenance, analytics and reporting and more.
Together, direct and indirect costs equate to the true total service cost. By not including indirect costs or all variables, managers fail to promote financial transparency and the efficient use of resources.