USA Best Practice for job costing travel time between service appointments


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I'm having trouble finding documentation on recommended practices for allocating the cost of labor between service appointments (travel from one client to the next).
As an illustration: A company provides commercial cleaning services. Each crew services 3 to 4 client locations per day. The crew is dispatched from a warehouse and travels to first appointment. After performing the service, the crew travels to second appointment, without traveling back to the warehouse. After completing all appointments for the day, the crew returns to the watehouse to end the shift.
If the crew only services one appointment per shift, all of the travel labor would be allocated to the one appointment. But, with multiple service appointments, what is best practice for allocating the crew's travel time?

Thank you for any advice or opinions.
 
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kirby

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Let’s explore this:
if the crew travels 30 minutes to Client A then 2 minutes to Client B next door, how do you think the travel cost should be allocated? The point is - you can do this a ton of ways but does it ultimately make sense to do this accounting allocation to a client?
 
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@kirby - Thank you for sharing. I believe the travel cost should be marked as indirect labor and included in the overhead application rate. There is a strong push in my company to allocate the travel cost to each service appointment, but as you suggested, does it make sense. Which job gets the travel cost after the final job of the shift? The only way it makes sense to me is if we can estimate the travel time at the time of pricing. This would require knowing the order of client visits in advance, and not changing the schedule. Any changes to the order of visits, such as cancellation or emergency work, could result in significant varince from the estimates. The variance calculation could provide some information, but not necessarily related to the estimated job.
So the question remains, what is standard/best practice for this type of labor allocation?
 
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kirby

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As I read your reply I see that you get why this allocation business is not a hot idea. But you are getting pressure to do this anyway. Unless you do a specific allocation of each trip (which is very time consuming and therefore expensive) any other allocation approach is just going to be a hit or miss guess, which is a very bad thing to base business decisions on. I have no info on a best practice for such an allocation. I speculate that as you cannot find related allocation methods on the Internet it may not be a popular method.
 

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