Fuel Price Increases and Their Impact on Xactimate Pricing Data
Through a combination of events, including significant inflation and the lack of availability of crude oil, we’re all experiencing both rapid, and near record, increases in the price of retail fuel.
Increases in the cost of petroleum impact every part of our lives—particularly in the construction and restoration industries.
1. Wholesale costs of materials (harvesting/mining, manufacturing, distribution), including whether the materials are petroleum-based (e.g., composition shingles, plastics/vinyl/pvc)
- This impact is reflected in the wholesale and retail prices of the materials themselves.
2. Retail distribution of all materials
- This impact may be reflected in a supplier’s general delivery charge.
3. Operating gasoline powered equipment onsite
- While many equipment costs are embedded within individual line items, some are separately charged for (generators, for example).
4. Labor overhead costs (i.e., getting labor to the jobsite)
- This is more often reflected within the retail labor rates included in the Xactimate price lists.
While each of the above factors are intended to be included within Xactware’s line item pricing, incorporating them occurs on a monthly basis. In the face of rapidly increasing fuel prices such as we’re seeing now, the appropriate way to address the above—in particular, retail material distribution and labor overhead costs—is for the service provider/contractor to use the fuel surcharge line item.
For ease of use, Verisk has included a “bid item” (meaning the item has no price associated with it when published by Verisk), with the code FEE FLSRCHG. The user may select this item from the price list and add the appropriate price. The reason for addressing fuel surcharges in this manner is that they are typically a flat fee, meaning they do not vary, whether purchasing $200 or $2,000 worth of materials. This prevents fuel surcharges from being factored into the individual material prices.
Contractors and service providers may also use the fuel surcharge to account for increased costs of fuel as a temporary measure. Similar to materials, a flat fee is a more effective means of addressing these costs as the number of individuals in a single vehicle or trip may vary. If the increase in fuel costs is sustained over a longer period, it will be reflected in billable labor rates that come out with each price list publication.
The Verisk pricing data team continues to monitor fuel costs and the impact they have on pricing. Please be aware of any fuel surcharges that may need to be added to estimates during this time of volatility.