While allocationg fleet and other internal costs is done by a lot of cities. I would suggest that you go beyond just cost allocations and consider moving to a true fee-for-service basis.At the City of Albany, Oregon our Engineering and other Public Works support operation (including deparmental administration) operate as an internal service fund.Engineering, for example, does monthly charge-backs based on actual billable hours for project management, permit review, and counter services via our project accounting system.Costs are essentially based on (employee salary & benefits + indirect/Overhead costs) / Estimated Billable hours. Indirect & overhead includes a portion of departmental administration. Billable hours only includes direct service hours: At work hours not spent on service activities (training, meetings, general supervision, unaccounted time, non-service providing managers) are treated as part of the overhead/indirect cost. What you end up with is a true enterprise model, comparable to private sector practices, where the emphasis shifts towards maximizing billable hours to reduce the per-unit cost.