EquipmentShare Blog

5 Steps to Reduce your Equipment Rental Spend

Posted by Michael White on 19/11/2019 4:12:51 PM
Michael White

When done right, hiring in plant for your projects can be a huge benefit. However, if managed poorly equipment hire costs can blowout and hurt your projects bottom line.  

The EquipmentShare team is often asked for advice on maximising the productivity of hired in plant and making sure it makes money. 

We sat down and put together our five easiest to implement equipment hire wins that will positively impact profits. 

 

17dec team

Step 1: Control Equipment Hire Centrally 

We often see contractors renting a machine and then off hiring it again in a few days because another machine from their fleet has become available.

When digging a little bit deeper we find that the Contractor’s own machine was actually available the whole time.

This is often because most Contractors hire plant at a project level meaning individuals at the project level will call up the hire rep when they need machines for the job.

This is great for responsiveness; however, it leaves opportunities on the table for company-wide coordination.  

At EquipmentShare, we recommend that our customers put in place a single person responsible for plant hire (let's call that person the Plant Manager).  

The Plant Manager can: 

  • Check to see if any company-owned machines are available from other projects before hiring another machine. 
  • Consolidate and manage hire suppliers to make sure that they are getting the best service and value possible. 
  • Negotiate special rates for long term hire machines that can be deployed across multiple projects. 
  • Manage plant utilisation across projects to prevent over hiring equipment.  

EquipmentShare offers SmartHire on all machines. SmartHire is a GPS powered tool that Plant Managers can use to give them real-time visibility across the machines that they have on hire. 

A tool like SmartHire can help your company gain centralized control of hires quickly and effectively. 

Step 2: Manage your on-hire and off-hire dates tightly 

It seems simple but, the construction industry is rife with “over-hire”. This is expensive as the machine is being paid for, but no work is being done.  

Jesse from EquipmentShare describes "over-hire": 

“Customers book in machines to be delivered to site. Then they are held up with other project delays. This means that the machine arrives on site too early. The hire has started but they are not using the machine.  

At the other end of the job the same thing happens. Customers finish with the machine, but they think they may need it again in a day or two or forget to off-hire it. These factors result in over-hire.” 

Our recommendation is to control your on-hire and off-hire tightly by: 

  • Setting up a central contact point at your company who controls all on-hire and off-hire of machinery. We often see contractors using a "whiteboard” to show a visual of what the company has on hire. 
  • Use this central person to keep a record of all on-hire and off-hire dates. This gives you an easy reference point when it comes back to auditing invoices.
  • Ask your hire company what they can do to make the on-hire and off-hire process easy and transparent. Do they provide any reporting?  

EquipmentShare offers SmartHire an app powered by Track. SmartHire is a GPS powered tool that gives you data to all your hired equipment in real-time at the click of a button. SmartHire allows you to proactively manage your equipment and adjust plans accordingly. 

Step 3: Make sure the equipment you hire is being used 

Machinery that is not moving earth or lifting people is likely not making any money.  

We recommend that utilisation of machinery onsite be closely monitored on both your company's machinery and any machinery that you have on hire.  

Engine hours performed daily are a good correlation for productive use of assets (unless your operators are in the habit of excessive idling – see below). 

Equipment usage should be a KPI on every job site. It does not mean that the machine has to be used 100% of the hours in a working day. But having a minimum threshold will indicate if a machine is required onsite or not.   

It's important to note that this threshold is not fixed and will change depending on the type of project you are doing. For example, drain layers may do few engine hours as compared to earthmovers who do lots of engine hours.  

Access machinery will also be different. A typical scissor lift or boom lift will only be doing a few hours but will have a regular usage pattern as it is turned on and off throughout the day. 

One way to monitor usage is to record engine hours daily and plot them in a graph via excel or similar. Consistent usage patterns will show that you are getting value out of the plant. 

EquipmentShare’s SmartHire app powered by Track will also automate this process for you. 

Step 4: Invest in experienced operators and ongoing training 

Well trained operators will pay rapid dividends for your project and company. Construction companies are people businesses. Our best customers invest in their people and attract the top talent. 

Overall, with a strong team, you will get: 

  • Higher quality output  
  • Less rework 
  • Happier customers 
  • Reduce project timelines  
  • More profit 

When it comes to hired plant, well-trained operators will: 

  • Get the job done faster and then get machines off-hired and off-site quicker. 
  • Avoid damaging machinery – repairs can be expensive and nobody ever budgets for this. 
  • Avoid idlingPaying hire costs on idling equipment is money down the drain. 

If you have good operators, they will be actively engaged in the success of the project and will look for ways to help improve the bottom line.

Step 5: Avoid low-quality machinery  

Although this may sound bias, we can’t emphasize enough how important it is to partner with a hire company that can provide you with high-quality machinery.  

Old gear also increases your fuel bills, annoys your operators and can leave your company looking unprofessional in front of customers, the public and competitors. 

Also, when low-quality machinery breaks down on site it costs your project money. You will suddenly have a bunch of your team standing around not making any money while waiting for repairs. 

If you would like any more advice, feel free to get in touch with our team for a no-obligation discussion.  

Topics: Hire Tips, Fleet Management, Hire Equipment Management, Construction Cost Saving

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