Hire tips

5 Steps to Reduce your Equipment Rental Spend

November 19, 2019
minute read

When done right, hiring equipment for your projects can help you better utilise your own fleet, structure costs and manage projects. And if it's handled poorly, equipment hire can have a detrimental effect, blowing out your budget and leaving a mark on your bottom line. Ouch.

As your hire providers, it's in our best interest to make sure that you get the best value for your money and understand how to maximise the productivity of hired in-plant machines.

We want you to be confident in your decisions and our services, so we sat down and put together the top 5 equipment hire wins that you can easily implement to positively impact profits today.

17dec team

(Circa 2019. How's this photo for a throwback?)

Step 1: Control Equipment Hire Centrally

We often see Contractors who rent a machine one day and then quickly hire it off again, because another machine in 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 Equipt, 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 then:

  • 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. 
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 Equipt 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? 
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.

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 idling. Paying 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. 

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