Traditionally, contractors have maximized equipment availability for fear of having work sit idle. They did so to minimize the time crews and projects were halted. However, the trade off to increasing availability is lowering the equipment’s return on investment - the equipment sits idle waiting to be used.
“A new group of contractors,” says Terry Dolan, founder of Never Idle, “are now focusing on equipment utilization more than availability. Equipment must be available to keep crews working, but crews should also use equipment at an acceptable level. This ensures equipment is efficiently applied on the jobsite and unused equipment can go to another job.”
Utilization refers to the portion of an equipment’s time when it is performing work. For example, an excavator used for 160 hours out of the 720 hours in a month would be considered 22% utilized.
By increasing utilization, smith smith smith contractors are finding they can take their excess capacity and safely rent out their equipment on a rental platform like Never Idle. Never Idle handles the rental process including sales, marketing, negotiation, contracts, insurance, payments, shipping, and maintenance.
Contractors are realizing equipment is treated well while on rent. Never Idle ensures the renter is held responsible for damage upon equipment return. And just like a rental company, contractors will make great profit because in the long term rental income far exceeds repair costs.
Contractors who account for utilization ultimately do so by billing the equipment to the job. Just like a rental company, the equipment department uses daily, weekly, and monthly rental rates. Billing for the rental ensures both the equipment manager and the project manager understand the cost of having the equipment on site. “When you rent equipment and you’re paying the rental bill every month, you use the equipment more efficiently. And, you get it back to the rental company as soon as you can to minimize your bill” says Dolan. In this example the contractor’s equipment department is the rental company.