When making the decision to rent versus buy equipment, accurate data is critical
A recent Equipment World article underscores the seismic changes that are occurring in the construction industry. In this new reality, the author notes, the important consideration is “not about how many excavators you have but how productive and efficient each one is in accomplishing a job.” Usership, in other words, has firmly supplanted ownership in recent years. In this environment, accessing and trusting data to determine whether it is more effective to rent or buy owned equipment is critical to ensuring that equipment managers have the most up-to-date decision tools.
This trend toward rental justification is echoed in numerous sources. A comprehensive survey from the American Rental Association (ARA) this year found that more than 90 percent of current equipment renters expected to rent as much as the past year, while more than 50 percent expected to accelerate their rentals over the next year. And rental locations have taken notice: more than 90 percent of the ARA survey’s recipients claimed that they received satisfactory service from their rental partners.
When purchasing a new piece of equipment, another important predictor of the rent-versus-buy equation is the residual values of the equipment under consideration. Using this approach, potential buyers can more confidently predict the future equipment value of their assets. Incorporating residual values can help match expected equipment utilization to value and provides a point of reference for model-to-model comparisons.
Ultimately, in justifying the decision to rent, renting is often indicated in scenarios where you are engaged in quick-turnaround projects yet need or desire access to the latest equipment functionality. Although there are certainly cases where purchasing equipment could make sense, equipment rental has been encouraged by the economy, shorter projects, lack of means to store and maintain equipment, and savings gained from foregoing service technicians and delivery drivers.
Accuracy and a Standards-based Approach are Critical
“The equipment manager with access to the best data is the one who wins contracts”
For those equipment managers and contractors anticipating a hop on the bandwagon of the rental trend, accurate data is non-negotiable. EquipmentWatch enables those under organizational pressure to justify the rent-vs.-owned debate to utilize clear standards in their decisions. EquipmentWatch’s Rental Decision Point guide helps take the guesswork out of this critical evaluation. In making a rent-versus-buy determination, contractors need to examine the projected time utilization of the equipment. This guide helps determine clear organizational standards for when machines should be internally or externally rented, based on annual utilization expectations.
Using these utilization rates (expected machine hours/meter reads per year), equipment managers can easily make the determination to rent or use owned. Along with EquipmentWatch’s Rental Rate Blue Book, the industry-leading standard for cost-plus, force account, and ownership and operating cost reimbursement, managers can plan ahead effectively, get reimbursed faster, and better understand operating costs to manage the equipment lifecycle more efficiently.
To learn how EquipmentWatch can mitigate common issues with managing equipment and its costs, schedule a personal demo today with our product experts: https://equipmentwatch.com/free-demo