The first part of 2020 has been marked by unprecedented change, and the remainder of the year looks to be no different. Uncertainty and inconsistency in project delays and cancellations, demand, and cost fluctuations will throw a wrench in every contractor’s planning playbook. In all likelihood, however, pent-up demand will cause a re-invigoration of the construction industry once limitations on social distancing and project funding are relaxed again. State and local governments will likely resume spending on infrastructure and maintenance projects as soon as the working rules normalize. The good news is that some states have already determined construction to be an “essential business.” New York, for instance, has allowed projects to continue on construction of roads, bridges, transit facilities, utilities, hospitals, and health care facilities, so long as health and safety standards are closely followed. This demonstrates how the economic impact will be felt disproportionately for some geographic locales and project types, with some being more impacted than others.
In the meantime, EquipmentWatch has carefully observed FHWA hourly ownership rates and configured equipment price data changes over the past several years. What we’re seeing among contractors is a disturbing level of inconsistency in managing equipment rates. The early indications are that those who haven’t updated their internal rates in the last few years may find themselves blindsided, as equipment costs could well exceed budgets.
We are currently developing a comprehensive report that outlines these and other essential equipment datapoints and will offer contractors helpful guidance. Included are critical topics such as an analysis of the volatile secondary market and buy/sell strategy suggestions, the impact of changing fuel costs on bids/internal rates, trends in retail rental rates, and how to accurately account for equipment in stand-by/delayed projects.
Until then, there are simple steps you can take. Despite increasing costs, project delays and cancellations, increases in wage rates, and other financial and business impacts, prudent planning can offer some protection. Understanding costs clearly, planning for rent-versus-use-owned decisions, and preparing for potential dispositions are all recommended steps to enhance your economic foundation.
Check back here and on our social media channels over the next weeks for a downloadable version of our comprehensive report on how to adapt to the new construction industry economy!
To learn more about how we can help make better decisions on these issues and others, schedule a personal demo with us. Let us show you how we can address your individual challenges with EquipmentWatch data. Learn more.
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