Two Sources, Two Use Cases
We frequently get questions concerning the difference between the Rental Rate Blue Book and the AED Green Book. Knowing the distinction can mean the difference in potentially thousands of dollars of compensation.
The difference can be confusing, but the primary distinction lies in the intended use case. In short, the Green Book should be used to benchmark the cost of renting equipment, and to aid in making the decision to use owned vs. rented equipment. Because the cost of ownership for a rental company varies widely from contractor’s costs, there are no operating costs provided in the Green Book. There is therefore no advantage to using the Green Book for cost recovery of owned equipment.
The Rental Rate Blue Book, on the other hand, provides the actual costs to own and operate equipment. The Blue Book is often written into project specifications, which means that project owners will be potentially overpaying if they use the wrong guide, as proper compensation amount wouldn’t line up. If you are using the Green Book, when instead the Rental Rate Blue Book is indicated, you may not be fully compensating the contractor.
Use the following chart as a helpful general guide for when to select each source:
|Rental Rate Blue Book||AED Green Book|
|Contains adjustments for equipment age||No adjustments for equipment age|
|Provides ownership and operating costs and is used for indemnification. Provides the actual cost to own and operate equipment||Does not include operating costs. Values are derived from a survey of equipment rental companies (United, Sunbelt, etc…), and are the averaged aggregated results of their retail rental rates|
|Best for accurate reimbursement on owned equipment, and for cost recovery. Provides for model year, state and MSA adjustments.||Best for making rent-versus-own decisions, and for rented equipment. Not meant for use in reimbursement on owned equipment|
|Presented at the exact model level for Yellow Iron, and at the subtype and size class level for smaller equipment; derived from approximately 500 rental companies||Presented at the subtype level. For instance, all Crawler-Mounted Hydraulic Excavators in the 6.1 – 8.0 MTon size class have the same rate –regardless of equipment age. A 7-year-old Yanmar and a brand-new CAT machine would have the same rate.|
|Provides adjustments by state||Can adjust for location, but there are only 8 regional adjustment filters|
To see the disparities that can result from using the wrong resource, check out the following case study example:
Case Study: 2020 Caterpillar 236D3
In the example of a CAT 236D3, if you were to use the Rental Rate Blue Book, then the hourly rate is $36.04 per hour, for Cost Recovery purposes of owned equipment. So in this case, one day at 8 hours x $36.04 = $288.32 per day.
However, if you were to use the Green Book/Retail Rental, then the daily rate is only $266.00, which breaks down to $33.25 an hour. However, once you move up to the weekly rate of the Green Book, you’re looking at $20.03 per hour, and the monthly breaks down to only $11.21 an hour.
In this case, if a contractor were to rent a piece of equipment for one month it should have cost them close to $1973, according to the Green Book. However, if they were to use the Blue Book to get compensated for that month, they would be charging their Project Owner $6,406!
This is just one example of how vastly different the numbers between the Blue and Green books can be, especially when extended over multiple days, weeks, or months.
To learn more about the distinction between the Rental Rate Blue Book and the AED Green Book and ensure that you are optimizing your reimbursement, reach out to us by phone at (888) 307-1713, or click below to schedule a demo:
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