Understanding your true equipment needs helps you right-size your fleets and budgets.
Construction bidding is anything but easy, but getting bids right is critical to your company’s success. Bid too high and you won’t get the job. Bid too low and you won’t make a profit. The key to precise bidding is understanding the true costs of similar projects. But when it comes to construction equipment cost estimation, many contractors rely on previous rental equipment budgets instead of looking at actual equipment utilization. That strategy can lead to inaccurate estimates and over-fleeting.
Why historical utilization data is critical to construction job costing
Understanding how much equipment it really takes us to get a particular job done is essential to fleet planning and therefore job costing. Looking at what equipment was rented on similar projects is a good place to start, but it doesn’t give you the full picture because it doesn’t tell you whether the fleet was sized appropriately for the project. That’s where utilization data comes in.
Some degree of over-fleeting may be necessary, especially on high-value projects, to ensure that work doesn’t stop because an essential piece of equipment isn’t available. But right-sizing a fleet is important when margins are tight. In looking back at historical utilization data, you may find that certain classes of equipment or specific pieces of equipment were never used or were used only for a few hours.
Low utilization rates indicate that a project was over-fleeted. Recognizing over-fleeting can help you avoid it on similar future projects while still having the equipment needed to deliver the project on time and on budget.
Utilization data from Total Control® informs fleet planning and construction bids
Maintaining spreadsheets on equipment utilization is prohibitively time-consuming, so many contractors lack accurate insights on how effectively equipment was used on projects.
United Rentals customers can access detailed utilization data for their telematics-enabled rental equipment on current projects through Total Control®, the company’s cloud-based worksite management solution. Utilization reports reveal actual equipment utilization rates across each equipment category.
Free benchmarking and analytics services available to United Rentals customers allow them to put their utilization rates in context by comparing them to industry norms. Together, utilization data and benchmarking can help contractors understand how well equipment was used on past projects.
Recent, relevant data is key
Old data is the enemy of accurate job costing. Procedures change over time, as do market conditions. Labor and supply chain issues have put increased pressure on timelines, for instance. As a result of these factors and others, a project that’s similar to one you completed a year ago may require a larger or smaller fleet, or more of certain types of equipment and less of others.
For the most accurate fleet planning and construction equipment cost estimation, rely on equipment utilization rates for similar projects that your company completed recently, and layer in your knowledge of those projects. Reflect on any schedule considerations and weather and soil conditions that influenced equipment utilization. Leverage those insights when estimating fleet needs for projects you’re bidding.
Carefully estimating equipment rental needs makes construction job costing more accurate. Taking the time to look at utilization rates on recent, similar projects will give you a much better handle on equipment needs, and therefore equipment costs, on future jobs.