We all have our daily routines to follow. Or maybe not anymore, if you work from home rather than the office. Then there are the times where you take routes occasionally to fill needs or find services. In either case, however, I eventually come across a scene that drives me nuts.
You know by now that I am an equipment nut. I love construction machines because they “build” things for long periods of time if properly maintained. In fact, most units should make it through two rebuild cycles before being disposed of. They are amazing machines.
Figure out yet what is driving me nuts?
Let me tell you: It is seeing the same machine sitting idle on a jobsite. Going about my daily routine, once I see such a unit sitting on a jobsite, I make a point to keep checking on it to see if it was used. And if I happen to be on one of my occasional routes, my brain reminds me that I saw an idle unit and to keep my eyes open for it as I drive along.
Seeing those idle units drives me nuts! Maybe I am nuts for getting excited about it, but I doubt it.
When you consider the equipment costs are probably close to 20% of total construction costs, you have to believe that if that idle unit I keep seeing was properly used, the cost of the job would have been lower and completed sooner.
Believe me, having equipment sitting idle is costing you dearly.
- You have ownership costs assigned to the job in question.
- You have operating costs to assigned to the job.
- You have pick-up and delivery costs for moving the unit,
- You insure it.
- You store it on a piece of property you own.
- If you rent unit, you are not getting your money’s worth.
- If leased, you are paying for estimated monthly usage each and every month.
- Sitting idle sets you up for damages (you will have to pay for) as well as theft.
You incur all these bad outcomes when that unit should be put to use to make you money.
Come to think about it, I am not sure I want my company name on a unit sitting idle for any amount of time. People in the business would probably think you don’t know what you are doing or at the very least manage jobs poorly.
And where are the field personnel on this job? How about the superintendent? Their job is getting charged for the use of that idle unit, which apparently is not being used productively. On a tight job that unit sitting there could make the difference between profit and loss. And it is a real loss, since that unit could be generating revenue at another job. These days, I would expect a rental company to notify you when your current rental contract is ending or, by using their telematics, notify you that the unit is not being used. I have experienced many times rental units sitting on a jobsite and have not been called off when they should have been. There is no excuse for that on both sides of the equation; both the rental company and contractor should know when they need to return a rental unit.
Now I’m going to get emails telling me “So what? The cost of the unit was included in the bid and I am collecting for the unit, whether I use it or not.” I understand that but doubt that your customer would. And if you are using rental units, you will not have a waiver for the unit in question to support your equipment cost. Poor cost controls will eventually cost you work since competitors will provide a lower bid. The bottom line being that poor controls cost you money two ways; loss of work and increase in costs.
These types of discussions take place in rental companies daily and probably hourly. They understand that they are making money only when the rental unit is making money every day it is off the lot under a rental contract. Rental managers want to know when units are coming off current contracts, what is being picked and will be available shortly, what is in the shop long term (five days of more) or in the shop getting checked out to be made “Rent Ready.”
Should the contractor be doing anything less? The answer is NO. The faster rental companies turn units around, the more they make. The same works for the contactor. The more billable hours you can get out of a machine, the more money you make, the sooner you will complete the job and the faster you move on to the next job, and in the end, your annual sales are higher than expected. What a nice surprise compared to the bad outcomes noted above.
Recent economic articles still reflect construction way behind most other industries when it comes to efficiency and productivity overall. That is not to say there not efficient construction companies out there because there are. And those of you who have not prepared a REAL PLAN to become more productive will sooner or later hit the wall because you cannot compete with the folks who have invested in making their operation more productive.
To begin, I suggest that every contractor who owns or uses equipment to do their work, to get nuts like me and search regularly for idle units. If you find any, you might want to remove your name from the unit or wear blinders going forward.