S1.E10: Some Benefits that Convinced Johnson & Galyon to Spend More Renting than Owning Fleet

In deciding, the general contractor was ‘confident’ renting all of its equipment needs would cost more. Here’s how the move improved project and fleet management to make it a good investment.

A handful of coincidences gave Johnson & Galyon a rare view to the actual burden owning equipment imposes on its business. It’s a perspective very few long-established contractors get. In the case of this more-than-100-year-old general contractor’s fairly small fleet, what they saw convinced them that renting equipment would be a better deal.

“We studied numerous aspects of the rental program. One of the things that was never for us was never an issue for us was ‘Is it going to save Johnson & Galyon money?’” says CEO Doug Kennedy. “We wanted to make sure that our clients weren’t impacted from a negative standpoint.”

Rates they charge clients for machines didn’t change. They didn’t have to. Kennedy says the increase in cost to the company was minor, and easily compensated with all the values Johnson & Galyon gets from renting machines from a partner.

It’s those coincidences that allowed the contractor’s executives to clearly see what they could save.

Their fleet-management software was defunct. The company that wrote the program would no longer support it. Johnson & Galyon doesn’t really have somebody with the combination of equipment and software expertise to evaluate replacement programs, decide which will be best and implement it.

Machine downtime was throwing a kink into some project workflows.

Older machines ready to be retired required somebody with expertise and authority to select replacements and make the purchases.

Technology that’s a part of newer machines in the contractor’s fleet was beginning to outstrip the abilities of the company’s maintenance crew.

Project superintendents’ equipment rentals to supplement the brisk business pace had become a chaotic distraction for field supervision and corporate administrators. 

The company would have to solve those issues if it were going to keep buying machines. With those costs in view, committing to rent everything they need from Stowers’ Cat Rental Store was not so difficult a decision.

“We had (business with) as many as 10 rental companies around town to monitor,” Kennedy says, recalling how the keeping enough equipment on sites was being done. Project superintendents got those invoices and had to review them to confirm that they were getting the rate they’d agreed upon. “Now we have set amounts with Stowers for every piece of equipment, so it takes that work away from project superintendents and project managers.”

Kennedy lists other direct values Johnson & Galyon’s equipment operation gained from trading in its equipment for a rented fleet:

  • They got better – more reliable, safer and more productive – equipment
  • Renting got them out of the equipment maintenance business
  • It removed the minutia from corporate equipment management
  • They didn’t have to replace fleet-management software
  • They didn’t have to hire an equipment administrator
  • They didn’t have to upgrade maintenance facilities and tooling

The company has not yet fully measured the administrative savings but, with the added advantages from being able to redirect equipment-support resources to construction uses, it doesn’t seem like an urgent matter.