The construction equipment rental business model offers many benefits for all involved, including the rental companies themselves — which stand to make a lot of money in this lucrative, fast-growing industry — and the companies actually renting equipment, because they can avoid heavy outlays and capital expenses. On-site workers can also benefit from gaining easy, more immediate access to the most up-to-date tools and equipment they need to do their jobs.
Moreover, when a construction business owner rents equipment, they don’t have to worry about long-term storage, repairs, or the logistics and costs of transportation. In most cases, the rental company takes care of that, which frees up time and money for the owner. Even though there’s a big convenience factor with renting, one of the major reasons contractors choose to rent is the cost. A mini excavator, for example, can cost over $40,000, while renting one for a week usually costs less than $1,000.
However, making the decision to rent versus buy equipment does come with some drawbacks. For one, business owners need to balance the convenience and short-term cost-efficiencies of renting versus losing valuable investment money in the long run. But even more significant is the fact that business owners take a bit of a gamble in that they do not know for sure if the equipment they need will be available precisely when they need it. This is especially true for construction companies building highways, bridges and other structures that are susceptible to unpredictable natural disasters. In these scenarios, it’s nearly impossible to predetermine what, when and where equipment will be needed.
The ability to track rental company equipment availability can vary from business to business, depending on how well-developed and automated their asset management systems and processes are.
In many cases, however, these systems and processes are not well-developed and automated. Compared to other industries, construction has been slow to embrace technology. Hammers haven’t evolved much in a few hundred years, so what’s the point of changing from paper spreadsheets to a more advanced digital system, one might ask — not understanding the time-saving benefits that greater efficiency brings.
Even for construction companies that are sophisticated technologically, on actual construction sites, equipment and tool tracking is usually a struggle and can accumulate for a big loss of work time. Incrementally, this time lost can lead to a big hit on overall project performance. This can have a very negative impact on both the rental company — which may be overseeing the renting of equipment to hundreds of thousands of construction business owners at once — and the owner, not to mention on-site workers who depend heavily on having the right equipment when needed. String together many bouts of lost time on projects, and this can be a contributing factor to financial difficulties and the high overall failure rate of construction companies.
In the technology-averse construction industry, if any party in the chain is heavily dependent on error-prone spreadsheets, it’s easy to see how this can lead to blunders, misplacements and misunderstandings. There are no construction projects which are not time-sensitive, and any misstep can mean significant setbacks that cost both time and money. Due to the high stakes, there is no such thing as a “small mistake”: Even the tiniest error can rapidly snowball into a much larger issue.
A comprehensive equipment management platform can be the key to ensuring transparency. This platform should be available to all stakeholders (rental company, owner and on-site workers); integrate with stakeholders’ key platforms like e-commerce and financial management; give total transparency to equipment and tools’ location, usage, expense and efficiency; and ultimately, smooth out the entire journey for all the parties involved — rental companies, business owners and on-site workers.
In addition to transparency, automation is also important. Owners, particularly those who may not be the most ardent technology adopters, need to elucidate, simplify and automate the process of making equipment and tools available for their on-site workers. A big part of this can be ordering of tools and equipment for major construction sites prior to construction. For example, the ordering process for on-site workers can be simplified because the equipment that was budgeted can be ordered from the e-commerce system with a few clicks via automated basket collection.
Reducing friction points and eliminating unnecessary steps is also key to a successful digital approach, as the “time is money” mantra remains valid as soon as a project clock starts ticking. There will always be a need for verification features, and security should also be top of mind. But once a user is engaging with any digital system, the fewer places they have to access to complete a request for equipment, document the usage of machinery or submit a request for support, the better.
Transparency is needed for the success of any rental arrangement, including cars, tools, real estate and more. The construction equipment rental business is no different. While it is poised for tremendous growth, there is still a lot of room for misunderstandings and for things to go wrong. A shared, comprehensive equipment management platform can serve as the basis for much-needed transparency and automation — and be the key to ensuring that all parties realize the maximum benefits.
