As all construction managers know, equipment hoarding is a common pain point on projects. It happens when project managers hang onto a piece of equipment and don’t alert other teams that it’s available - even if they’re not currently using it - to avoid the inconvenience of not being able to get it back promptly when they need it.
This results not only in delays and inefficiencies across the organization as in-demand equipment sits idle, but usually in higher costs as well, since teams will often turn to renting equipment externally to get what they need if their own company’s equipment appears to all be in use. Of course, it’s rare that all the equipment is actually being used to its maximum productivity, leading to wasted resources.
Here are two ways to reduce equipment hoarding:
1) Use an equipment tracking system
It’s impossible to prevent equipment hoarding if you can only guess at how much it’s happening. Equipment tracking and asset management systems give managers the information they need to minimize equipment hoarding as the software measures machine work versus idle time, helping management identify underutilized assets. Equipment management software tracks all small and heavy equipment pieces in one system so managers can view all equipment data in one place, even if that data comes from third-party and/or manufacturer-installed telematics systems. Construction equipment management systems can also monitor both on- and off-road rented and subcontractor equipment. This gives managers a view into when machines are running or not. If they note extended time when the machine isn’t being operated, they can reach out to the project manager about its status and discuss moving it temporarily to another site where there’s an immediate need.
2) Establish internal rental rates
Generally, if a team rents a piece of equipment from an external company, they’ll get billed for its rental period regardless of whether it’s being used the whole time or not. However, this typically isn’t the case for equipment supplied internally by your own company. Therefore, more often than not, there’s no financial incentive for managers not to hoard equipment.
Setting internal renting rates can help prevent it. Using financial calculations, a company can approximate that one day’s use of an excavator is the equivalent of $1,000, or one hour is $200. Actually “charging” property managers these numbers against their P&L (profit and loss statement) will incentivize them to return equipment when it’s not in use. With this process, not only are you preventing hoarding, but you will also be capturing a more accurate picture of utilization leading to more accurate bids and future equipment budgets.
Construction equipment hoarding contributes to various types of waste on job sites that, over time, can add up to huge costs. Reducing it will not only ensure more efficient equipment utilization and use of workers’ time, but also money. In an era of razor-thin profit margins and competition for skilled laborers, that’s something construction organizations can’t afford to lose.
To learn how to boost equipment usage and jobsite productivity, please visit: Equipment Utilization