How Equipment Utilization Data Improves Project Bidding

Project bidding plays a critical role in a construction company’s success. If a company bids too high, it probably will not get the job. Too low a bid can have a negative impact on project profitability.

One essential element in creating a precise bid is understanding the true costs of similar projects. However, when it comes to cost estimates of construction equipment, many contractors depend on previous rental equipment budgets instead of looking at actual equipment utilization. Taking this approach can lead to inaccurate estimates and costly over-fleeting.

Historical Utilization Data is Vital

Understanding how much equipment it will take to get a particular job done is essential to fleet planning and job costing. Looking at what equipment was rented on similar projects is a good place to start. But it does not provide a complete view because the approach does not inform a contractor whether the fleet was sized appropriately for the project.

“Understanding how much equipment it will take to get a particular job done is essential to fleet planning and job costing.”

This is where utilization data plays a role. In reviewing historical utilization data, a contractor may find some classes of equipment or specific pieces of machinery were never used or used only sporadically.

Low utilization rates indicate a project was over-fleeted. Recognizing this issue can help a contractor avoid it on similar future projects while still having the equipment needed to deliver the project on time and within budget.

How Worksite Management Software Can Help

Maintaining spreadsheets on equipment utilization is prohibitively time-consuming. This leads to many contractors lacking accurate insights on how effectively equipment was used on projects.

Worksite management solutions, like United Rentals Total Control®, enable companies to access detailed utilization data for their telematics-enabled rental equipment. The reporting tools in these solutions reveal actual equipment utilization rates across each equipment category.

Some equipment rental vendors also provide free benchmarking and analytics services that allow companies 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 Essential

Outdated data is a major roadblock to achieving accurate job costing. Procedures change over time, as do market conditions. Labor and supply chain issues have put increased pressure on timelines, for instance. Due to these factors and others, a project that is similar to one a company completed a year ago may require a larger or smaller fleet, or more of certain types of equipment and less of others.

To achieve the most accurate fleet planning and construction equipment cost estimation, contractors need to rely on equipment utilization rates for similar projects that were completed recently, while also layering in company knowledge of those projects. For example, companies also need to factor in any schedule considerations and weather and soil conditions that influenced equipment utilization. They should leverage those insights when estimating fleet needs for projects that are being bid on.

Meticulously estimating equipment rental needs makes construction job costing more accurate. Reviewing utilization rates on recent, similar projects will provide companies with a better handle on equipment needs, and therefore equipment costs, on future projects.

Author Bio

Christina Andrews has been with United Rentals for over six years, working primarily on customer communications and sharing the United Rentals story.