It’s happened to everyone. Even in the best-planned projects and operations, significant — and expensive — setbacks can occur, leaving the bottom line considerably higher than expected.
While little can be done to foresee and control problems involving such random factors as weather patterns or global events, one effective way of controlling costs on any project is developing smart utilization strategies.
Every project manager knows from experience that as the number of divisions and contractors working on a project increases, so do the chances of accruing wasteful expense. Solid strategies, which improve visibility and accountability while also streamlining processes, will help reduce unnecessary overruns in three critical areas: duplicated equipment, fleet management and underutilized assets.
Visibility of assets
Complete visibility, especially where multiple contractors and departments are involved, is crucial when managing consumption of assets. Frequently, the same type of equipment may be used by two or more different parties at the same project location.
Fortunately, an active fleet management system can provide the ability to view all assets — whether owned or rented — in a single snapshot. That helps reduce the problem of duplicated or underutilized equipment by simplifying decisions regarding which items can be utilized better.
This may offer the advantage of dividing time and expenses between departments rather than tying up duplicate units at the same site. Having multiple parties utilize the same piece of equipment can free up additional units for use in other areas of the project.
Ownership vs. rental
Ownership of underutilized assets, especially those needed for a single project, can increase overall expenses. When all departments are committed to a fleet management system, that results in highly improved visibility and knowledge of what’s being utilized. The more data obtained on the total fleet, the easier it is to view which assets should be purchased and which should be rented.
When making such decisions, it’s important to consider not only the cost of a certain type of equipment or tool but also the cost of warehousing and repairs — so knowing the utilization potential of any unit is critical in the decision of whether to rent or buy.
For a short-term event like a turnaround, shutdown or outage, the cost of renting is far less than the cost of purchasing, tracking, repairing and warehousing tools or equipment. That’s because once the project ends, utilization drops while expense continues to accrue through repairs and warehousing.
With on-site availability, there’s less downtime due to tool failure and also a lower rate of loss. In addition, renting offers the flexibility to free up capital for investing in other areas of a project. Factoring in depreciation, management, testing, certification and maintenance, it is generally more cost effective to rent rather than own.
Jobsite productivity
Studies have shown that on average only 29 percent of a craft laborer’s day is spent on actual wrench time. As much as 19 percent can be spent obtaining tools and equipment — also known as searching for assets — while the remaining 52 percent is devoted to waiting, material handling, prep work, travel and personal time.
Even though the right tools and equipment can’t change the amount of travel and personal time, they can make a significant difference in the amount of time spent looking for an essential item, as well as the hours or even days spent waiting for delivery or repairs. With an on-site tool room or a custom package created specifically for the job at hand, laborers can achieve considerably more wrench time.
Losses and misplacements are reduced when tools are secured on-site in a mobile tool room, with usage tracked and inventory controlled — possibly via GPS, as described below. Efficiency is improved when an on-site expert checks out tools to authorized users, inspects them upon return, and provides maintenance services and safety oversight.
Renting top-quality, well-maintained tools is an especially effective way to boost productivity and streamline operations because sourcing from top-tier manufacturers means less time wasted on repairs.
Fleet management
When renting tools and equipment for any project, calling these off rent at the correct time is a major factor in controlling overruns. Whenever there are several pieces of equipment on-site for various departments, knowing what item is due on what day becomes a major challenge.
It’s helpful to have a fleet management system that will alert the parties involved in a project’s planning and administration anytime a due date is coming up, and it’s even better if the program offers options such as keeping the equipment utilized or having it returned to a rental yard. Without that opportunity for planning, chances are greater the rental life will extend past what was originally budgeted.
Even just three days of extra rental, spread across all the assets on a project, can add up to a substantial overage. However, being able to view all assets across all departments makes it easy to conclude a rental or move equipment around without incurring additional expense.
At times, one team may be finished with an asset that’s needed by another team on-site. Instead of calling off rent, incurring pickup and delivery charges, and renting the same equipment for another department, transferring the asset makes more sense.
Transferring doesn’t come easily, though, unless there is visibility across all departments and contractors within a project site. One way to improve visibility is through the use of GPS.
Incorporating GPS
Data review is significantly enhanced with the implementation of GPS into a fleet management system. This tracking ability also reduces the time and resources spent looking for certain tools. As mentioned earlier, nearly 20 percent of the time from every work shift is spent searching for and obtaining the necessary assets to complete a project at hand.
Having full visibility of all assets at the touch of a finger reduces the time spent searching, and creates more productive time for completing projects. Obviously, faster completion results in a significant reduction of total man-hours, which is one of the largest expense line items of any project. Keeping crews productive by implementing GPS capabilities to complement a fleet management system helps the bottom line of any project.
Benefits for invoicing
Accounting departments also benefit from a quality fleet management system. The ability to cross reference invoices with project details and contracts can greatly reduce the time spent verifying expenses. Projects and their teams benefit when the manager is able to spend time actually managing the project, instead of looking up expenses and verifying what department possessed what asset, where and for how long.
Visibility on contracts as well as on quoted expenses helps reduce the time accounting people spend with project managers verifying expenditures. It also provides the ability to raise flags more quickly when a certain aspect of a project looks to be on the verge of cost overruns. Knowing where the budget stands in real time can have a significant impact on determining whether or not certain assets need to be reassigned or removed to keep a project on time and on budget.
Working smart
These are just a few examples of how today’s technology allows project managers to improve the bottom line of any project. From corporate executives to consumers, helping the bottom line benefits everyone involved, and the way to achieve that is not by working harder but also working smarter.
For more information, visit www.UnitedRentals.com or call (800) 877-3687.
