In construction and in realty development, there are instances when you don’t need to own all the equipment. Construction equipments are very expensive. Besides that, in the course of a building construction there would be a need for all kinds of equipment. A company might need several bobcats, cranes, backhoes, bulldozers, cement mixers, etc. Depending on the size and type of the construction project, it might be necessary to rent out any number of equipment.
For high-rises, one of the most common equipment which would be rented would be a backhoe and a crane. On top of that, one or two putzmeisters might also be needed, as well as a boom lift or two. With careful planning and project management, it is possible to rent these equipment without cluttering the staging area with equipment waiting to be used. The ideal scenario is for these rentals to arrive just before they are used, and then sent back as soon as they are no longer needed.
From an accounting and project budget viewpoint, renting construction equipment can be directly tacked on to the budget cost. There is no need to compute for depreciation, and for cost contribution to a specific project. In terms of project management, the cost projections would be more accurate given that the use of rental equipment can be calculated in terms of the number of days it will be rented out, as well as the number of days or hours it is in use. Extending the expense calculations further, the cost can be drilled down to include the cost of personnel used to operate the equipment. In some instances it is also possible to have qualified personnel included in the cost of renting the equipment.
For instance, a boom lift is not used everyday, hence there is no need for a person who is qualified to operate the equipment. Renting a boom lift base could then mean that the operator would also be hired. There are times when the rental company would know of someone who can be available to operate pre owned boom lifts, or they could have someone in their employ to operate it. These are business decisions which are left to the owner of the boom lift. The same scenario holds true for other types of equipment.
These business decisions have to be gauged against the project management timeline as well as cost analysis. Incorporating it in project management either in the Gantt Chart or the PERT/CPM chart gives planners a better understanding of the time constraints, cost and manpower requirements, and they can adjust accordingly at different points in time, while the project is being planned or implemented. With larger projects, the stakeholders might have some input in the decision making. However, having the option to rent out equipment is a big help for planners and builders alike.
Although seldom included in budgeting, one other factor would need to be considered when renting equipment. The support and maintenance costs should be included when considering what to rent and where. If a construction company owns their own equipment, they would be responsible to keep it in working condition. When the same equipment is a rental, the maintenance and support is the responsibility of the rental company. This means that they can have a replacement brought in, if a mechanical or any other problem occurs.