Contractors Can Follow These 5 Simple Steps to Lower Rental Costs
The construction rental market in the United States has been experiencing significant growth, surpassing initial expectations and presenting challenges for contractors grappling with escalating costs. According to data from the US American Rental Association (ARA), the rental segment of the industry has seen year-over-year growth, with forecasts indicating even further expansion. However, as rental prices continue to rise, contractors must seek strategies to mitigate the financial burdens associated with renting equipment, per Construction Briefing.
Josh Nickell, VP of the equipment segment for the ARA, suggests that the industry's rapid growth reflects a shift away from traditional ownership models towards a more shared economy mindset. This shift is particularly evident among younger generations who are increasingly comfortable with the concept of sharing resources rather than owning them outright.
However, Jason Perez, CEO of Yardz, a construction rental technology company, cautions that with industry growth comes increased costs for contractors. Economic fluctuations, rising demand for construction services, equipment supply shortages, and higher maintenance expenses are among the factors contributing to the escalation of rental prices.
To address these challenges and effectively manage rental costs, contractors can implement several strategies:
1. Negotiate initial rates: Contractors should leverage competitive pricing by negotiating rental rates with rental companies. Understanding both national and regional rates is essential, and contractors should be aware of the pricing flexibility offered by rental companies. Negotiating project-specific rates can also be advantageous, especially for high-demand equipment.
2. Manage rate receipts: Vigilant invoice management is crucial to ensure that contractors are charged the agreed-upon rates. Regularly reviewing invoices against contracted rates and challenging unexpected charges can prevent financial losses.
3. Gain visibility and control over assets: Implementing systems for tracking and monitoring equipment usage can optimize utilization and avoid redundant rentals. Modern technology allows for the efficient management of rental fleets, reducing costs for contractors.
4. Document delivery and conditions: Documenting the condition of rental equipment before, during, and after usage is essential to avoid disputes over damages or repairs. Electronic inspection forms and photo documentation can mitigate risks and prevent unexpected expenses.
5. Long-term and bulk rentals: Negotiating long-term rental agreements or bundling equipment orders can lead to lower monthly rates. Rental companies often offer discounts for large or bundled orders, providing cost savings for contractors, particularly for equipment needed regularly.
In addition to these strategies, embracing new data technologies can further streamline rental processes and reduce administrative burdens for contractors. Third-party software platforms offer features such as rate management, equipment inspection, rental visibility, and automated alerts, enabling contractors to make informed decisions quickly.
Looking ahead, the adoption of advanced technology holds promise for the construction rental market. Remote operation and driver-assist features for equipment could significantly enhance efficiency and collaboration between rental agencies and contractors, ultimately driving down costs and increasing profitability.
As the industry continues to evolve, contractors must adapt by leveraging innovative strategies and technologies to remain competitive in an increasingly challenging economic landscape. By proactively managing rental costs and embracing technological advancements, contractors can navigate the rising rental market while maintaining profitability and efficiency in their operations.