Most construction projects hire some, or all, of their construction equipment. These items could be portable electric tools, through to monster bulldozers and excavators. Sometimes the item is only required for a couple of days (even a few hours), while other equipment is required for the duration of the project. On large earthmoving projects hired equipment could make up some 40% of the project costs, so even small savings can make a difference to the project’s profits.
What to check for when hired equipment arrives on your project
The task of receiving equipment deliveries is often left to a person who has not been told what to look for. Things to check when hired equipment arrives on the project include:
1. The item is actually for the project
It sounds very basic, but it wouldn’t be the first time something is delivered to the incorrect project.
2. The item is what was ordered
Sometimes suppliers deliver smaller, or bigger, machines, and on occasion even the wrong item. (Bigger items usually use more fuel and they might not be suited for the task. Obviously, small items may be ineffective, and you’ll probably be paying the price of the original item that was ordered.)
Damage to the item, such as; bumps, scratches, cracked windows and damaged lights. These damages should be noted on the delivery note, put in writing to the supplier, and if possible photographs should be submitted to the supplier, as well as a set kept on the project.
Suppliers will charge for damages they find on the machine when it’s returned, so it’s important to record existing damages so the project isn’t charged for pre-existing damage when the item is returned.
4. Parts condition
The condition of wearing parts and cutting edges, since the project is normally charged for their replacement or additional wear.
5. Tires condition
The condition of the tires, because those that are damaged or in a poor condition often result in deflated tires, which not only cost time to repair but the project could be liable for new tires when the item is returned to the supplier.
6. Operational condition
Ensuring the item is in a roadworthy and in an operational condition, that there aren’t oil leaks. It has to be able to do what it’s supposed to do.
That all the parts and fittings are included with the delivery, and that wheeled machines come with at least one spare tire.
The fuel level of the machine which should be recorded, since suppliers normally expect their machines to be returned full of fuel, and will charge for additional fuel they have to put in (but of course the converse doesn’t happen, and often machines arrive with minimal fuel. When large items take several hundred liters of fuel, this could result in a significant additional cost).
When the item is being charged at a mileage rate, the odometer reading should be recorded and compared to what’s on the delivery document.
10. Keep track
When the item is being charged for the hours or days it’s on the project, then it could be important to record the time the machine arrived on the project. For example, if the item arrived in the late afternoon, the project shouldn’t be charged for that day.
Most importantly the project member who requested the item should be notified the item has arrived on the project. Often machines arrive and then aren’t used for several hours, or days because the person who requested the machine doesn’t know it’s available.
Where the item is supplied with an operator, it’s important to check that the operator has all the correct licenses to operate the equipment. The operator should attend a project-specific introduction or induction so that they are aware of the rules and the hazards of the project before they start working.
Understanding the conditions in the hire agreement
Often items of equipment are hired, but the project team has not read the terms of the hire agreement, which can be fairly stringent. The terms should include:
- The hire rate for the machine, and whether it’s charged hourly, daily or monthly.
- The minimum hours, or minimum days, the item will be invoiced for.
- Whether a surcharge applies if the machine is worked excessive hours or travels more kilometres.
- What the hire charges will be if the machine can’t work due to rain, force-majeure, or non-work days on the project.
- Which party is responsible for insurance – more importantly is the machine insured?
- Who is responsible for repairs and maintenance (these costs can sometimes be large, adding significantly to the hire costs).
- Who supplies fuel, oil and cutting edges, and for cranes the slings.
It may be possible to negotiate some of these terms when the order is placed, which could result in considerable savings later.
Personnel using the machine must be aware of these conditions. In the past, I’ve had supervisors park-up machines thinking they are saving hire costs, when in fact the machine is still incurring charges since it hasn’t worked its specified minimum hours. However, swopping machines around, and using it on a task more aligned with the hire agreement can sometimes result in some hire costs being saved.
Should the item break down, the supplier should be notified immediately (verbal notifications should be confirmed in writing). The person recording the working times of the item must be informed and they must record when the item broke and the possible cause of the failure so that the project isn’t charged for hours when the machine couldn’t work.
Hired equipment needs to be managed and controlled properly to avoid unnecessary expenses. Safety is important so the equipment should be in good condition and it should be maintained properly and only used by trained operators.
Failing to check the equipment thoroughly when it arrives, or to understand the conditions in the hire or rental agreement can be costly.
Have you incurred unnecessary expenses for hired or rented construction equipment?
What tips do you have when renting construction equipment?