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How to Avoid the Hidden Costs of Plant Hire

January 13, 2022

With the turn of the new year, many people are striving to pursue their new-years resolution. This could be to stop eating as much fast food or to be more organised in their personal and professional life. Whatever your New Year’s resolution may be, I may have another to add to your growing stack of goals for 2022.

Plant hire, initially a small and maybe even forgotten about expenditure to the start of a construction project, can easily build up over time to cost significantly more than budgeted for.

At this point, you may be thinking to yourself: “Sure, I’ll keep an eye out for plant costs accruing over time”. Great! However, there are various reasons as to why people encounter large and even unnecessary costs to begin with.

Before the Christmas and New Year’s holidays, we had several businesses approach us, each interested in our Plant Hire Management Modules to work alongside our construction-specific accounting packages, Construct for Sage and EVision ERP. Considering this, we thought it would be beneficial, to our existing customers, new customers and peers in the construction industry to make a short guide on how to avoid the hidden (and ever-growing) costs of plant hire.

Plant Hire in the Construction Industry

For the readers who aren’t too familiar with plant hire in the construction industry:

Plant is a term used in the construction industry to describe machinery or heavy-duty apparatus to undertake industrial, construction and demolition activities. Plant can be forklifts, cranes, large foundation drills etc.

Hiring plant is a part of every construction project and often seen as the most cost-effective option; a recent Wells Fargo Equipment Finance survey showed that a third of contractors hire plant when the work required doesn’t justify a purchase. 

But could renting equipment actually be costing you more money than you think? Without effective plant management, something as simple as hiring an excavator or mini digger can go from being convenient to costly in a matter of days. Clearly, plant hire can have a significant impact on a project’s margins. So how do we reduce them?

Top 3 Ways to Reduce Plant Hire Costs

After speaking to thousands to businesses over the years, we have identified the three key areas in which construction companies can reduce their plant hire costs.

Stay local 

The further you are from a supplier, the greater the cost of getting your equipment delivered. Whether it’s calculated per mile or using a predefined band system, simply locating a trusted plant supplier based near the project can save money on equipment hire and there are plenty of comparison websites to help you do your homework. 

Keep Track and Avoid Overdue Fees 

Once equipment is on-site, it’s easily forgotten about and quickly becomes a drain on resources rather than a money saver by incurring overdue fees from the supplier. Instead of relying on spreadsheets, the right software can help contractors and project managers monitor where plant is on-site and generate automated alerts when the equipment needs returning, boosting efficiency and avoiding overdue penalties which can quickly amount. 

Consider Buying 

Despite the perceived wisdom of hiring plant, for frequently-used equipment, it can make more sense to buy it outright and recoup the costs in the long term. If you often spend £400 a week to keep a mini digger on site, only to forget about it and incur late fees time and again, you’re likely to end up paying more than the cost of the digger itself in the end. Starting to collect cost information on plant helps businesses make this decision based on real numbers.

Our Construction-Specific Accounting Software Can Help

Construct for Sage and EVision ERP by Eque2 makes plant management easy, reducing the cost of equipment hire and improving operational cashflow. From tracking plant, so that it isn’t left on site longer than necessary, to generating automated alerts and reports warning you of potential overcharges, software can help you avoid the hidden costs of plant hire.

With Construct or EVision, you can realise the true impact of plant costs on your contracts by recording plant orders, on hire/off hire tracking per contract. 

To see how our construction-specific accounting packages can help to increase the efficiency and accuracy of your business, consider registering for a free online webinar.

If you would like to arrange a online demo with us, or would like to learn more on how our software can benefit your business, you can email us at Construction@eque2.com or phone us at 01619 390111.

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