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Plant hire costings benefit from accuracy


Sir, The plant hire industry tends not to have an accurate whole-life cost of an item of equipment on their rental fleet, although most have a fairly good rough idea.

Unfortunately, many seem to set their plant hire rates according to what competitors are charging. At the end of the year, if they are making a profit they assume they have their costings correct.

A small minority do try to cost items of equipment accurately. We generally find that if we use accurate costings then this produces a hire rate which is either at the industry average or slightly above.

Many organisations, for example, will not include the cost of funds in purchasing equipment, or may not include head office/ overhead costs that could be absorbed by a holding company.

We have a computer program we have written ourselves that can include all the variables to produce a weekly cost of running an item of equipment. It is extremely useful in giving us costings when variables suddenly change (fuel, etc) so we can ref lect these into our costings.

It is not rocket science, simply a matter of ensuring that one includes all the appropriate variables and costs, many of which most hire companies would simply ignore.

Hugh Edeleanu, chairman, HE Group