Telematics for construction can tell you exactly which piece of heavy equipment to buy, how often to use it, how best to take care of it and more.

Construction companies are under constant pressure to take on more complex projects while keeping costs under control, forcing many contractors to rethink how much equipment they truly need to own. Contractors need to be as flexible as possible to meet today’s demands, whether that includes building eco-architecture, mixed-use developments or even barndominiums. Traditional equipment may no longer be enough, but purchasing new equipment is cost-prohibitive for many up-and-coming contractors and construction companies.

The answer may be to pull back on purchasing assets and equipment and instead balance a hybrid model that relies on both rental and ownership. The solution entails using data to determine when it’s time to own and when doing so is a costly mistake.

The Benefits of a Hybrid Model

Numerous benefits exist for construction leaders turning to this type of hybrid model. The goal is simple. Balance core owned assets with short-term rentals. In doing so, an organization can:

• Reduce capital expenditure, keeping more money available for bigger investments and meeting the higher cost of labor
• Optimize fleet utilization; keep equipment in frequent use, rather than sitting and waiting
• Ensure the feasibility of big projects or more specialized work without having to plan for outright investment in new, limited-use equipment

The most challenging aspect of this process is knowing when to rent and when to buy. The cost of short-term rental can be prohibitive if using equipment for the long term or consistently extending a short-term contract.

How to Use Data to Make Better Decisions

Heavy equipment ownership should be based on data-backed decisions, not guesses about what purchase will yield the best ROI. The solution is to capture data that provides highly accurate insight into the use and effectiveness of any equipment. One solution is the use of telematics. These software programs provide exceptional insight into how to use equipment by gathering information such as:

• Real-time location
• Engine hours used
• Maintenance requirements
• Fuel and maintenance costs

Tracking Utilization

Telematics can provide a range of benefits to an organization. For example, utilizing software that offers GPS tracking and IoT sensors allows business leadership to consistently monitor utilization rates for each individual piece of equipment. This allows the measurement of how many hours each piece of equipment is actually being used. It allows tracking of idle time and pinpointing both overuse and underuse of assets.

If equipment is underused, it may not be worth the outright purchase depending on how frequently it’s needed. Overuse is a concern as well. Necessary equipment that goes down, even for a short amount of time, can be costly with added delays.

Improving Allocation

Utilizing telematics software, it’s possible to know the exact location of equipment. This also incorporates data about the usage status of the equipment, even paring the days and times a piece will need to be accessible for each project.

Managers can then more effectively and affordably move machines where they are not only needed but also where they’re needed most. This enhances outcomes and ensures employees have the right equipment for the job.

Optimizing Maintenance

Some construction companies are plagued with the ongoing need to keep equipment operating to push deadlines and meet project goals. Yet, skipping or missing maintenance can jeopardize the functionality, safety and even the future accessibility of that equipment. For some companies, downtime for maintenance and repair forces the consideration of purchasing new equipment. Still, that can be an expensive and avoidable mistake.

With telematics, it’s possible for companies not to plan maintenance by timing, but to make repairs when needed, stay ahead of breakdowns and enhance long-term outcomes. That includes monitoring factors such as:

• Changes in hydraulic pressure
• Fuel-burn rates
• Engine diagnostic data

Utilizing Data to Decide When to Buy or Rent

In some situations, companies will need to consider the feasibility of purchasing additional pieces of equipment or renting. For example, turning to local scaffolding rental companies for projects tends to be less expensive than trying to manage and move equipment from one area to the next. It’s local, convenient and readily available without worrying about not having it available when a project needs to change.

Other types of larger equipment can be tempting to purchase in order to have on hand anytime; however, before making such a decision, companies can use telematics and other data to determine:

• If there is an ongoing need for the equipment, which will make it a long-term, financially sound decision
• Whether equipment is necessary for a highly specialized project, and whether purchasing it outright could create capital that’s frozen in that equipment without really producing value
• If investing in total ownership is the best route for long-term growth

Using data to make such decisions minimizes locking capital up for too long in the wrong equipment, allowing businesses to maneuver more readily around ever-changing project designs and demands. Prioritize equipment access over total ownership. What is going to help improve cash flow and profitability?

Investing in modern equipment can be wise, but doing so with careful attention to an organization’s current and likely future use needs is more important than outright purchasing. With so much flexibility in ownership methods, including the wide availability of rentals, it makes sense for companies to make data-based decisions that ultimately keep cash flow moving. With access to software and IoT sensors so readily available, making critical decisions is far easier than ever.

SEE ALSO: THREE WAYS FLEET TELEMATICS ARE OPTIMIZING CONSTRUCTION IN THE NEW NORMAL