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Time Utilization and Apples and Oranges.

So I can see some of you are asking "What do apples and oranges have to do with time utilization?"
More than you think.
Everyone has heard the term "compare apples to apples".
The term applies to one of the most used rental metrics in our industry. TIME UTILIZATION.

Depending on who you talk to, time utilization or TU can be loved or hated. In future tips we will discuss why there is such a range of emotions regarding TU. In this tip, we will focus on how TU can be different from rental house to rental house.

Here are some of the different methods of measuring time utilization:
- UNITS ON RENT divided by UNITS IN FLEET
- UNITS ON RENT divided by AVAILABLE UNITS (on rent and green tagged only)
- DOLLARS ON RENT divided by DOLLARS IN FLEET
- DOLLARS ON RENT divided by AVAILABLE DOLLARS OF FLEET
  - sometimes referred to as dollar utilization
- The above measurements can also be calculated using units over a certain dollar value (under $5000 not included)

Considering these different methods of calculating time utilization, you can see how all the "apples" may not be "apples".
How this can affect you as a rental person depends on how the measurement is being used.

I recently spoke with a rental branch manager who was getting pressure from his owner that he was not getting as high a time utilization percentage as a publicly traded company. The publicly traded company was reporting a number that did not include units under $5000 or units that were hard down, red tagged or being transferred to other branches. The branch manager was working with a number that included ALL units in fleet. This was like comparing apples to oranges.

So often, the larger companies also throw around DOLLAR UTILIZATION numbers which basically focus on big ticket equipment. With pressures from investors and the stock market on return on invested capital, you can see that they are more concerned with "the big stuff getting out". In the meantime, the smaller player is counting every unit. A $150 grinder counts the same to the TU percentage as a $200,000 boom lift.

So make sure you understand how you are measuring TU and if being compared to another rental house, make sure you know how they measure it. Especially if you have a bonus program based on TU.......

If you have any questions on TU or any other commonly used rental metrics feel free to give me a call or email. Or feel free to make contact through my website.

Together, let's make our industry better.


JimBo