Holding the Key to Recovery

Rod Sutton, Editor in Chief | September 28, 2010

We welcome your comments.

E-mail: rsutton@reedbusiness.com

Fax: 630/288-8185

Mail: 2000 Clearwater Drive, Oak Brook, IL 60523

An equipment executive recently told us that his company checks equipment costs daily. That's right: daily. What some equipment managers review monthly or quarterly, this company is keeping a keen eye upon.

A bad number on equipment costs can destroy the profit in this highly competitive market. Projects listed today are receiving two or three times as many bids, as more companies vie for fewer opportunities to put machines to work.

As a result, bids are coming in way under expected budgets. In fact, the bids on demolition of Texas Stadium in Dallas range anywhere from $7 million to $15 million, according to a document obtained by demolitionnews.com.

Granted, some bids are taking advantage of decreasing materials costs, but the pressure on an equipment manager couldn't be greater. If you can't provide reliable owning and operating cost on the pieces of equipment needed to build a project, your company's bid could end up sinking the corporation.

According to a recent Wall Street Journal article, strong companies are taking advantage of current market dynamics to buy market share. It will work if that company has the cash and is in a strong financial position.

The equipment manager holds one of the keys to that kind of strong financial footing. Here are two suggestions if your company isn't one of them:

1) Read "How Estimates Affect Cost Calculations" (March 2004) and use the downloadable spreadsheet to see how you can figure your owning and operating costs. Use it to fine-tune your processes.

2) Consider traveling to Chicago this month for AEMP's Asset Management Symposium. One session in particular will help you work better with your organization's upper-management team: Building Owner Understanding of the Value of the Equipment Department.

It's important that your organization rightly approach the increasingly vital role of the equipment executive in financial situations.

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