Equipment Charging Dispute

Trencher

Hi guys! Long time no see! Hope everyone has a great winter planned!!



OK, I have an on going dispute with a large company about my charges, when it comes to charging for equipment not being used, during the time I am working. Example...

1. Bring equipment for job agreed upon.
2. Use equipment, as I need it, on job agreed upon

Now the issue is, they want me ONLY to charge for the time I actually operate my equipment, but I try to tell them, "if that is the case I will have to bill you for pick-up and delivery after each time I use the equipment, since I cannot charge for it "sitting" on the site for a couple of hours during the day. I would have to call my guy to come get my equipment and then bring it back when I need it."

They get a bit pissed at me for saying that, but they have to realize by me charging a daily rate they are MUCH better off than re-p/u and re-delivery.


The argument continues as to why I have to charge for the equipment if it is not ACTUALLY being used? And I ask them, "Well, do you feel the same about your company cars when your employees are not actually in them when at the customers place of business?" Needless to say there are looks at that time.

Is there another way of presenting to the customer no matter if the tools are being used, at the time, that it would be in their best interest to pay for the standby or even a daily rate?

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Fulcrum Services, LLC
www.fulcrumservicesllc.com

finehomes

You can't be serious. If you tried to charge me for equipment that wasn't being used....you'd be gone in a second and the next guy would get the job.

Santa's Helpers

That's the way any rental agreement works. A car, tool, real estate, it all works the same. Now, if you are doing the job, use the equipment one day and charge them for a week, that is different.

Sarah9910

Charge your idle time to the job when you job cost equipment (often done when payroll is done) at your idle time cost rate. Charge customer for hours used but make sure your rate is high enough to cover all costs.

Analyze periodically to be sure you are recouping your costs for idle time.

You are right in your thinking, the equipment is required to on site. AKA opportunity cost, but Finehomes is right too, don't tell them what your billable rate is composed of, they don't need to know.

My 2¢

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Trencher

Finehomes, you completely missed my point.

The customer wants to be billed for the ass time in the seat of the equipment, not the time from when I get off of the equipment, walk over to a material stash and back to the equipment (10 mins.). I am not going to sit back and get into a pissing contest of what I should charge when I charge it and break it down in 10 minute increments. You'll end up paying more for my time doing your micro-managing.

If you rent equipment they don't bill you for actual hours (unless you go over the allotted hours), they bill you for the time in which it is not at their yard.

__________________
You don't know half, until you know all" - My quote

Fulcrum Services, LLC
www.fulcrumservicesllc.com

Big Chris

I would just bill them for the machine time as they want, but all the time spent off the machine doing other tasks bill them at a laborer rate. I'd inflate that rate enough to make up some of the difference. Maybe raise your mobilization fee too. Just my $.02

I can see where this could be an issue trenching and installing conduit. There can be a lot of time spent putting conduit together or installing sonotube that if you are only billing for machine time would bite you in the azz.

rino1494

When working by the hour, we charge for whatever time is on the hour meter. Doesn't matter if the machine is warming up, cooling down, greasing, or it is running while I am shoveling. Never had a customer complain about the bill. This is why I prefer to bid jobs instead of working by the hour. You will make more money and the customer will not complain if you are sitting idling.

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dayexco

personally, i'd never pay you for equipment sitting off the side not being used. my arguement would be, if you want to charge me for it....where's the operator for it, and why isn't it being used?

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tgeb

I take a totally different approach to this as I have been beaten into the ground on this type thing back when I gave a crap.

If I provide a machine: be it an excavator, loader, skid loader, tamper, on site dump truck, what ever it is. That piece of equipment has a daily rate for the machine with out operator.

My daily rate is less than you could rent it yourself, put fuel in it for the day and pay any associated "damage waiver fees" from the rental company.

I provide an equipment operator that is paid for his time on site, or off site if he is getting material for the job at hand.

This approach has limited the fights I get into about charges for equipment.

You don't want to pay for the machine...go rent one yourself, put some a-hole in it that can pull the levers and get done less than half as much as one of my guys and then, see where you are.

I have used this method and it is the only way I know to get paid for the thousands of dollars of equipment we have, at someone else's immediate disposal and still be fair.

Now don't get me wrong, I'm not inflexible and will work around things such as machine that was only needed for a couple hours, but was needed, could get a break in the daily rate.

But if I'm backfilling a trench, and compacting it with my tamper, I am getting paid for the tamper and the man time to operate it, and the day rate for the loader filling the trench.

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www.gebcon.com

backhoe1

I could never justify billing more equipment hours than actual man hours.
for example if I had 4 pieces of equipment on site but only 3 men for say a ten hour day, I would make sure I wasn't charging more than 30 equipment hours.

Electric_Light

You need to read the contract. What's in the contract is what it is. If you don't read the contract, you lose. If it's a large company you're dealing with, you've more than likely received paperwork with all the terms and conditions. If you didn't read it thoroughly, nobody is to blame but yourself.

I don't deal with rental construction equipments, but if the rental company has say, only one of that equipment, there's another customer who wants it, but it's sitting in your site doing nothing and can't bill you for it, the rental company just lost the money there.

Speaking in common sense, when you rent a car for a week, but there's a day you don't drive a single mile. Even though you didn't use the car, it was in your possession and it is an opportunity cost for the rental company as it could have been lend to someone else.

Mr. Constructio

When I dig sewer taps for plumbers with mini-ex my time starts when I get there to when I leave, time keeps running while I sit and wait for plumbers to glue pipe together

Trencher

A lot of contractors bill a daily rate whether it is discounted or not AND whether the equipment is used or not. The fact is the equipment is costing money to sit and run. I have jobs I charge by the hour, but on this one we apply a daily rate. The customer knows this and has agreed to it, but they are now deciding to nickle and dime.

No contract was signed on their behalf. One was submitted by me and they agreed to it.

In the oil fields you are expected to be there for a job. When the chaos ensues and it hinders your completion of the job, guess what....you bill for your equipment and men just sitting there, because you are upholding your end of the deal.
This may be the second customer who wants to micro-manage every aspect of what is going on and how it is going to be done. I told the customer rep. that the cost are going to inadvertantly rise due to his interference of my operations.
Instead of allowing me to run the job I am expected to run, this guy is trying to validate his job any way he can.

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jmacd

What if the job takes more than one day? Do you charge the customer for the time the machine was idle over night? How about weekends.?
You have to work with your customers and do what is fair for you and them and only you and can determine that. I quote the job 99% of the time and only do hourly when the job is very small and discuss the charges upfront what ever they may be.

Trencher

I do not charge for overnight nor weekend sitting. My point is not being seen here. Sorry for not conveying it more clearly.

The customer is wanting to deduct time for every time I get out of the seat, no matter the duration. I can understand if I am out of the seat for a couple of hours, but I am not going to deduct 10 minute intervals when I have to get out and either sign for materials, get water, scratch my butt, or hook a lead.

I could charge a daily rate, but then they'd complain once they average it out per hour.

__________________
You don't know half, until you know all" - My quote

Fulcrum Services, LLC
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jmacd

That doesn't sound fair to you. I would not like that situation either and would have to straighten that situation out before I did anymore work.