Metal Construction News, February 2021

BUSINESS FEATURE The sharing economy is starting to impact the construction industry Photo courtesy of Varco Pruden Buildings Companies like Uber Airbnb and Lyft have defi ned sharing economy the practice of sharing owned assets with others The sharing economy originated with the fi nancial crisis in 2009 Now this collaborative consumption where businesses and individuals both optimize and become more effi cient with their unused existing resources and possessions is a growing trend in multiple industries throughout America According to a 2014 PricewaterhouseCoopers study in its Consumer Intelligence Series the sharing economy is projected to grow from 15 billion in 2014 to 335 billion in 2025 Its gaining acceptance in B2B markets particularly in the construction industry And now in the age of COVID 19 this digitally enabled sharing economy has been further accelerated by contractors needs to engage in touchless nonphysical ways to do business with each other A Common Construction Market The sharing economy is bringing contractors together in a common construction market matching those who need equipment with those who have it to spare Via virtual online marketplaces contractors can list and rent out their inactive equipment to other contractors Equipment sharing services allow contractors to browse an app or website for a machine they need and rent it for less than they would pay a traditional rental house or dealer Both small and large construction companies can create new revenue streams and save money on expenses and losses In construction a companys projects can fl uctuate In between jobs unused equipment can become a major cost sink that accumulates depreciation and interest expenses Sharing equipment is a more cost effective means of having machinery sit idle in between jobs This subletting lowers transaction costs and reduces companies bottom line Sharing instead of buying offers fl exibility companies dont have to make a highpriced expenditure for just one piece of equipment Sharing is ideal for one time projects and aids in maintenance and storage issues Companies sharing construction equipment can sometimes deduct the leasing cost on their taxes Also taking an immediate deduction on a shared piece of machinery could be more benefi cial than deducting the cost of purchasing construction equipment over several years Owning construction equipment is an expensive proposition says Brig Ricks CEO Burly Rentals Traverse City Mich Surveys show that equipment sits idle 70 of the time When equipment is inactive the owner must still pay the fi nancing insurance property tax maintenance storage and other equipment expenses Sharing the equipment with other construction pros in your area creates a new revenue stream for the owner Ricks says the most commonly shared metal construction equipment comes in two categories of equipment that he sees being most often requested lifting equipment and compact equipment such as skid steers mini excavators and loaders Also transportation of equipment is important Equipment that can quickly be loaded and hauled will always be easier to share Another reason construction machinery sharing is growing in usage today is because machinery is becoming increasingly diversifi ed Where a single machine used to do the work highly specialized equipment is now used for specifi c scenarios says Thomas Müller CEO of evan GmbH Dresden Germany and spokesman for the evan network organization The demand for such special construction machinery varies greatly as it is only needed occasionally but must be available for customers This demand cannot be met by a single company alone which is why machine subleasing via cooperating partners is immensely increasing The advantage of a sharing economy therefore is that a provider no longer has to own all the machines but can also offer machines from other companies via its portfolio to satisfy customer requirements in the best possible way However this sharing fl exibility can become a major challenge for providers and customers alike While rental and leasing long term rental models still dominate today Müller sees more and more pay per use and on demand business cases These are cases that Müller believes can only be realized effi ciently through consistent digital processing from placing the order through handling and fi nally to payment The necessary administrative steps such as maintenance or claims management must also be included in the automation and digitized Such end toend digitization ultimately leads to signifi cantly more effi cient processes and thus saves companies time and money Today however most providers are still a long way from such a status Müller sees the construction machinery sharing procedure comprised of the following steps 1 Finding a free resource 2 Booking a machine due to the lack of digital processes nowadays this is hardly possible in real time 3 Preparation of the machine including checks and services 4 Delivery of the machine including transport coordination and transfer of risk 5 Use in future also including pay per use 6 Repatriation including transport coordination and transfer of risk 7 Accounting 8 Claims management if applicable Construction Equipment and the Sharing Economy By Mark Robins Senior Editor 20 METAL CONSTRUCTION NEWS February 2021