ARA publishes standards for rental metrics
By Murray Pollok27 September 2011
The American Rental Association (ARA) has published a white paper outlining industry standards for measuring and reporting the performance of equipment rental companies.
The ARA Rental Market Metrics white paper suggests a consistent way of calculating and reporting key performance measures. These include the definition of a day, original equipment cost (OEC), the calculation of time (physical) utilisation of equipment, financial (dollar) utilisation, fleet age and percentage change in period-over-period rental rates.
"The development of rental performance metrics marks a new chapter in the equipment rental industry", said Christine Wehrman, ARA's chief executive officer, "Standardising the methods equipment rental companies use to calculate performance measures will advance individual businesses and industry performance in a consistent manner. ARA undertook this landmark initiative to further the growth and professionalism of the industry."
The metrics have been developed by an industry-wide advisory group, with rental consultant Dan Kaplan providing the initial inspiration and also contributing advice during the project.
ARA's vice president for government affairs, John McClelland, was project leader and co-author of the white paper with Michael Graboski, an ARA consultant.
"Several key performance metrics for equipment rental businesses are unique to the equipment rental industry", said Mr McClelland, "Most of these metrics are associated with fleet efficiency and utilisation. Consistency in reporting metrics was missing in our industry and made it virtually impossible for rental businesses to assess their performance relative to their peers".
It is not yet clear whether the white paper will be freely available or available for purchase. This story will be updated when we receive that information.
ARA's white paper comes at a time when the rental industry is looking the creation of a worldwide benchmarking survey for rental. The Global Rental Alliance - the umbrella body for rental associations around the world, including the ARA, ERA and associations in the UK, South Africa, Canada, Australia and New Zealand - is discussing a set of standard questions to ask in a global benchmarking study.
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