Most contractors own more equipment than they think, and most of it works for free. The scaffold, the shoring, the compactor, the saws, the headers and props: they get loaded on a truck, sit on a job for two months, come back with a piece missing, and none of that shows up on the job's numbers. The job looks profitable. The equipment account looks like a black hole. Both are wrong.
Internal equipment rental, sometimes called intercompany rental, fixes that with one rule: every job rents the equipment it uses, at a daily rate, from the company that owns it. Same as if it came from the rental store down the road, except the check goes from your left pocket to your right. This is how I ran headers and props inside my masonry company for three years, and it is the reason I ended up building software for it.
Why charge yourself
Three things happen the month you start.
- Your bids get honest. If a job needs a lift for six weeks, the estimate carries six weeks of lift. You stop underbidding the jobs that lean on your yard and overbidding the ones that do not.
- Gear comes back. A foreman who is paying $5 a day per header sends them back the day the wall is done. A foreman who is paying nothing lets them sit in the mud until somebody needs the truck.
- You find out what the yard is worth. Add up a year of internal rental and you know whether the equipment is paying for itself, whether you should buy more of something, and what you could charge if you rented to the sub next door. That last one is how a cost center becomes a side business.
Setting the rate
Start from what the rental store charges and take a third off. You are not paying for their counter, their delivery fleet or their margin, and the point is to make the job feel the cost, not to gouge your own foreman. For anything the rental store does not carry, work backwards from replacement cost:
| Item | Replacement | Days rented a year | Daily rate |
|---|---|---|---|
| 8 ft steel header | $[COST] | ~120 | $5.00 |
| 350 shoring prop | $[COST] | ~150 | $1.50 |
| Coupler | $[COST] | ~120 | $0.50 |
A daily rate that pays the piece off in two to three years of realistic use is about right. Round it to something a foreman can do in his head.
Always use a minimum
A header that goes out for two days costs you the same handling as one that goes out for a month: pull it, load it, deliver it, pick it up, inspect it, rack it. Set a minimum rental period per item, fourteen days for small stuff and twenty-one or twenty-eight for the heavy pieces, and bill the minimum even if it comes back early. Without a minimum, the yard subsidizes every short job and the numbers lie again.
What to track, and what not to
You need exactly four facts per line: what went out, how many, on what date, and when it came back. Everything else, the invoice, the days, the overage, the "what is still out on that job" question, is arithmetic on those four. The mistake most companies make is tracking the arithmetic instead of the facts, which is how you end up with a spreadsheet where the total is right and nobody knows why.
Do not track condition on every piece unless you rent to outside customers. Track it when something comes back damaged, charge the job for it, and move on.
Where the spreadsheet falls apart
Everybody starts with a spreadsheet, and it works for about a season. Then:
- The pick ticket, the spreadsheet and the invoice are three places to type the same line, and one of them is always behind.
- A job sends back half its props. The sheet has one row for props. Now it has two, then five, then nobody trusts it.
- Gear moves from one job straight to another without coming home. It never went out on the second job's sheet at all.
- Month end, someone has to remember which lines were already billed on last month's internal invoice. They will miss some.
- The only person who understands the sheet goes on vacation.
Every one of these is a variation of the same problem: the spreadsheet is a record of what someone typed, not of what happened in the yard.
How we run it now
The version that finally held up puts the four facts in the hands of the person who has them. The yard picks on a phone; the pick is the record that the gear went out, and it starts the rental clock. The return is done on the same phone; that is the record that it came back. The office never types either one. At the delivery, the job is billed for the minimum on every line. When gear comes back, the job is billed only for days past that, never less. Anything still out shows on one screen, by job, with the days ticking.
Add-ons and partial returns are the normal case, not the exception, so they are one tap each and they roll into the same job. The internal invoice at month end writes itself from the returns, and the lines it billed are marked so next month does not bill them again.
That is the whole system. It is not complicated, which is the point. The last one we paid for was powerful enough to run an airport and it took three years and a lot of swearing before we admitted it did not fit a yard with one truck.
Start this month
- List what you own that jobs borrow. Skip the hand tools.
- Put a daily rate and a minimum on each line. Rental store price, less a third, rounded.
- Tell the foremen the rate exists and that it hits their job. Watch what comes back the next week.
- Record out and back on the day it happens, by the person it happens to. Phone, clipboard, whatever, but that day.
- Invoice every job once a month, internally. Read the total. Decide what to buy next.
If you would rather not build the spreadsheet
Header Tracker is the system in the section above, sold to small yards for one flat price. Quote, pick, return and invoice from one record, with a phone app for the yard. It runs internal rental and outside rental side by side, so the day a sub asks to borrow twenty props, you can say yes and bill it.
Book a 20-minute walkthrough