So far in this series on Financial Management for Rental we have covered Time Utilization, which tracks units over time to help you monitor trends and compare fleet efficiency during different time periods, and Financial Utilization, which focuses on true amount of revenue each unit earns on an annualized basis. Now that you understand these two metrics and how they are used in conjunction, it’s time to advance your knowledge of rental financial analysis.
Fleet Apportionment is a more advanced method to determine utilization, and is accomplished by dividing your fleet into two groups; a “Base Fleet” vs. “Other Fleet”. Dividing your fleet helps you more closely evaluate and compare changes in utilization rates and fleet mix across time periods.
The “Base Fleet” can be determined by units or classes of units and includes only those that have rental activity in the two periods being compared. The Base Fleet evaluation should allow you to exclude units rented from outside of the rental fleet, such as re-rents or units borrowed from retail stock.
The “Other Fleet” encompasses changes in the fleet from period to period that result from adding equipment units to the fleet or deleting equipment units from the fleet. This might happen if you need to pull a unit to be serviced and replace it with a functional unit during the lease period.
Fleet Apportionment Measurement Methods
Measuring using the Fleet Apportionment method needs to be done carefully and used in the right situation. For more information on Fleet Apportionment and how to determine the best method for your company to determine the Base Fleet, please refer to the ARA guidelines. They have developed a methodology and set of rules for determining the best way to measure this metric. Visit www.ararental.org for more information.