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ARA Introduces Rental Industry Performance Standards

The American Rental Association (ARA), Moline, Ill., has published a white paper outlining industry standards for calculating and reporting equipment rental company performance.

The report, named ARA Rental Market Metrics, provides equipment rental companies a consistent way of calculating and reporting critical performance measures. It develops industry standards for the definition of a day, original equipment cost (OEC), and calculating time (physical) utilization of equipment, financial (dollar) utilization, fleet age, and percentage of change in period-over-period rental rates.

“The development of rental performance metrics marks a new chapter in the equipment rental industry,” said ARA CEO Christine Wehrman, “Standardizing the methods equipment rental companies use to calculate performance measures will advance individual businesses and industry performance in a consistent manner,” Wehrman added.

According to John McClelland, ARA vice president for government affairs, several key performance metrics for equipment rental businesses are unique to the industry, and most are associated with fleet efficiency and utilization. “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,” said McClelland, who led the project and co-authored the white paper with ARA consultant Michael Graboski.

ARA convened an industry-wide advisory group to advise the project team during development of the white paper. Dan Kaplan, a rental expert from Daniel Kaplan Associates, Morristown, N.J., provided the initial inspiration to ARA for this project and contributed to the effort.

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