Equipment as a Service in the Construction Industry

Equipment as a Service for Construction Machinery – What Is It?

Equipment as a Service (short: EaaS, sometimes also referred to as Machine as a Service) means that a machine is not purchased by the customer, but rather the manufacturer or a rental company provides it to the customer against a fee as a type of service. The machine is located on the customer's premises or construction site, but remains the property of the provider. All service functions such as repair, maintenance, or installation of spare parts are the responsibility of the provider, not the customer: the provider ensures that the machine is ready for use at all times.

Unlike a purchase, the customer does not pay the total cost of the machine to the provider.

Instead, the actual use by the customer plays a role: the machine sends data to the provider so that the provider can verify when the customer actually used the machine. The provider then calculates the usage fee that the customer must pay. The transmission of such machine data is becoming easier and cheaper thanks to digitalization.

Discover our rental selection

What Is the Difference Between EaaS and Leasing or Renting?

Besides the service functions (maintenance, repair, etc.) that the provider guarantees in the EaaS model, the cost calculation in particular is a unique feature and a difference from leasing or traditional machine rental. Various billing models can be used:

• Subscription: The customer pays a fixed amount (for example, annually) and can use the machines at any time – as long as they do not exceed an agreed number of machine hours. If the customer wants to use the machine beyond the agreed quota, this costs extra.
• Pay-per-Use: Here, billing is based on actual usage. The customer's actual use is recorded by machine data and transmitted to the provider. The usage fee is then calculated.
• Pay-per-Outcome: With this model, the customer pays for the result they achieved with the machine. Only if the customer is successful does the provider also benefit, for example by participating proportionally in the customer's profit on a project.

Through EaaS models, providers and customers build a close relationship: only if the machine is ready for use and is actually used by the customer does the provider receive payment. At the same time, the provider has much more precise information about the machine's operating times and can better tailor their offers to the customer's needs in the future.

Who Benefits from Equipment as a Service for Construction Machinery?

EaaS models can bring benefits for both customers and providers:

How Customers Benefit

• Especially with expensive machines, they don't have to invest large sums that would be due all at once with a purchase. This can avoid liquidity problems
• Through EaaS, they can flexibly respond to changes in orders – if you don't use machines, you don't pay for them
• They only need to handle maintenance and operation of the machine during the rental period
• The provider themselves has an interest in maintaining and preserving the machine. Both provider and customer want to achieve high machine utilization, because downtime no longer costs the customer money, but especially costs the provider money. The provider thus bears the risk of standstill.

Renting construction machinery or EaaS – which is more worthwhile for the customer?

Rental

EaaS

+ better machine availability since more rental companies than EaaS providers are active in the market

+ more flexible billing models such as Pay-per-Use or Pay-per-Outcome

+ usually cheaper when many machine hours are expected to be needed in a short period

+ usually cheaper when few machine hours are expected to be needed over a long period

+ better suited for frequently changing work locations since collaboration with local rental companies can avoid long machine transport distances

+ more flexibility when orders change since unused machines don't incur costs

How Providers Benefit

• because EaaS models turn machines into permanent revenue sources with recurring revenue. This allows providers to build a stable business model that doesn't depend as heavily on selling individual machines.
• because they can use the data transmitted by the machines to better understand their customers' needs. They know exactly what their customers currently need and can create tailor-made offers.
• because through EaaS models they can build long-term customer relationships. Working together over a longer period creates a relationship of trust between provider and customer. If the customer needs additional machines, they will be more likely to contact the provider with whom they have been working in the EaaS model for a long time.
• because they can use the data to make machine maintenance more efficient. Instead of checking machines at fixed intervals, providers can perform maintenance exactly when the transmitted data indicates it's necessary – with such data-driven decisions, providers save money.

Equipment as a Service for construction machinery? That still sounds like the future. In fact, the business model is already being successfully implemented in other industries. The construction industry will also experience this new form of collaboration between machine providers and customers thanks to digitalization and ever easier data transmission – and both sides can benefit from it.