Cypress Bayou Energy rents 12 compressors in DeSoto Parish under a 98% runtime guarantee. Every month the vendor's invoice includes a one-line summary: fleet runtime, guarantee met, no credit due. In June it said 98.4%.
The production engineer had a nagging feeling about four of the units. So she checked them one at a time.
Same hours, two answers
At 98% over 30 days, each unit may be down 14.4 hours before a credit is owed. Across the whole fleet that is 172.8 hours, and the fleet was down 138. Averaged, the guarantee was met.
Unit by unit, it was not:
Show the mathHide the mathHow each figure above is worked out, step by step.
Credit owed, unit by unit$382
- Hours in the month30 days × 24 h720 h
- Down hours allowed per unit720 h × (100% − 98%)14.4 h
- H-01(26 h − 14.4 h) × $6,800 ÷ 720 h$110
- H-03(22 h − 14.4 h) × $6,800 ÷ 720 h$72
- H-05(31 h − 14.4 h) × $6,800 ÷ 720 h$157
- H-07(19 h − 14.4 h) × $6,800 ÷ 720 h$43
- 8 units stayed inside the allowancedown no more than 14.4 h, so no credit$0
- Credit owed, unit by unit$110 + $72 + $157 + $43$382
A fleet average finds$0
- Hours in the month30 days × 24 h720 h
- Down hours allowed per unit720 h × (100% − 98%)14.4 h
- Down hours, all unitsevery unit’s down hours, added up138 h
- Fleet allowance14.4 h × 12 units172.8 h
- Average rent per unitevery unit’s rent, added up, ÷ 12 units$6,800.00
- A fleet average finds(138 h − 172.8 h) × $6,800.00 ÷ 720 h$0
Read your contract for one word
Most rental contracts measure the guarantee per unit. Some measure it per fleet. The difference decides whether eight healthy units can quietly cover for four bad ones. If yours says per unit and the invoice reports a fleet average, the invoice is answering a different question than your contract asks.
What Cypress Bayou does now
- Runs the credit unit by unit every month, from their own callout times
- Sends the vendor the unit list with the invoice dispute, not a fleet number
- Tracks H-01, H-03, H-05 and H-07 as a watch list
- Guarantee
- 98%
- Days in the month
- 30 days
- Units
- 12 rows