You’ve got a construction gig coming up and it is getting close to breaking ground, but before you do that, you need to figure out how to acquire your construction equipment. The most common choices—buying and renting—have their own advantages and disadvantages. Many other factors, such as budget, the projects you’d be working on, cost analysis, and risk assessment and management, all play a crucial part in your decision.
Here’s a quick list of considerations that you should think about as you prepare for the project ahead. It’s better to plan wisely rather than make a costly investment that affects your profits later on!
When to Buy
This is the most no-nonsense method of them all. Essentially, this is a “get it and forget it” choice for picking your equipment, one that comes with less hassle than renting or leasing as you need it, which makes the choice appealing to many. After all, owning your own equipment makes it easy to ensure that you have the right tools for the job at all times, no matter what the job may entail.
But monetary feasibility is a primary concern for buying your own equipment. Buying comes in at a higher price than rentals, which means you must decide if it’s worth the price. One way to determine feasibility is by analyzing the cost effectiveness of the item and assessing the choice’s associated risks. If it’s not a piece of equipment you’ll use that often, purchase costs and long-term maintenance may prove prohibitively expensive.
When to Rent
For one-time projects or construction plans with limited scope, this the best choice for your budget and company. Need to move a large patch of gravel quickly or excavate to install the foundations for a new home? This is most likely the way to go. A careful balance between special requirements and should also be factored in, in addition to the length of usage you expected to put in for the equipment. This way you can quickly assess when renting is better for you or when it’s better to buy.
Your Business’s Budget
As we talked about earlier, renting is usually taking less of hit on your wallet as opposed to buying the equipment outright. That being said, there are certain examples or situations where renting is actually more expensive. Companies or individuals usually rent out high quality, brand new construction equipment featuring all the latest technology in order to attract more potential customers. Rental fees on this equipment can be expensive when an alternative would be to purchase used equipment that has been maintained well for potentially much less than semi-regular rental fees.
Owning construction equipment may also get a bit messy sometimes in terms of budgeting. Insurance, operational and maintenance costs, governmental licenses, and of course, taxes, are just a few costs that come to mind regarding the list of fees related to ownership. Most of these costs will never come up if you choose to rent. On the flip side, renting could also come with additional costs, such as the price of transportation to and from the rental place.
Accessibility and Duration
One of the biggest issues to consider with both renting and buying is just how long you are going to use the equipment for. If you plan to use it for extended periods, such as years or over the course of several construction projects, then buying and owning the gear is probably right for you as it would be more cost-effective. A one-time gig, however? Then renting is more than likely the answer.
Availability is another point. Where is your equipment coming from? Maybe you need something specialized and the nearest renter is out of state. Or perhaps there’s a sudden, unforeseen change in your scheduling—like the materials you require won’t arrive until next month. These kinds of situations can cause scheduling chaos when you’re attempting to rent around delays that are out of your control. Additionally, if you are a contractor working for many clients, owning your own construction equipment may prove fortuitous in that it allows your schedule to be far more flexible. Clients feel more assured and confident in contractors who can show up on time with their own equipment.
When to Buy vs. Rent
For renting, you have the luxury of having fewer costs to worry about, a wider array of equipment to choose from, and most importantly, you don’t need to start out with a lot of funds in order to rent. Look into this option if you’re a startup company or an individual contractor without a long-term need for various pieces of equipment.
As for buying, you’ll make your money’s worth back and then some over a longer period if you use the equipment regularly. You’ll also be prepared for schedule changes and new opportunities, too. Finally, when you are done with a piece of machinery—or you want to upgrade—you can sell it to recoup some of your initial investment.
All in all, do a careful and well-thought out analysis before you spend on construction equipment. Strategizing ahead of time can pay dividends. Before you buy something, always ask yourself a few times if it is really necessary and a good choice for the money. As one old adage goes: “It’s not your salary that makes you rich, it’s your spending habits.”