Regardless of whether you hire it or buy it, heavy equipment is a big investment and a major cost component of any project. There are many factors to consider and many questions to ask in finding the best equipment approach for your business, including:
- How will you achieve the greatest cost efficiencies?
- Does buying or hiring present the lowest risk?
- What breadth of specialist equipment do you need?
- Does your solution need the newest technology and innovation?
- Will access to heavy equipment expertise enhance your project outcomes?
For some businesses, buying equipment is a good investment, but there are often as many, if not more reasons to hire. Here we uncover our top five reasons to rent.
Many factors affect the true cost
of investing in construction equipment.
2. Risk mitigation
- Purchase price: Costs vary greatly, but some of the larger and more specialised equipment – like super booms and monster earth movers – require major investment.
- Interest: When loans are required, interest repayments will increase total expenditure.
- Maintenance: The cost of ongoing preventative maintenance (like regular servicing, safety checks, fine-tuning and tyre replacement) can quickly add up.
- Registration and insurance: Requirements vary from state to state, but some construction and agricultural vehicles (like forklifts and tractors) require conditional registration for travelling on roads. Insurance also increases ongoing costs.
- Depreciation: Heavy equipment is a depreciating asset, so if you’re looking for an investment that holds its value, construction equipment may not be it.
Risk is another major consideration. Hiring access equipment allows businesses to mitigate some of the commercial risk and occupational health and safety (OHS) risk that come with owning it.
As employers we are all responsible for ensuring the safe access to and operation of heavy equipment. However, when purchasing equipment we also take on responsibility for mechanical safety and maintenance. Hiring heavy equipment provides businesses with the same assurance of equipment that is rigorously tested and serviced, without bearing this additional cost and responsibility.
There is also heightened commercial risk in committing to large capital expenditure on heavy equipment, to service volatile sectors like mining, construction and agriculture.
Many businesses choose to hire construction equipment based purely on convenience. As well as overseeing maintenance, registration and insurance, owning equipment also means coordinating transportation for equipment to and from work sites and finding secure storage for assets in between jobs.
Hiring equipment offers the convenience of transport being taken care of, with no ongoing storage costs when the hire period ends.
The best option for accessing heavy equipment will also depend on the diversity of tasks you will undertake and how frequently equipment will be used. In many cases, utilisation rates of 60% (or more) are the tipping point for purchasing becoming a viable option. However, there is much more to consider than just
Hire equipment gives you the flexibility of always having the right machines (and the right advice to help you find them) for any job. This may not be the case if you rely solely on equipment you own. Hiring also allows businesses to keep their options open and “try before they buy”.
5. Technology and innovation
As is true of most industries, the technology that underpins construction equipment is always changing and evolving. If you own construction equipment, you are limited to the state of technology at the time of your purchase. In contrast, by hiring construction equipment your business will always have access to the very latest in technology and innovation.
Working alongside an equipment hire specialist is also a great way of keeping abreast of industry developments, as they occur. Experienced hire specialists can share quality advice and industry best practice that will help you maximise the performance, safety, productivity, cost-efficiency and sustainability of your projects.
Given the many benefits and the high demand for heavy equipment rentals, it comes as little surprise that the hire and rental industry continues to grow, locally and internationally. In Australia this sector currently employs over 16,0001
people and is estimated to be worth over AUD$5Bn. Globally, the construction equipment rental market is predicted to grow to USD$230Bn2
How does your business decide which equipment to hire and what to? Which equipment makes the best investment for your business? Please share your thoughts and comments with us via LinkedIn.
Alternatively, please contact a member of the Coates Hire team on 13 15 52.
1 - https://www.cea.net.au/2018/04/10/market-outlook-hire-rental-industry/
2 - https://www.grandviewresearch.com/press-release/global-construction-equipment-rental-market