Construction projects often go beyond budgets because of design flaws, expanding scope, inaccurate estimates, and other factors. Hence, construction contractors are constantly looking for ways to optimize their resources and save costs.
The cost of heavy construction equipment is relatively high when compared to the operating costs of other industries. These machines are not just high cost but also expensive to operate and maintain. Plus, owing to equipment comes with tax implications and insurance costs.
No wonder, construction equipment is one of a contractor’s highest cost centers impacting their bottom line.
Hence, the trend of renting equipment is picking up in this industry segment.
Technology has had a huge role to play in making the equipment rental process seamless and stress-free.
For instance, the equipment rental sector is experiencing advancement in telematics. Almost all OEMs have created their own or partnered with third-party providers to create a telematics system for tracking equipment. The system monitors everything from battery levels to hydraulic fluid levels, averting the need for maintenance.
Similarly, rental platforms like Sharefox have completely digitized the process of managing inventory, keeping track of orders, showing equipment availability, and preventing overbooking.
So, let’s see how renting equipment can help construction contractors.
1. Renting Equipment Is Cheaper Than Buying
The total cost of ownership (TCO) of heavy equipment is higher than the cost involved in renting it. Purchasing equipment is a major investment, needing upfront capital. This high initial purchase cost can negatively impact the project budget.
Moreover, investing such a huge capital in equipment ties you down with no resources to spare for other aspects of the project.
On the other hand, renting offers the perfect opportunity for contractors to save costs and gain access to technologically advanced equipment. This allows contractors to better allocate their resources.
2. Ensures Low Maintenance and Repair Costs
Owning construction equipment means paying for its upkeep and repair, regardless of its uptime. Machinery and vehicle owners need to invest in keeping their equipment running in optimum condition.
This is not just a huge cost but also leads to downtime while the maintenance is being performed.
This issue is completely taken care of when contractors choose to rent equipment. Though renting machinery does involve some maintenance and repair, these costs aren’t to be borne through the equipment lifecycle. The associated time and labor costs are borne by the rental company.
Thus, renting equipment allows you to reduce your maintenance costs and ensures minimal downtime.
3. No Stress about Depreciation
Depreciation of construction vehicles and machinery is a huge cost incurred by contractors owning equipment. Regardless of their performance, the value of machines continues to depreciate throughout their lifecycle because of wear and tear.
This makes it tough for contractors to recover the cost of their initial investment at the time of reselling.
Hence, contractors should carefully consider how long they are planning to use the piece of equipment before purchasing it. If the equipment is expected to upgrade after a few years, it isn’t worth the investment. This will not hurt your bottom line because there’ll be no cost of depreciation.
4. Offers More Flexibility
One of the biggest benefits of renting equipment is that it offers contractors flexibility in their business decisions.
As mentioned before, purchasing equipment is a huge investment, locking up a big portion of your resources for the purchased asset for years. This limits the extent to which you can bid for or accept new projects.
Renting equipment, on the other hand, makes you more flexible because you can lease a wide range of equipment based on the nature of projects you take up.
5. Saves Additional Expenses
When considering the cost of owning heavy construction equipment it’s easy to underestimate the additional expenses one may come across.
For instance, since you own such heavy and expensive equipment, you will want to invest in appropriate insurance to safeguard against thefts and damages.
Further, you will need to store the equipment in a suitable location to keep it safe from environmental damage. This means you’ll need to invest in a space where it can be kept safe when not in use.
Finally, transporting machinery to project sites is a huge task and cost. Transportation involves a lot of labor and time, thereby affecting the firm’s productivity and project efficiency. Not to mention, the time lost in delays.
All these costs combined can be a huge dent in your bottom line.
On the other hand, when renting equipment you do not need to think of these aspects because the rental company takes care of them. Thus, these expenses are distributed amongst the renters via rental fees.
Further, you do not need to stress about the logistics of storing or transporting the equipment.
Thus, renting equipment becomes cheaper and less stressful for contractors
6. Allows Easy Exchange of Equipment
Purchasing expensive heavy equipment is a risk. For instance, after purchase, you may realize that the equipment isn’t what you expected or needed for a specific project. In such a case, returns could be complicated.
However, when you rent equipment it’s easy to return it for the specific size or model you need. This allows you to pick the most appropriate equipment that fits your needs.
Whether you are looking for equipment for your next construction project or planning to replace an existing one, it can be tough to determine whether to purchase or lease it out. Because of the high cost savings, it comes with, renting construction equipment is emerging as a more flexible and affordable option among contractors.