Most construction companies in general regardless of the size of the company have moved away from owning heavy machines and other logistical related components of the construction sphere.
Equipment such as cranes, bulldozers, skid-steers, trucks and even small compact excavators that are below 2T and even standard excavators are in most case scenarios taken for hire by construction firms from a construction equipment rental company.
The reasons behind as to why construction firms prefer to take equipment such as mini excavators and other smaller versions of heavy machines is numerous and this article will present a comparison between hiring and owning heavy machines.
Owning Heavy Machines
Owning anything, be it a car, a house, a crane or even a mini excavator carries with it what is often regarded as ‘ownership costs’. Any such equipment for the most part is tagged with ownership costs that have the potential to grow and be substantial enough to impact bottom lines negatively. This is especially true when ownership costs are associated with heavy machines and this is mainly due to the conditions that these machines are subjected to.
Even a small excavator assigned to perform small demolition work for home improvement projects for example are exposed to tough conditions which augment the ‘wear and tear’ process of the machine leading to breakdowns or maintenance requirements which are anything, but cheap. The cost of maintenance and repairs along with the cost of owning dedicated transport to ferry these machines to and from project sites to storage are high and could be avoided altogether by renting small excavators.
Adding to the fact is the possibility of these machines not being used for some projects which simply mean that the money invested into these machines is not generating revenue. This scenario reflects badly on the accounting sphere of the company especially when it comes to the ROA (Return on Assets) equation indicating that the company is inefficient in managing owned assets which may deter potential investors or even result in a failed loan attempt from a financial institution.
Heavy Machines under Hire
In contrast, taking heavy machines such as a compact mini excavator for hire would save a construction firm from a range of cost factors including, ownership, maintenance, storage and as well as transport and repair costs. On top of that, construction firms would also be saving their company from using too much initial investment to buy these machines and instead use it to keep their working capital and cash flow in healthy territory.
Logistics are minimised through rentals as construction equipment rental companies in general offer a plethora of value added services such as pick-up and drop off of rented equipment. Furthermore, construction firms will also have access to equipment that is well maintained, which reduces the possibility of breakdowns that cause project disruptions and unnecessary delays.
Hiring equipment on an “as and when needed” basis also ensures that resources are utilised optimally which in essence improves bottom lines. In summary, the benefits of hiring heavy machines far outmatch owning them.
