Building Equipment thats better to Buy than Hire
This is a particularly hard decision in an industry that in 2015 saw a decline, even though it is expected to increase overall in 2016/17. In an uncertain environment, organisations often won’t invest in equipment and see hiring as the best option short term. However, this may not necessarily be the case, a lot of hire equipment can pay for itself between 6-12 months.
This article addresses some considerations when it comes to buying rather than hiring equipment for your construction site. It explains some equipment assets are cheaper to hire rather than buy.
Project managers should look at when the time is right to purchase rather than rent, and feasibility should be conducted on a project by project basis. Other factors that may influence your decision are profitability, tax situations and obvious considerations like capital investment, length of time you expect to use equipment or whether it can be used over multiple projects. These are all cost based however Project Managers should be making the decision not only on casts and profits, but also based on risk, efficiencies or inefficiencies and whether equipment needed is for immediate use.
Often hiring equipment isn’t an effective option when reviewing it with all these cost factors in mind. You should always look to the future and the impact owning equipment will have on your business strategically. If a contractor owns a lot of their own equipment then they have a great competitive advantage over other companies when estimating work or achieving profit margins in projects.
Equipment like a generator may often be seen as more cost effective to rent because of their infrequent use. However even though they aren’t used frequently they’re needed instantly in an emergency. Whilst hire companies can be very expensive with additional fees, fuel charges etc., buying or hiring a generator should not be decided based on purely a cost comparison. You should consider the potential for other costs such as down time, or OH&S risks in the event of an emergency. A generator purchased could often pay for itself in just one or two power outages, it minimises risk and down time. Lowering risk on some sites may often outweigh the additional costs initially.
Equipment or machinery
Purchasing ideally would be the best option for equipment that’s used daily onsite, however the majority of the time it might not be affordable. If forklifts are used daily for loading and unloading trucks and moving equipment, then purchasing can be much more cost effective, particularly if it is a long or ongoing project. If tradespeople are using elevated work platforms or man lifts for high access work, often these are better purchased rather than hired. Resale value, if maintained on these pieces of equipment can often be decent however don’t base you purchase decision solely on resale value. You should always compare your rental costs to your purchase costs over the useful life of equipment. The benefit of owning these rather than hiring them is they are available when you want or need them, no length paperwork additional insurance waivers or elevated charges for damage.
Temporary Fencing & Crowd Control Barriers
A great example of inexpensive equipment that’s often more cost effective to buy, rather than hire is temporary fencing and safety barriers. This is particularly beneficial if you are using the fencing for long periods of time on large construction sites or for multiple projects. Most temporary fencing will stand the test of time and can last for multiple years in harsh conditions.
Unlike hiring, buying your own temporary fencing means you don’t have to pay the additional fees often associated with hiring. These additional costs can include damage & cleaning fees, hire contract extensions, transport, set up and dismantling fees, you often end up paying a lot more than you initially expected.
When you hire, damages to temporary fencing can be penalised 300-400% of the actual cost. For example if a temp fence panel’s
cost is around $50 to purchase, a fencing hire company could charge you $200 to replace just one damaged panel. With buying can just purchase small amounts as low as one panel to replace any damages as and when they occur in one transaction. No consequences for misuse, costs for extension of loan period or annoying paperwork.
As OH&S is central on most sites that require temporary fencing, compliance is a must. You need to adapt and often site areas secured by fencing are subject to change. Owning fencing means you don’t have to worry about pick up or delivery to relocate your temporary fencing on site as the need arises – no hire company to contact, no waiting, and no installation fees. Move around your site or to another site whenever or wherever it’s needed and no need to extend hire periods or pay for ongoing use. All you need is hand tools to relocate to a different part of your site, you are in control.
Just buy your own fencing and use it where and when you want, it will pay for itself over the course of a major project or a couple of smaller ones. So if you have a long project, or a couple of projects in the pipeline, why not buy your temporary fencing? – take a look at The Temporary Fencing Shop they can help you determine whether to hire or buy your temp fence.
Buying some types of equipment can also mean you can brand them in your company logos and colour which can be valuable marketing space.
The big advantage of owning equipment means that it’s available to you 24/7 – you control where and when you use it.