Every construction business has to make tough decisions of hiring vs buying plant equipment. Maybe you’ve got new projects coming up, or you’re merely looking to expand the scope of your business. Whatever the reasons, there are many factors to consider, starting with an assessment of the financial picture of your company, the expected usage frequency, and skills in the maintenance and operating of the machines. Before you decide, take a careful look at some factors which might influence your decision of hiring vs buying.
Make an analysis of your needs for plant equipment
Multiple construction business analyses show that in order for a piece of equipment to pay off its purchase, you need to be using it at least 70% of the time. If this is not the case with what you need, consider a plant equipment rental instead. If you expect to be using the same piece of heavy construction equipment for multiple projects, once you add up the rental costs, you can calculate whether the final sum exceeds the price of buying the new one.
Hiring vs Buying plant equipment costs
Buying plant equipment is not where the expenses end. You should consider the maintenance and operative costs, as well as the insurance. If you rent construction equipment, you will not have these expenses. In both cases, you will have the expense of fuel.
Beyond the current financial picture, you should look way ahead. What are your plans for the bought or heavy rental equipment in the next few years? If you can estimate how much you will be using the heavy construction equipment in the long run, buying it might pay off. Consider how much owning it would reflect on your business taxes.
It’s important to estimate how much you will use the heavy construction equipment, and over what period. If you rent a specialised machine, the risk is that you might not use it for as much you’ve paid. It doesn’t pay off if the machine is being unused due to changes in plans on the site. Contrary to that, if you have an ongoing project and you estimate that the piece of plant equipment will be used on a daily basis, it might be worth buying it.
Servicing and inventory control
Depending on your skills and experience, if you can operate and give proper maintenance to the machines, you can deduct the expense of outsourcing this job from your list of expenses. If you need all of these done by someone else, renting machinery might be a better idea.
Consider the decrease in resale value
Finally, when you make your financial projection with the new piece of equipment, take into account the decrease in amount after resale. Not all brands have the same resale value. Invest some time in researching which brands offer the longer-lasting value for their equipment.