Pro's and Con's of hiring and or buying earthmoving machinery

Pro's and Con's of hiring and or buying earthmoving machinery

Thursday, 06 October, 2016

Do I hire or do I buy? The million $ question. What are the pitfalls of hire? Do I know the true cost of ownership? Read on to answer some of these questions and more. Don't allow the experience to be a total nightmare!!

Pro's and Con's of hiring and or buying earthmoving machinery

When hiring an Earthmoving machine, what do you look for, the Quality of rubber pads, rubber tracks or undercarriage? A fully serviced contract including wear parts or just a machine with the right attachments that is best suited for your job? This choice can be a total nightmare!

Excavation work is usually a significant part of construction or demolition work. There are various types of earthmoving machines that contractors and project managers can hire for specific projects. Kennard’s Hire is one of many companies that offer affordable and reliable earthmoving equipment hire for all different excavation work on construction sites.  It is important for you, as a customer, to know what type of machine is suited for the kind of task at hand. For example, You may be after something to assist you to install a swimming pool, correct the drainage, high demand demolition work or just general excavation. Having the right equipment for your job can save time and money. Let us be honest everyone wants to save time and Money.

A lot of people think, "Why hire something when I can just buy and own it." Others say “Why buy when we can hire.” There are so many pros and cons for renting compared to buying earthmoving equipment. Here is some points that you may need to consider:-

  1. What level of specialization does my project require?
  2. What impact will hire or purchase have on my financial situation
  3. What would be the overall total cost of ownership?

Let’s break this down a bit

What level of specialization does my project require?

  • What exactly is my job? Is it a small home project that the home handyman could complete? Or is it an elaborate long-term construction project that requires long machine hours?
  • Do I have the skills needed to perform this project or do I need a skilled machine operator? Maybe I only need a handyman who has his machine?
  • Is it possible that I should contract out the whole job?
  • Is the site one that is sensitive and will need rubber pads on the excavator or would steel grousers be adequate?

What impact will hire or purchase have on my financial situation?

  • Hire is for short term projects. What is the length of this project?
  • If I hire will I be able to off-hire for part of the project?
  • Could I negotiate a flexible stand down arrangement?
  • What is the actual total cost of owning a machine? Depreciation is often understated and does not show until the machine is sold and value not realized
  • When I hire am I covered for all damages and consumables such as wear parts and rubber tracks or will they be an extra cost whether I hire the machine or own it?

How long is this construction project going to continue? As we can see from the above questions the length and time of the project has a significant influence on your decision about hiring versus owning your machinery. Some areas you may need to review are

  • What is the chance of ongoing work using this machine?
  • Is the contract so valuable that I could pay off the machine and then have the flexibility of owning the machine in the future
  • Will outside conditions such as the weather delay the project and cause me to have excessive hire cost
  • Can these costs be mitigated under contract?

One thing that is evident is that no one solution fits all situations. Buying the equipment that is needed can result in very high upfront costs and also results in a lot of related expenses that are included in the all round cost of machine ownership. Just a couple examples, maintenance, and repairs, insurance, transportation, storage and energy (e.g., fuel and electricity) which can exceed 100% of the average purchase price. The financing costs are only the beginning. However, rental rates can be very buoyant. Because contractors rent ground moving equipment in line with when it suits their project dates and have little to no control over timing, they are often at the inclination of these price variations.

One way that you can reduce your exposure is to look at long-term rental agreements. These agreements could avoid you having to pay higher project costs in the long run. Additionally, the contractor who rents for an extended period may secure extra discounts. Over against this the contractor who is working on long-term projects or have recurring needs to use the machinery will benefit from purchasing the equipment and machinery.

With the machinery costs continuing to climb there is one this that is sure doing research and finding the ultimate partners can reduce your costs. Partners such as Kennards Hire offer an excellent one-stop source for all smaller equipment with many branches throughout Australia there is sure to be one close to you. When it comes to larger equipment, there is always Coates Hire, Proquip or Ram Equipment

One partner, you can always trust to keep your machinery working harder for longer is Terrappe Group. With a national grid of warehouses through our Australia, we stand by to assist you with your equipment spare parts and consumables. Phone 1800982166 or send an enquiry.