Hiring VS Buying: 5 Key Things to Consider

Are you wondering whether to hire or buy construction equipment? It's an important decision that can have a significant impact on your business. There are pros and cons to both options, so it's important to consider several factors before making a decision.

KEY THINGS TO CONSIDER

1. USAGE & DURATION: HOW OFTEN WILL YOU BE USING THE EQUIPMENT?

One of the most important things to consider is the frequency of use. If you plan to use the equipment frequently, purchasing may be more cost effective. There is a general rule of thumb in construction that if an item of equipment is in use?+70%?of the time then you may want to think about purchasing.

However, if you only need it for a short time or for a specific project, hiring could be a better option. It's important to take into account not only current projects, but also upcoming contracts to determine overall yearly usage.

In addition, Construction projects often experience fluctuations in demand and requirements, making hiring equipment a better option than purchasing it outright. By hiring, contractors can adjust their equipment needs according to the fluctuating demands of their projects, whether weekly, monthly or yearly, without incurring the cost of buying equipment that may not be needed in the long term or may not be suitable to complete the project. Furthermore, equipment hire companies typically offer a wide range of different tools and machines that can be easily switched out or upgraded as required, increasing the flexibility and agility of contractors to adapt to changes in demand.

2. DO YOU HAVE ACCESS TO SAFE STORAGE?

Storage is another factor to consider. Larger equipment requires safe storage, which could mean additional costs for purchase. You'll also need to think about where the equipment can be safely stored when not in use - such as in-between contracts or when the site is closed. This could mean additional storage costs on top of the cost of purchase.

3. INSPECTIONS, MAINTENANCE AND REPAIR

Maintenance and repair costs can add up quickly, and it's important to consider whether you have the resources in place to handle these tasks. Do you have the necessary tools and expertise, or will you need to invest in additional resources or training? It's also important to consider the impact of equipment breakdowns on-site. If tools and equipment break down, can you replace them quickly with an alternative, or are you restricted to having to wait until the item is repaired?

When hiring, breakdowns tend to be covered by the hire company and downtime will be lessened as they will be able to replace the broken-down equipment immediately.

4. TRANSPORT COSTS

Transportation is another key factor to consider. Do you have a way to transport larger equipment from site to site? You'll need to factor in not only a driver, but also whether additional help is needed for loading and unloading equipment.

5. DO THE SUMS

Finally, financial aspects need to be taken into account. Hiring equipment may be more expensive in the long term, but buying requires a significant capital upfront and comes with hidden costs such as storage, insurance, and maintenance. It's important to run the numbers and compare the hire rate against the cost of ownership, taking into account not only acquisition and financing-related costs, but also depreciation, resale rate, insurance, repairs, maintenance, inspection costs, and usage.

SUMMARY

So, Hiring Vs Buying – is one better than the other? Sometimes hiring will make more sense than buying and vice versa. Many contractors choose to have a mix of both, depending on the tools and projects in question. What is important is when deciding, particularly when significant costs are involved, is to make sure you think about all the variables – usage, project duration, storage, transport, financial implications, and so on. That way you know you will be making the right decision for the company.

And, if you are hiring, make sure you choose a tool hire company that can mitigate some of the cons identified above – such as possible delays and blockers caused by late deliveries and poor communications.

FURTHER READING:

Visit our website for more information on Hire Vs Buying, where we outline both the pro's and con's of both hiring and buying equipment.