Many have seen the crossroads and chances are that you’re at it now, where the decision to hire or buy plant machinery could prove crucial for your company’s growth. Many contractors return to the dilemma often or even continually assess their options to make an informed decision. Below, we discuss important considerations and details you need to factor in as you deal with equipment procurement, including:
Plant Hire: The Advantages
Indeed, few will start a company and immediately go out to buy construction machinery for their first project. There are profound reasons for that and these all come off as pros to plant hire, fully capitalised on by project managers and owners alike.
✔ Significant savings
You simply cannot but see the financial aspect of it first, as your capital investment is dwarfed by wet hiring equipment. This means fewer costs to start your first project, less manpower needed in the long run, and next to no equipment maintenance.
✔ Access to top-notch technology
Plant hire is bound to allow you access to higher-quality equipment, with a more diverse range of what’s available to you on a day-to-day basis.
✔ Increased flexibility
Depending on the contract you sign, hiring construction machinery is a much easier path to take with delivery, servicing, and other logistics too. With reliable partners, you get machines delivered where and when you want them, with no headaches of servicing, upgrading, or storing them.
Plant Hire: The Drawbacks
It would be a straightforward decision if it was only the positives we can say about renting equipment, right? We discuss some of the most important cons you have to consider when hiring plant and equipment in Australia.
✘ Potentially limited availability
Renting allows for increased flexibility as per your needs and projects. However, it can also mean limited availability when you need it the most as well as a necessity to look for different plant hire companies if you’re to avoid deadline stress.
✘ Limited to no customisation
If your line of work requires custom-made vehicles or pieces of equipment, you will hardly be able to find them for hire. Additionally, you are not allowed to customise the plant you hire regardless of your project length.
✘ Recurring rental costs and additional charges
Possibly the biggest drawback of all, plant hire means recurring costs rather than one-time payments. You also have to consider distance for delivery charges and careful planning to avoid overdue fees.
Buying Construction Equipment: The Advantages
If the pros and cons we’ve listed above lead you to consider buying a plant instead of renting it, we move on to see what else you need to know. We’ll first focus on the benefits but also touch base on who should buy and why.
✔ Long-term sustainability
If you have contracts and will surely use it frequently, owning construction equipment provides great savings in the long run. Additionally, you would increase your reliability and resolve potential availability issues you could see with wet hires.
✔ Customisation and maintenance
While required plant customisation might push you into a purchase, it is important to note the ability to alter but also maintain machinery on your own plays a big role in such a decision.
✔ Asset appreciation and tax advantages
Owning equipment is great asset appreciation for the company, as you add value and help the business grow in that sense as well. Additionally, equipment is among the top tax deduction opportunities for construction and demolition companies.
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Buying Construction Equipment: The Drawbacks
There are drawbacks to buying construction equipment too and we’ll list some of the most important below. This often comes down to finances, which will mean meticulous calculations on whether it actually pays off or not.
✘ Higher initial investment
The salient downside to buying heavy-duty machinery is the initial investment, which can be rather large, especially for a startup company. With that in mind, even growing contractors hesitate and calculate long-term sustainability after a successful year.
✘ You still have ongoing costs
It would be wrong to believe buying construction equipment is a one-time investment and only plant hire has hidden costs attached. Ongoing costs here include maintenance, transportation, and storing machines during and between projects.
✘ Coping with technology
Last but not least, you need to consider coping with changes in the industry and how your purchases will age. See how these considerations reflect your wish to work with high-quality, up-to-date, and diverse plant machinery and if you will have to renew equipment sooner than you had hoped to.
Key Factors to Consider When Deciding Between Plant Hire and Buying
We’ve thus covered many of the advantages and disadvantages of both plant hire and buying. All of these remarks point in the same direction as we shortlist key factors to be wary of before you decide.
Equipment use
The first thing you want to consider is how you use or intend to use the equipment in question. This includes the current project duration but also your expectations for the future and projected frequency of use.
Your budget
Budgetary constraints can be obvious, but you do need to know it might prove viable to wet hire equipment on some projects but also more costly on others or in the long run.
Your goals
Additionally, you want to keep your goals and the overall business strategy in mind. For example, buying and pushing for quick project turnaround may be right if you’re to expand aggressively but it also has dangers few other purchases hold.
Final Thoughts
This could prove one of the tougher decisions you will make as a contractor, as equipment procurement plays a big role in overall success. Look at the pros and cons through your very own prism, with a focus on your needs, goals, and budget. Calculate what buying as well as plant hire mean for your projects and act with conviction.