Demand in the construction industry continues to surge, with projections showing a 4.5 percent increase over the next several years. Organizations are taking steps to ensure they have the resources to meet that demand, hiring more workers and getting more equipment - whether that means buying, leasing or renting it.
Our 2018 Global Construction Benchmark Report found when it comes to expanding fleet size, 72 percent planned to purchase new equipment, 30 percent planned to purchase used equipment, 26 percent planned to lease and 12 percent planned to rent. Buying new equipment is popular because it’s the best investment over time for equipment you plan to use heavily, you can control how it’s maintained to improve its longevity and can get value for it when it’s time to sell. Meanwhile, renting or leasing are appealing options for equipment you plan to use less frequently because they allow organizations to be more flexible, cost less up front and enable managers to experiment with different manufacturers and models.
Determining whether you should buy, rent or lease comes down to what the data from your current asset tracking and management system tells you. Analyzing it carefully will give you important insight into whether you need equipment in the first place, as often it reveals inefficiencies and waste around job sites. Here are more details on how that works:
Buy, rent, lease...or none of the above?
Many companies use assets inefficiently, causing them to think they need new equipment when they really don’t. Take a careful look at what your machine data is actually telling you - are machines being actively used when their engines are on, or are they idling? Also look at foremen’s reports on how workers and assets are deployed: if you can identify where holdups are occurring, that also provides insight into whether there’s too many pieces of equipment on a site or more are needed. Using GPS tracking devices on equipment so you know its whereabouts at all times also ensures you won’t lose it, which also contributes to unnecessary spend.
Make data-driven projections for usage and maintenance
The general rule of thumb in construction is to rent if you don’t plan to use the machine or vehicle more than 60 to 70 percent of the time, but how can you know what your projected needs are if you don’t know what your current usage is? That’s why accurate usage data is key to anticipating your future needs.
The cost-benefit analysis of buying vs. leasing also must include a discussion about maintenance. Data can tell you how big an expense maintenance is for your fleet, both in terms of money and resources. Depending on your balance sheet, it might make sense to rent or lease equipment you won’t need to use as frequently to avoid having to shell out for major maintenance costs. On the other hand, renting or leasing always brings the risk of getting a vehicle that hasn’t been properly maintained or received regular servicing - even if the rental company replaces the equipment, you’ll already have lost time and money from the unexpected downtime.
Long-term renting or leasing = losing out on important data
One potential downside to renting equipment is it may be difficult to connect it to your construction management software, meaning you may not be able to view telematics data from that machine side-by-side with the permanent equipment in your fleet. Even if you can, it might be a difficult process to incorporate it and view the data cohesively. As a result, you’re giving up on intelligence (like idling data, operator usage data and maintenance alerts) that could otherwise be gained when you own a machine and are tracking it and regularly analyzing its data. Over time, the long-term value of such data could make a difference to your bottom line.
Clearly, there’s no one-size-fits-all solution when it comes to buying, renting or leasing. However, making the right decision always rests on the strength of your organization’s equipment tracking and asset utilization data.
To learn more about streamlining your equipment management operations, please visit: Equipment Utilization Solutions