Heavy equipment is a big investment. That’s why many construction companies continue to run their equipment until it dies and take great pride in knowing their maintenance teams are keeping old equipment running, at times past their life expectancy. However, operating old equipment isn’t always as cost-effective as you’d think. There’s a lot more to consider than the upfront cost of machinery in the decision whether it’s time to purchase or lease newer fleet assets.
It’s no secret newer equipment is more fuel efficient. Less fuel consumption equates to bottom-line savings and better profit margins. But there are other considerations that should be part of the decision to upgrade, and ways to extend the life of older equipment while maintaining efficiency.
Equipment eventually reaches a point where it frequently begins failing unexpectedly. Companies need to understand the cost of unplanned downtime and whether they can afford it. Not only do you have to pay to repair whatever is wrong, which gets pricey quickly. Missing a piece of critical equipment also puts your production and project timeline at risk, delaying other tasks and leaving entire site teams waiting around.
- How to minimize the impact: Daily inspections can help catch signs of a breakdown and keeping up with maintenance (greasing, belt tension, tire pressure) can prevent failures. Regular cleaning to prevent mud and grease buildup also helps minimize strain on equipment. Equipment tracking can help by tracking maintenance schedules and providing alerts if an asset isn’t working properly. Also consider, if your contract ties pay to on-time completion, whether the risk of using older equipment is worth it.
Maintenance and repair costs
Equipment maintenance is important but the older the equipment is the more maintenance and repairs cost. Think of all the time workers must spend on daily inspections rather than on the project as well as the heavier reliance on mechanics for keeping up with regular wear and tear. At some point, the maintenance will exceed the cost of what it would be to buy a new piece of equipment.
- How to minimize the impact: Build a model of the cost of maintenance vs. the cost of new equipment. Take note of where the cost curves begin to meet and even make future projections (based on historic data) of when they will to predict when buying or leasing equipment makes the most sense.
Worker safety, comfort and productivity
Old equipment lacks the comfort of newer equipment – and things like more ergonomic seating and cushioning directly impact the wellness and productivity of workers. New equipment also has much better safety features, such as dashboard and backup cameras, adjustable cab seat height and motion sensors. It’s often easier to operate, minimizing worker fatigue, and also have more advanced machine guiding, which helps with a younger or less experienced workforce.
- How to minimize the impact: If you’re seeing turnover, look at other nearby companies and whether they offer newer equipment. If safety issues, accidents or lowered productivity is recurring, consider if any of that is stemming from the shape of your fleet and the resulting physical impact on operators. It may be time to upgrade.
The decision to upgrade or pay more to lease newer equipment shouldn’t be taken lightly, but it often makes economic sense long before a fleet realizes it.
Learn more about how Teletrac Navman helps construction companies maximize revenue and minimize costs.