| September 2023 |

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Is your construction equipment purchased, rented or leased?

Suppose you need to find suitable site equipment when preparing for your construction project, and your current fleet does not cover the load. There are several factors that influence the decision to buy, rent, and lease when selecting equipment, such as capital budgeting, equipment specification, life cycle cost analysis, financial and risk management strategies, and employee training.

With the sharp increase in demand for construction equipment, contractors are purchasing more machines, but at the same time they have also entered into rental and leasing agreements to support their own fleet.

There really is no cut and dried answer to the question of whether you should buy, rent or lease construction equipment. It will always depend on the unique circumstances you are faced with. In this article, we have listed some pros and cons of each choice, which will certainly help you make the right decision for your projects.

Buy construction equipment

Points for leasing formula

1. Working capital is not linked to the equipment.
2. The tenant receives a tax deduction because lease payments are treated as expenses.
3. You can select specific equipment features that you need.
4. No large capital expenditures required.

Points against leasing formula

1. There are only a limited number of machines available in leasing plans.
2. You have no certainty that the required equipment will be available when you need it.
3. The contract duration is often much longer than a rental contract.
4. Contracts (e.g. number of machine hours included in the price) can be challenging and should be negotiated.

The purchase of new equipment can be done on the basis of telephone information, technical and financial evaluation, ordering, contract formation/purchase, transport, assembly and installation and operation/commissioning.

Rent equipment

Points for rental formula

1. When it is a short-term project and/or the equipment is not needed full-time.
2. It is more flexible because you spread the rental budget over monthly repayments.
3. A rental company can provide additional added value, such as supplying skilled labor, repair and maintenance formulas, etc.
4. You only pay for the usage and the period you need it.

Points against rental formula

1. If you use the equipment over a longer period of time, the rental costs may increase, making it more expensive than purchasing it.
2. Possible restriction of the rental offer.
3. Renting means higher monthly payments than loan financing and leasing.
4. Some specialized equipment may not be available when needed.

Leasing equipment

Points for leasing formula

1. Working capital is not linked to the equipment.
2. The tenant receives a tax deduction because lease payments are treated as expenses.
3. You can select specific equipment features that you need.
4. No large capital expenditures required.

Points against leasing formula

1. There are only a limited number of machines available in leasing plans.
2. You have no certainty that the required equipment will be available when you need it.
3. The contract duration is often much longer than a rental contract.
4. Contracts (e.g. number of machine hours included in the price) can be challenging and should be negotiated.

Conclusion buying, renting or leasing construction equipment

To make an informed decision, you should definitely consider factors such as the frequency of tool use, the duration of projects, budget constraints, and the availability of storage and maintenance resources. It is often wise to perform a cost-benefit analysis to determine which option makes the most sense for your specific circumstances. Additionally, consulting with industry experts or equipment rental/leasing companies can provide valuable insights tailored to your needs. In reality, it will often be a combination of different solutions that will provide the most benefit for your specific business needs.

The importance of smart material management software

Regardless of your decision to buy, rent or lease, it is always a smart choice to implement an equipment management system. Why? Well, there are a number of key benefits of a yard equipment management software:

• You maintain an overview of all your site equipment at different locations and know exactly where your equipment is located.
• All important information about your equipment (manual, inspection documents, maintenance booklet, etc.) is digitally linked and can be consulted by your employees via smartphone.
• Machine operating hours can be read remotely, so you always know the operational status of your equipment
• Thanks to digital inspection, time registration of operational hours, and maintenance or inspection alerts, you ensure that your equipment is always 100% available and you avoid high repair or replacement costs.

More information about locating and monitoring your construction equipment?

Did this blog answer your questions, and would you like to know more about the cost price or brainstorm with us about the right application for your company? Then contact us directly by phone 03 289 55 35 or fill in the form below to request more information or to book a consultation.

Also read our other blogs about tracking and monitoring business assets:

• Tool Management. What is it?
• Want to manage your material or infrastructure digitally on location? Use SMART QR codes!
• Practical examples for the smart use of IoT sensors for on-site machine management
• Asset Management: the benefits of CHECK.connects for your company
• Asset trackers for all your building materials

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