Is it Better to Lease or Buy Your Construction Equipment?
It all comes down to money, my boy!
But first let’s clarify one thing; in this context “construction equipment” means what we usually refer to as “plant” – JCB’s, road rollers, fork-lifts, etc.. That means we can forget trotting along to the nearest Tool Hire place and leasing a panel saw from them!
Today’s construction equipment is great stuff! Means one man can do the work of ten in 1/10th. of the time it would have taken them! I still look back 40 years to how wonderful life became when we got a fork-lift and didn’t have to hand-ball all the cement and plaster off the delivery wagons!
So back to money! The purchase of something like a JCB is a large capital outlay. That makes the first question to be answered is “can we afford one?” The second question is “do we have enough work requiring one to justify buying it?” If we do, ancillary costs for maintenance, etc. don’t come cheap. On top of which if you buy it andit doesn’t get put into pretty continuous usage, that ends up money having been paid out for nothing! Of course, once it has earned its full cost it is a pretty cheap option for it to just sit in your yard until you do need it again!
However, let’s say you did actually purchase the plant – that meansthe operator will get used to it and work faster and more accurately as he doesn’t have to learn new tricks with leased machines.
So now let’s have a look at leasing your construction equipment. To do that certainly saves a heavy capital investment and that is probably the biggest “plus” to that option. However there are serious down-sides to it. First is a question of timing. Is the plant you need available at the time you need it? If you have to put a hold on work for a week that can start to have you looking at Delay and LAD. If you lease the plant do you also have to get a driver to run it? If so, he will come at a far higher hourly rate than your own man would be getting paid.
Then the leasing company need to meet all the costs you would have incurred had you bought your own. They probably use a finance company and those guys are notoriously greedy! You’ll be getting charged a fair old lump on top to meet those costs and also for the leasing company to make their profit!
The long and the short of “Is it better to lease or buy your construction equipment?”is that you have to all get sat down around a table and do your sums! It all comes down to money!