By Charlotte Larin, Marketing Manager, Genie
A key part of any project proposal is equipment costs. As a company budgets for boom, scissor lifts, and telehandlers, or other manually-powered manlifts, they will have to consider what they already own, and whether to supplement their fleet.
Comparing acquisition costs is part of the equation if they are on the fence about whether to rent or buy, but the decision is about more than just simple math. Start by understanding the specific model needs. How much does it cost to rent the specific model every month? How often will the project need that particular model, and is it usually available when and where it’s needed? If a company is renting the same thing often, could money be saved by owning it even after factoring in costs associated with ownership? And if it’s purchased, where will it be stored? How will it be maintained and how will it get to the jobsite?
Reasons to Buy
If a company has been budgeting more money recently to rent a particular model of equipment for certain jobsites, it may be a good time to consider whether it’s better to buy.
Size and Utilization
A general rule of thumb is that the smaller the machine, the less often it will move from location to location, and the more often it’s used, the more likely it will be that it should be purchased. Long-term rental costs on smaller equipment being used on a regular basis – like a trailer-mounted boom, vertical mast lift, or even a slab scissor or indoor boom lift – may easily surpass the costs of purchasing it in one, two or three years in some markets. On the other hand, mid-size booms and telehandlers may take up to the equivalent of five years of continual rental to match the purchase price in other markets.
Total Cost of Ownership Improvements
When calculating how much it will cost to own the equipment rather than renting it, don’t forget to factor in other potential ownership costs – things like service training, maintenance parts and insurance, to name a few.
In addition, premium brands like Genie tend to offer significant residual value, and technological advances have continued to reduce the cost and inconvenience of equipment ownership. Parts can be purchased online and ship faster than ever, technical service training and support can in many case take place online rather than requiring in-person availability, and design improvements on new equipment has reduced parts and maintenance requirements. At the same time, standardized GPS tracking helps prevent equipment theft, reducing insurance premiums, as well as streamlining fleet management all from a phone.
Broader Financial Impact
When a company owns a piece of equipment, there also may be significant tax and balance sheet benefits in the form of depreciation or interest payments, if money was borrowed to make the purchase. While these benefits don’t extend toward leased equipment, it can be a huge plus in the why-buy column from an accountant’s perspective, depending on the individual financial situation.
In addition, the cost of potential downtime itself may be the key financial driver. The real cost to a business if there is often wait for equipment from a rental provider. Downtime can occasionally be more costly than the equipment itself, due to the trend toward large late penalties in construction or lost output from production facilities when the lift is needed for troubleshooting high-value production lines.
Specialized or Hazardous Work
Is the equipment being used for specialized work? If a bid spec contains custom options that are essential for a long-term rental that isn’t always readily available on an ad-hoc basis from a rental provider – such as 12kW power-to-platform, cold-weather packages or TraX, for example – it might make sense to buy so that a lift can be customized to fit ongoing and specialized needs.
By owning the equipment, a company can make sure that what they need is available whenever they need it, which might not always be the case with renting specialty packages or accessories.
If the idea of specialized equipment sounds useful, but it’s not feasible to buy a specialized machine, a company might want to also consider buying the accessories they use most frequently – such as an access deck, fall arrest bar, or panel cradle – and use them with rented equipment. It’s important to take the extra step of making sure the brand of equipment that is being rented is compatible with the accessories the company owns, but accessories for jobs like welding or glass installation projects take up less space to store than a boom or scissor lift, and are fast and easy to attach to rented equipment.
Reasons to Rent
While there are good reasons to consider buying equipment, there also are plenty of reasons that make renting a sensible option. If, for example, a company works on a wide variety of projects with diverse needs, renting can provide application flexibility that owning one product type doesn’t always offer. Depending on the job and task, there might be a need for different machines at different times, or there may be a need for booms, scissor lifts or telehandlers to all work together for only a short duration to get the project done. That type of flexibility is more achievable if equipment is being rented when it’s needed.
Fixed vs. Variable Costs
As mentioned above, an owner will be responsible for things like annual maintenance of wearable parts that need inspected or replaced at regular intervals or on an as-needed basis. If equipment is rented, the rental company takes care of these expenses. Otherwise, a company needs to know who will provide this service.
On top of this, what will it cost to transport the equipment to the jobsite? A specialized vehicle or trailer with the necessary towing capacity and someone trained to do this may be needed. If the jobsites aren’t geographically close to each other or to where the equipment is stored, transportation could be a costly item and renting it closer to the jobsite might save time and money.
Equipment Provider Added Value
After considering all those options, there may still be questions about what is the right choice. Equipment manufacturers, like Genie, have dealer locators on their websites and can help a customer understand what goes into equipment ownership. A trusted equipment partner can add value through spec’ing the equipment. The right partner will have a 360 perspective on business operations and will be happy to advise on the latest acquisition costs, residual values, and help estimate the aftermarket costs and whether renting or buying will and won’t work best in an individual situation.
This material appears in the November 2021 issues of the ACP Magazines:
California Builder & Engineer, Construction, Construction Digest, Construction News, Constructioneer, Dixie Contractor, Michigan Contractor & Builder, Midwest Contractor, New England Construction, Pacific Builder & Engineer, Rocky Mountain Construction, Texas Contractor, Western Builder