How to Choose Between Construction Rental & Purchase?

 


A business entirely dependent on the use of heavy equipment needs to take a few decisions to conclude about how they’ll acquire the equipment that is important for proper completion of a project that too efficiently and on time. Your exact situation is bound to differ from another construction or excavating business. They may depend on equipment rental companies in California. You may not. So, it’s not that simple to only avail of the required insights from a fellow business owner on what they prefer.  

You must take into consideration a wide range of various factors that will contribute to making the right choice regarding quality equipment rental for the significance and management of your company. 

Review the fundamental factors that will help you decide to purchase or rent your construction equipment. 

  1. Your present financial condition 

  1. The existing resources and skills available within your company for inventory regulation and fleet management 

  1. The costs related to purchasing and how they compare to renting 

  1. Your requirement to have equipment that’s available at a moment’s notice 

  1. If the owned or rented equipment will be employed for the appropriate length of time 

 

HOW YOUR BUSINESS UTILIZES CONSTRUCTION EQUIPMENT 

 

The most crucial deciding factor behind renting or purchasing is how often and in what process the heavy equipment is utilized. No one can deny that there will be a few specialities equipment that will exclusively be deployed for occasional projects and is a simple renting option. With the different uses for the multitude of construction equipment products, there will probably be a few machines where it’s not as definite if renting from the best rental equipment in California is the best option financially or purchasing will give you a better return in the long run. 

By doing a few easy calculations, you can have a very clear concept of whether it’s ideal to rent construction equipment or if you’ll gain the most benefit from buying your equipment. 

 

ASCERTAINING YOUR UTILIZATION RATE 

 

Eventually, the amount of use a certain machine receives will conclude whether to rent or purchase your construction equipment. There are many other factors to take into account that will come into play. However, if your business uses a specific piece of equipment most days and for the long-term, then it’s probably easy to ascertain that purchase is your ideal way to go. While the nature of future projects may differ, you can evaluate the best guess on your utilization rate from recent use and projected projects. 

Here’s a primary way to figure out what your utilization rate would be for a particular piece of equipment. We’ll cite the example of a telehandler in this instance: 

  • Look at the use of the telehandler for the last 3 months and get the number of full days the telehandler has been used (if it only ended up getting used part of a day, then add the parts up to make the equivalent of a full day). For our example, we’ll say it was used for 45 days. 

  • Divide that number by the industry-standard calculation of probable operating days of 66 (22 days a month). 

  • The utilization rate is 68% (45 divided by 66 equals 0.6818 multiplied by 100 to receive a percentage of 68). 

There’s nothing wrong in predicting usage in the future to have an accurate guess at your future utilization rate, particularly if you have some bid prospects that you have a fair possibility of getting or have projected projects. Either of these cases could lead you to seriously consider purchasing some of that equipment that has only made sense to rent in the past. 

 

  • If your utilization rate is 60% or more, purchasing is usually the ideal choice. 

  • If your utilization rate is between 40% and 60%, then you’ll wish to consider how the other factors relate to your business and consider all the pros and cons of owning and renting. 

  • If your utilization rate is below 40%, renting is usually the best option. 

You need to assess what to opt for with the above calculations and take your decisions in the best interest of your business. 

Location: United States

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