Renting equipment is a growing trend in the construction industry. According to Research and Markets, the amount of money the construction industry spends on equipment rentals will reach $84.6 billion by 2022. Why? Many contractors find ownership expensive and time consuming.
Equipment ownership often comes with inconveniences and problems. Equipment acquisition is tough for most construction companies, especially smaller ones, because buying machinery requires a high level of up-front capital. Ownership is also costly, as the construction companies need to find reliable mechanics and spend money on maintaining storage space for the purchased equipment.
In addition, business owners are required to keep up with changing emissions guidelines and must purchase new equipment if their current equipment no longer meets these guidelines. The value of equipment depreciates, and the trade-in or resale value can plummet—if the machinery is even in demand when owners are ready to sell it. This problem is compounded by the fact that many machines sit idle for long periods of time between projects.
There are also difficult decisions to be made in buying generalist machines versus specific-purpose machines. Buying specific-purpose machines may mean only using that equipment on occasion, while purchasing generalist machines may mean not always having the right tool for the job when a specialized machine is better suited.
With all of these problems, contractors and companies often benefit from renting equipment instead of owning. Renting allows a contractor to match the machine to each specific job, providing the specialized tools needed to carry out the work and to offer quality results to clients.
With rentals, there is no need for storage, and machine maintenance is included in the price of the rental. Since the rental company is responsible for keeping machines in working order, the company is not likely to have downtime due to a machine not working. In addition, the contractor is not expected to pay extra money for repairs or replacement if a machine breaks down.
The contractor can leave the task of monitoring equipment guidelines to the rental company. Renting comes with the convenience of having the equipment delivered straight to the jobsite, so contractors don't have to deal with transporting it. The benefits of renting can save general contractors a lot of time and money.
Renting can also help with the general ebb and flow of construction work. Contractors don't have to keep the equipment when they are going through a slow phase. They can rent what they need when work picks up again and they have more income coming in to the company.
Because rental costs make it clear how much is spent on equipment for a particular job, contractors can even opt to add some or the entire price of the rental to the job quote.
Renting can also make sense for general contractors and construction companies that already own machines. These companies might want to rent more equipment when they are particularly busy, rent specialty machines for certain projects or try out a new machine before deciding to purchase it outright.
With all of these benefits in mind, it is important to note that renting has its problems, too. The equipment rental supplier industry is highly fragmented, and often contractors face great disparities in price and service offerings from one rental company to another.
For the same machine, contractors may receive quotes that are double or even triple the quotes from other companies. Even apparently cheap quotes may end up being much higher when all the fees are tacked on at the end of the rental.
When a contractor decides that renting is in the best interest of their firm, they should do their due diligence to find the best price. Instead of accepting the first price available, it's best for contractors to ask for quotes from numerous rental companies to compare the rates. This can also provide a strong bargaining chip to negotiate with a preferred company that might charge a higher rate than others.
Large construction companies are often able to benefit from discounts by ordering a large number of machines from the same supplier. While smaller companies generally can't take advantage of discounts when they only rent a few machines here and there, they may still be able to find reduced prices by using new services. Look for a service that makes it easier for construction companies to rent equipment, without dealing with the price disparities and "gotcha" fees that are common in the industry.
Ultimately, it is up to each contractor to decide whether to buy, rent or lease equipment. Each company needs to weigh various factors, such as the equipment needed for jobs and the specified budget.