How to measure your ROI and improve productivity
During the tough economic times, contractors have had to carefully analyze their fleets, consider all options and closely examine their budgets before making any major equipment purchases. Some areas have reported improved economic conditions, but contractors still remain careful about spending money on equipment — unless they know the equipment will make them more money. The more tasks a single machine can accomplish in a short period of time, the greater that machine’s potential return on investment.
This is one of the reasons the versatile backhoe loader continues to be a popular equipment choice, according to Jack Riley, operations manager for Cervus Equipment Corporation in Edmonton, Alberta.
“We’re seeing a steady increase in backhoe sales across the board from government entities and other large organizations to one-man operations,” Riley says. “Contractors are wisely looking at backhoes as affordable replacements for other machines and tools.”
Chris Giorgianni, general manager of product marketing at JCB’s North American headquarters in Savannah, Ga., says that backhoes can also provide the extra power that small and large businesses need to complete more projects in less time.
“For example, if a small contractor decides to add pond installation or retaining wall construction to his list of services, using a backhoe would probably help him complete those jobs faster,” Giorgianni says. “The time he could save might be the difference between winning or losing the bid on a new project.”
Contractors should ask themselves these five questions before purchasing a backhoe:
1. Do I really need a backhoe, or does my current fleet meet my needs?
It depends on the types of jobs you want to take on, the type of equipment you currently own and its physical condition. For example, a contractor who focuses on landscaping in the summer and removing snow from driveways during the winter may be able to accomplish his goals with a skid-steer or track loader. However, if that same contractor wants to add other services, a backhoe might be a wise investment. “If you’re going to be consistently excavating or moving large amounts of materials, a backhoe may be a more efficient choice because of its larger size and greater power,” Giorgianni says.
2. How do I find the best backhoe make and model for my application(s)?
Again, the correct backhoe model will depend on what it will be used for. Ensure the backhoe has the horsepower, dig depth, bucket capacity and operating weight necessary to handle all your tasks. “I typically recommend that customers go for the most powerful, versatile and capable backhoe possible that can still maneuver in tight spaces,” Riley explains. “In many cases, a contractor’s specific needs—such as four-wheel drive, extended reach or high lift capacity—will dictate the machine he should purchase. A knowledgeable dealer will uncover those needs to help contractors narrow their choices down.”
3. Should I purchase a new or used backhoe?
You must consider several factors besides the unit’s upfront cost. Used machines may cost less, but new machines have the obvious benefit of all-new parts backed by warranties. Financing terms tend to be much better for new machines. And Riley says these machines offer another less apparent advantage. “If you want to be seen as reputable and professional, you need to look the part,” Riley says. “This is where many used machines simply can’t hold up.” However, if the machine will only be used as a support piece or for a short-term job, then buying used may be the best option. But be careful. “If you’re going to buy a used backhoe, I highly recommend purchasing it from an authorized dealer,” Riley adds. “That ensures that the machine has been fully inspected by a qualified factory-trained technician. There are just too many potentially costly repairs often hidden beneath the surface of a used machine to risk purchasing it from an auction house or private owner.”
4. What backhoe features or attachments could help improve my ROI?
Backhoes can be outfitted with a multitude of attachments to improve the machine’s versatility and income potential. Different types of attachments might include front forks and grapples, various digging buckets, tampers and breakers and other hydraulic-driven attachments like concrete saws and cold planers. These attachments will allow you to perform a broad range of tasks, which will fill up your work schedule and maximize the backhoe’s overall use. Many backhoe manufacturers have started implementing technology that increases fuel economy. Hydraulic refinements have also made it easier to control backhoe loaders, decreasing operator fatigue and increasing the amount of time an operator can spend using the backhoe productively.
5. How much does it cost to own and maintain a backhoe?
While some backhoe owners feel comfortable repairing and maintaining their own machines, this task often should be left to experts. “It’s important to concentrate on your strengths,” Riley says. “In other words, if your core business is construction, do you really have time to also become an expert at equipment maintenance and repair? Dealers have the proper tools, equipment and training to perform repairs and maintenance the way they are intended to be done and on schedule. Done properly, component lifecycle is extended, resale value remains high, and downtime is rarely a concern.”
The Bottom Line
Prices for new backhoes vary depending on the machine’s brand, dig depth and overall size, as well as any optional features you add. Attachments like buckets, saws and hydraulic hammers will also increase that overall cost. However, keep in mind that you get what you pay for—which also translates into the long-term return on investment you will receive from your machine.