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What makes construction sense…Rent, Buy or Lease?


Posted: 30th September 2015 16:41

Although the UK is experiencing economic growth, the construction industry is still someway away from where it once was. Not least with UK and Irish governments realising a greater emphasis must be placed on other industries to help with economic growth becoming less dependent on the construction industry. Ireland in particular where the Celtic Tiger boom and bust has led to an emphasis being placed on technology and growing a stagnant export market as ways to lead to the country being on an economic sure footing.

Yet for those with firm business foundations rooted in the construction industry do they speculate in order to grow their business in an industry that is still climbing out of post-recession decline? Take equipment for example; companies particularly in the construction industry require heavy equipment such as diggers, bulldozers, scissor lifts and even attachments like digger buckets to get the job done. Therefore in this current economic atmosphere is it better to rent, purchase or lease? There is no right or wrong choice just different situations for different companies. However the challenge requires foresight and educated analysis of what is best for your own company.

Should you rent Construction Equipment?

Renting presents little risk and offers greater flexibility as you may not require it for certain jobs and situations. Furthermore, maintenance and upkeep in most case lies at the hands of the dealer so again the contractor avoids the expense outlay for upkeep. If a piece of machinery breaks down, the dealer will fix it and if the repair takes longer than expected the dealer will normally exchange it meaning project plans and downtime is limited.

Should you buy Construction Equipment?

Buying equipment outright gives the company immediate ownership whilst deductions for depreciation and interest can often reduce a company’s taxable income. Purchasing used equipment saves additional money while still giving you the perks of ownership. Many websites make it possible to search for and buy used backhoes, loaders, trucks, and more. This will also make availability and convenience a non-issue as the equipment will always be on hand for use as and when required. Ownership also allows the company’s work force to upskill with the opportunity to learn how to operate such heavy duty equipment meaning dependence on any one member of staff is reduced.

Should you lease Construction Equipment?

Lease is a viable option for companies who are currently not profitable as they may not be able to efficiently use the depreciation properly. In terms of leasing it offers a usage agreement rather than ownership lasting anywhere between three to five years and requires no cash up front. With technology advancements and innovation moving at an incredible pace it makes it more viable for companies to lease as opposed to buying upfront for a piece of equipment that may be dated or obsolete in five years’ time. Though leasing will require the company to research potential leaser’s and weigh up their service costs against buying or renting construction equipment on an ad hoc basis.

Conclusion

For any business in the construction industry they must look at their immediate business needs. Look at their immediate environment asking what prospect is there of further project builds that will need this heavy duty equipment in the future. Most importantly though, can they afford to buy it outright, or is renting or leasing a more viable option for the business.


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