Equipment costs make up a substantial amount of a construction project’s expenses. One strategy that contractors can use to save on equipment is using software that benefits general contractors to optimize resources. You can determine the best resource mix for your project to prevent waste and save on money.
Here’s what you need to know about construction equipment costs, as well as some strategies for how to save without cutting corners.
How much money do construction companies spend on equipment?
Construction companies across the United States spend billions of dollars every year on equipment. This spending is necessary to maintain a fleet of vehicles and machinery that can handle the demands of the construction industry.
The amount of money spent on equipment varies depending on the size and scope of the company. However, it’s safe to say that it’s usually a significant amount due to the fact that construction often requires heavy machinery and specialized vehicles.
The cost of construction equipment
Construction equipment costs start immediately after a company purchases required tools and machinery. It’s important to consider the following operating costs.
Repair and maintenance costs
Using equipment on a daily basis causes wear and tear, prompting repair and maintenance costs, which can be a major expense. Construction companies must regularly service and maintain their vehicles and machinery to ensure that they are in good working condition. Repairs must also be done to fix the damage that equipment sustains during the course of a project.
Costs include replacing worn-out parts and having to pay someone for fixes. Both repair and maintenance costs increase over time depending on the age of the equipment.
Fuel provides the combustion power required by engines to run machinery. Expenses will depend on the machinery’s engine capacity and working conditions.
Regardless, the cost of fuel is a major expense. Construction vehicles and machinery consume a lot of fuel, so construction companies must budget for this expense. Fuel costs can fluctuate depending on the current market conditions.
Construction companies also need to purchase insurance for their equipment. This insurance protects the company in the event that its equipment is damaged or stolen. Liability insurance should also be carried to protect the company in the event that one of its employees is injured by or while working with equipment on a project.
Strategies for saving more on construction equipment
All of the various expenses associated with construction equipment add up over time. As such, construction companies must carefully manage their expenses to ensure they’re not spending more than they can afford to on equipment. Here are a few strategies to save on construction equipment costs.
Consider leasing instead of buying
The first thing project owners will have to decide is whether they’d like to lease or buy a piece of equipment. Leasing equipment tends to be cheaper, primarily if the equipment will only be used for a short amount of time.
Another advantage of leasing is that the business benefits from using newer and more economical models. This is because newer models are leased out every few years, preventing you from having to buy replacements for greater efficiency.
Of course, you’ll also need to consider the fact that leasing can attract high-interest rates and heavy penalties if leases are terminated early. This will of course vary depending on the company you are leasing from. If you decide leasing is the best course of action for you, a quick online search for “rental equipment delivery victoria tx” for example, should help you to locate the most trusted equipment rental company in your area.
Buy second hand
One of the largest expenses is the purchase of new equipment, as there is a continuous need to replace older equipment that has reached the end of its useful life.
Regardless, if you do decide to buy equipment and your company has budgetary constraints, consider buying second-hand equipment. Second-hand equipment is cheaper because it’s already been used.
However, you’ll need to be careful when considering this option, as worn-out equipment can be dangerous if not properly maintained. For this reason, a qualified construction equipment mechanic should inspect all equipment before it is purchased.
Know your needs
Another strategy project owners can use to save on equipment costs is to only buy what is needed. Some assume buying more equipment is better. However, in most cases, they realize too late that it can be unnecessary and a detriment to the project’s budget.
Remember also that bigger does not mean better, as bigger equipment tends to incur more maintenance costs, especially those requiring specialized labor.
Construction companies looking to reduce costs should ensure they only buy efficient equipment. Efficiency should be based on fuel consumption and energy needs. If equipment uses large amounts of fuel or electricity, the company will have to pay for that excessive consumption, incurring extra expenses.
Saved equipment costs means higher profit margins
It’s in the business owner’s interest to reduce equipment costs as much as possible. Reduced equipment costs can help the company save more than 15% in overall costs, significantly increasing profit margins.