It’s often said that the key asset of any business is its people. Companies working in the construction sector certainly need the right people, but having the correct tools and equipment for the job is also essential.
Sometimes, it makes sense to own these assets outright; but at other times, renting might be the best choice — particularly if the tools are expensive or unlikely to see frequent use. The decision of whether to rent or buy tools can also be dependent on many other factors, but it should be an integral element of any asset management strategy.
Here are five steps that you should take when considering whether to rent or buy as part of your tool and equipment management process.
1. Consider how much you need it
There are three basic parts to this consideration.
- Is the tool a broadly useful one that you are likely to use on different jobs and in various circumstances going forward?
- Conversely, is it a specialized piece of equipment that will see limited usage?
- If so, then how long will you need it for?
Once you have considered these basic questions, you will be able to make a cost-benefit analysis. However, remember that there are often variables on specific jobs, and your requirements may change going forward. One of the major benefits of owning a piece of equipment is that you always have access to it right when you need it. In general terms, however, it usually makes sense to rent expensive equipment with limited or specialist utilities.
2. Take cash flow into consideration
Even if buying equipment seems to be the right choice in the long term, your current financial situation and cash flow could also affect your decision. Renting might offer a way to access vital equipment to get through a certain job or timeframe if your budget is tight. Over time, the cost of renting can end up being far more expensive than buying outright, however. In some cases, looking for high-quality, second-hand equipment or considering hire purchase and other financing plans could also extend your range of options.
3. Think about maintenance issues
Maintenance and repair are significant to any business that is highly reliant on tools or equipment and should be a vital part of your tool management strategy. If you are renting, then the owner bears the responsibility and cost of routine repair and maintenance. This can be particularly important for complex, high-maintenance equipment.
Another important factor is the potential cost of downtime if a piece of equipment that you own breaks. This can have a ripple effect with regard to other aspects of a project. If you are renting and a tool breaks, you can expect a prompt replacement or onsite repair with minimal disruption to productivity.
4. Check your storage space
Proper, secure storage is essential for all tools, and using asset management software for tool and equipment tracking should help ensure that everything has its place. If you are buying equipment or renting on a long-term basis, then you will have to consider your storage space availability and any associated expenses for extending your capacity or introducing new security measures. You can also return tools borrowed on a short-term basis to a rental center at the end of the day, although it may be more convenient to securely store them on site until the end of the job or rental period.
5. Consider liability issues
The cost of repairs can be a huge liability for smaller contractors owning expensive or complex equipment. As already explained, this expense falls to the owner in the case of rented tools and equipment. For heavy equipment and fleet vehicles, there might also be issues having to do with environmental compliance. It is possible to outsource your responsibilities concerning emissions and pollution regulations.
Whether you own or work for a large firm with tons of tools and equipment, or you’re a small firm just exploring your options, knowing what to rent and what to buy is a huge step towards saving resources, time, and money.
For more information about renting vs. buying, along with an overview of the benefits of tool and equipment tracking, download our free guide: An Expert Guide to the Benefits of Tool and Equipment Tracking.