Fifty years ago, owning equipment used to be a status symbol for contractors — the more equipment you owned, the better you were considered to be by the industry. However, things have changed in the last decade, especially since the 2007-2008 financial crisis and the following recession, which struck a tremendous blow to the construction business.
But even now, when the economic climate is relatively stable, the equipment rental sector is still in full swing. Naturally, construction businesses and contractors realized that it is much wiser from a practical and financial perspective to rent what they need instead of outright purchasing niche equipment with low day-to-day utility.
But interestingly enough, the new economic reality is not the only factor that caused this industry-wide shift toward renting — the other, if not the most important, reason for this new mentality is because we, as a culture, have grown more accustomed and comfortable with the idea of renting in general, even on an individual level. There are tons of websites, such as EquipmentRental.org, magazines and other information sources dedicated solely to the phenomenon of renting. Nowadays, renting has become the norm, not the exception.
But for the purposes of this article, we will discuss renting on a larger scale, namely when it comes to big construction companies and contractors. Here is why construction businesses, engineers and contractors should rent equipment instead of buying.
General Arguments in Favor of Renting Equipment
In a survey conducted between 2011 and 2014 by Purchasing.com, researchers have concluded that heavy equipment rentals were on a constant rise across the United States. In the mere span of just three years, rentals for compact truck loaders saw an increase of 925 percent, wheel loader rentals rose to 273 percent, while forklift rentals saw a 90 percent increase, nationwide. For the survey, the researchers interviewed over 70,000 CEOs, managers, procurement professionals and business owners.
These head-spinning numbers should not surprise anybody — with construction projects slowing and businesses failing left and right following the financial crisis, companies were forced to tighten their belts and make drastic changes in order to survive the next quarter.
But, you might be wondering, what was the exact context that led to these high numbers? The recent economic improvements following the recession, as well as that cultural shift that we have mentioned during the introduction of this article, has allowed business-minded entrepreneurs to found companies that specialize solely on providing this service. If in the past, renting equipment was for many more of a backup solution, now it is the first, and most obvious cost-cutting measure that companies, engineers, contractors and even DIY builders apply.
Ultimately, when it comes to deciding between renting and buying equipment, the numbers have a final say in this regard. It all comes to cost and convenience, two essential factors that could represent the difference between the construction project going smoothly or closing due to lack of funds and mismanagement.
Advantages of Renting Equipment for Big Projects
When it comes to large-scale construction projects, the perks, and advantages of renting go beyond the financial aspects. Renting gives engineers, and people in charge of the project, in general, a wider freedom in terms of equipment selection. This factor, in turn, naturally makes the micromanagement of resources, labor and tasks significantly easier from a logistical perspective.
Let us think about a hypothetical case. Let us assume you own a middle-sized construction business and have a big construction project coming up that has to be finished on a tight deadline. In these cases, prioritization and time management are key. What do you do? If the answer is ‘’buy all the equipment and start the project,’’ you are half right. If you want to buy the equipment, ideally, you would have to be looking for gear that can accomplish as many tasks as possible.
But not all equipment pieces are versatile and multipurpose, so naturally, you would be forced to cut down costs in other places, triggering a domino effect of compromises that could lead to some big troubles. Not to mention the fact that, should you decide to purchase the equipment, you will need to spend additional funds on storage and maintenance. On the other hand, if a contractor has the financial means for this, sure, then purchasing the equipment could be wiser from a long-term financial perspective.
Renting Gives Small Companies Access to Brand New Technology
Brand-new equipment is expensive — this goes without saying. All contractors wish they had access to the latest technologies, but because they can’t afford purchasing top of the line equipment, they are forced to resort to previous generation gear. This is an issue that can be easily solved through renting.
Nowadays, technology is advancing at a much faster rhythm than ten, even five years ago. This accelerated rate is a great opportunity both for renting companies to expand their equipment selection and thrive and for contractors to test the newest technologies, with minimal costs and obligations to worry about.
But in the case of the latter category, the advantages go beyond simply using said technology — it is a great opportunity to test it, learn how to use it efficiently in future projects and whether or not it is worth buying. And again, the costs and risks are minimal, because were the equipment to suffer damages and malfunctions, the renting company is required by law to offer immediate assistance.
The recent economic improvements paved the way for equipment rental services to thrive and succeed. While there is a case to be made about purchasing equipment in some situations, contractors, engineers, and construction companies have more to gain by renting whatever gear the project requires. Apart from the logistical benefits — meaning that there is no need to spend money on storage, maintenance, transportation, and so on and so forth, renting is a great opportunity to test new technologies with minimal costs with almost no risks involved. With that being said, we can safely state that the equipment rental business is here to stay for the foreseeable future.