Buying Vs Renting

How to navigate a $1Million mine-field armed with the ammunition to make the right decision

renting your mobile plant

When does it make sense to buy as opposed to renting your mobile plant?  There is potentially millions of dollars in unrealized profit if you get it right and millions to lose if you get it wrong.

The aim is to generate significant financial gains without any extra effort on your part.

How would it feel if this took financial pressure off other parts of your business and reduced your stress levels knowing you didn’t have to find extra cash?

Let’s look at 3 parts of the equation:

  1. How renting can cost you more
  2. How buying is no more effort on your part, in fact it may be less
  3. How much you could potentially save

Renting is a great option if you have a short or medium sized project with a quick turnaround for plant that you have no use for elsewhere.  Throw in some extra services like maintenance, servicing and re-fuelling and you have a no nonsense, financially viable alternative to cost out your project.

Where this model turns the corner though, is on long term projects.  On a large project you will already have maintenance crews, service and refuelling trucks and are able to service your own plant at a cheaper rate than outsourcing.

Add to this the fact that the extra costs incurred when renting must be passed onto your clients, it soon becomes apparent that this inflates your final pricing: potentially leading to you missing out on lucrative contracts.

In terms of effort, buying is as easy as renting, if not easier.  Long term rental can involve long and costly contract negotiations involving both parties to agree to the finer details.  If you buy this is mitigated.

When buying, we’ve already done the hard work for you-making sure the machinery is mine site ready, up to the appropriate standards and in full working order-ready for you to deploy to your site.  You simply transfer the money and get handed your new plant…we can even arrange delivery for you!

It’s that easy.

Now the big question…how much could you potentially save and is it even worth the effort?

Let’s run through a quick scenario using lighting towers:  Imagine you are buying lighting plant and the cost is $40,000, you use it for 6 years and sell it at auction afterwards for $4,000-the machine has cost you $36,000.

Now imagine you rented that same machine.  We will assume your rental cost is $50/night and you are operating year round:

$50/night x 30 days/month x 12 months = $18,000/year

6 x $18,000 = $108,000

More simply put, you have paid for that plant 3 times over: an EXTRA $72,000 per machine!  Money that should be in your back pocket!

Let’s conservatively say you have 40 lighting towers on your 6 year project(s):

40 x $72,000 = $2,880,000.

Money that should be yours.

And for large sites, it’s not uncommon to have many more towers, the money potentially lost through making the wrong decision can really add up.

Who wouldn’t potentially love another $2.5M+ in their budget, bottom line or to put as a win against their KPIs? It would also reduce the financial pressure associated with the project they are responsible for.

Whether you’re a CEO, Director, Superintendent or Purchasing Officer maximising profits through great decision making proves to your peers you know how to run your project properly and deliver value to your clients.

Next time you’re looking for plant, contact PROMAC International via sales@promacinternational.com or call +61 8 6254 1800 and we will help run through the specifics requirement of your project and see how much you could potentially save.

Ben Bunker.