Cranes are among the largest investments any construction company can make. And, when most people think about construction sites, they see at least a few cranes. Perhaps readers will be surprised to learn that most cranes are not bought or owned by the construction company using them, but rented. The choice between buying and renting cranes is complex, and deserves a lot of thought and consideration.
To begin, the average lifespan of a crane is 25 years with regular maintenance and checkups. While this is an average, there are, of course, outliers. Particularly in areas where construction is incessant (think of newly emerging economies, like Asia and Africa), a typical crane’s service life may be much shorter.
Volume of work and return on investment:
With that in mind, first consider how much work the crane will be doing over its service lifetime (assuming 25 years). If the average length of a construction project is about 5 years or more, the crane could work on several projects before being consigned to the scrap heap.
Additionally, if a company foresees a lower volume of work, then it makes more sense economically and financially to hire a crane rather than purchase one. For instance, if a company forecasts only two projects in the next decade, it may be a better idea to rent, rather than purchase, a crane.
The key here is to keep an eye on the return that you will receive on your investment (ROI); more projects (a higher volume of work) can mean more use of your crane a better and higher ROI.
Also, bear in mind that often cranes need to be disassembled, transported, and reassembled at the work site, which is yet another added expense.
New vs. Used:
Buying a used crane is yet another option that might appeal to companies looking to save a quick penny. A quick search shows us that some used cranes are as cheap as Toyota Camrys, while new ones can run nearly $1 million.
Ideally, you’d want to purchase a crane between 5-10 years old (as with most vehicles), since these cranes are in a sort of not-too-expensive, not-too-old sweet spot. After 10 years or more, cranes will experience another price drop–though this, of course, comes with a much higher corresponding decrease in performance as well.
With the recent burst of the housing and construction bubble in many areas of the world, particularly Europe, there are a number of cheap, low-cost cranes that sit on abandoned construction projects. It may be possible to find excellent deals in such areas, as companies are desperate to generate some capital and recoup their losses. However, keep in mind that certain countries may have legislation that forbids the use of cranes past a certain age; be sure to check with local authorities before making any purchases.
Needless to say, when purchasing anything used, one should always look for a reputable, excellent dealer that has a strong track record of customer satisfaction and a high reliability rating. If you must, check with the Better Business Bureau or your local consumer affairs department to see if there were complaints lodged against the dealer.
At times, certain types of cranes are so specialized that it is not feasible to purchase them; rather, construction companies hire them for both long and short-term work. Essentially, specialist cranes are so narrowly specialized that the infrequency of use does not justify purchasing the crane. Perhaps the best example of this category would be heavy-duty tower cranes used for very specific construction projects, including nuclear reactors or shipyards.
If your company decides to purchase a crane, then note that logistics, including warranty and maintenance, are your responsibility. This includes anything from shipping costs to replacing faulty parts and upkeep of your equipment. Granted, logistics are a non-issue if you decide to hire a crane from a rental company, but should you choose to purchase one, understand that this is another dimension that you will have to consider–which is especially daunting when, not if, the warranty on the crane runs out.
Buy And Rent Out:
Another option would be to purchase the crane, and in between projects, lease it out to other companies. This hybrid option is an excellent choice, though it does mean that you have to take charge of some of the more troublesome aspects, including maintenance, transportation, and other logistical issues. Still, by purchasing and then renting out your crane to other companies, you stand to lower the cost of the crane considerably.
As you can see, both purchasing and renting cranes has its pitfalls and advantages. Purchasing a crane could very well be a solid business decision that continues to pay dividends for years to come. On the other hand, crane rental could save you hundreds of thousands in the long run. Obviously, it will depend on your specific set of circumstances.