Construction equipment represents not only a significant investment for most contractors, but also a critical requirement for doing business. For these reasons alone, keeping your assets in good working order should always be a high priority, and precisely how you go about doing so deserves regular attention.
Contractors can address equipment maintenance in a variety of legitimate ways. Some think it’s best to keep equipment running as long as is reasonably possible; others prefer to replace machines regularly to avoid incurring repair costs. Looking at the pros and cons of several approaches may help you decide what’s best for your construction business.
- Holding on
Contractors who believe in holding on to their equipment for as long as possible rely on routine, preventive maintenance, often employing staff dedicated to keeping assets in tip-top shape. They expect and budget for repairs, and authorize their maintenance crews to replace hoses, pumps and even engines, if necessary.
When the business grows to a certain point, or the needs of a specific project dictate it, they’ll acquire more, larger or heavier-duty machines, while transitioning the older equipment to smaller jobs. And if they no longer need or use a piece of equipment, they can sell it while the asset still has some value.
- Trading up
Other contractors take a different tack, opting to minimize their maintenance burden by keeping their fleets up to date. These construction company owners charge their machine operators or a part-time maintenance worker with performing daily checks and making minor adjustments. But they’re more likely to buy equipment with extended warranties.
By doing so, they can rely on dealers to make any needed repairs without worrying about incurring additional costs. The contractors then typically “trade up” their machinery for newer, better models every couple of years, when they can still recoup a good part of their original investment.
One benefit of this approach is that you gain access to new technology sooner, which may give your company a competitive edge. Innovations in construction equipment don’t come fast enough to justify trading up every year, but you don’t want to wait too long before adopting technology that might improve safety or efficiency.
- Renting out
Still other contractors find it preferable to rent or lease equipment and then rely on the supplier for maintenance and repairs. Smaller construction companies in particular can use this approach to avoid the expense of a big equipment inventory while still having access to newer, well-maintained machines.
Many equipment rental firms operate full-service field trucks that they send to their customers’ yards or jobsites to perform routine maintenance or emergency repairs. Most dealers can also quickly provide a replacement unit, if a piece of equipment breaks down. That way, their customers avoid costly downtime.
Change and growth
Your ideal maintenance strategy is likely to be based partly on personal preference and partly on objective factors — such as your company’s size, the extent of its fleet and your proximity to reliable service providers. Don’t hesitate to re-evaluate your approach as your business changes and grows. Your CPA can help you assess and predict how each of the options mentioned above may impact your bottom line.