The leasing alternative

Weighing the pros and cons of renting and buying heavy and moving equipment

For the booming construction businesses in Dubai deciding whether to buy or rent heavy and moving equipment can be difficult. There are numerous advantages and disadvantages to both options.

With the majority of companies often combining the two by renting and buying equipment, as this is the most cost effective option, within an industry that shows no sign of slowing down.

Heavy and moving machinery will often need repairs, as general wear and tear on the job will take its toll.

Although initially a big payout, buying equipment will be an added asset to your business, but it can become problematic if a machine begins to fail and professionals must be hired to fix the equipment.

This can be very expensive in the long run. Maintenance must be carried out periodically to ensure no major problems occur, this will enhance safety as well as extend the life span of the equipment.

The flip side
"The downside to owning heavy equipment is you have to create a maintenance team and have a maintenance area. It can be a headache. If a piece of equipment goes down, the whole work force can be affected.

"Depending on the damage to the equipment it can affect the progress of the project. Getting equipment fixed can take time while we try to get the parts, sometimes we can get them very easily and other times we have difficulties trying to locate them," says Fida Hussian, CEO of Infinity Aviation.

Heavy and moving equipment must be looked at as a long-term investment. If a project will take three or four years then investing in a machine would be a better option, but if you will only be working on a project for a few weeks or months then it is better financially to rent.

If you find that you repeatedly hire the same machinery over and over again, then buying would be the better investment.

Renting has many advantages, such as no waiting time on equipment, and no high maintenance costs.

Renting can sometimes be the better option as it can save contractors on storage and transport costs if a machine breaks down. It can be difficult to get the parts, whereas specialised maintenance companies will be more equipped to handle the problem. They will have all the necessary parts on hand; and you don't need a service team.

The practical solution
"Renting gives you a wider range of equipment and earthwork. It can be much more practical. It is almost impossible to acquire all the equipment you will use in one project. This way you can build up on what you already own. When renting something such as a crane, companies vary on how they charge. Some charge hourly and some charge daily.

"Most big cranes charge on an hourly basis. If a builder has 12 projects that all require the use of a crane it would make more sense for him/her to buy as he would use it on a regular basis, but if the builder needs the equipment for one project only then it's not advisable to buy. It makes more sense to rent. It's all related to utilisation," says Hussian.

Aggreko International supplies gas and diesel generators, load banks, heaters, air conditioners and chillers, which are used in power stations, mines, offshore oil platforms, shipyards and hypermarkets.

"We have a large range of generators that will be used for temperature control. They are very much sought after during the summer months," says Julian Ford Business Development Director, Aggreko International.

So what is the better option? Renting or buying?

"It's a mix. I have a few items that I own and a few that I rent. I have a few sets of equipment that are more profitable to own rather than lease. Then for certain contracts that I have I will rent certain machines as it makes more sense to do it this way. I will sometimes add to what I have if I feel like the machinery will complement other pieces," says Hussian.

As the demand for construction continues and the market grows, heavy and moving equipment will always be required. The sudden market growth has had a positive effect on most rental and leasing companies.