Rent, Lease or Buy: Understanding Your Options When Acquiring New Equipment
Well, the answer to this question may be a little difficult as all the three options have their own list of merits and demerits.
Hence, it always makes sense for the contractors or construction companies to pay heed to all the factors and conditions while choosing the right solution. These factors may include cash flow status, expected hours of utilisation, current and projected workload, maintenance costs and host of other aspects that may be specific to the business.
Let us throw light on each of the three options in detail…
Rent the equipment
Not everyone possesses the huge finances to buy the costly Construction Equipment (CE). In such cases, renting CE can make more sense. Renting CE can be a good decision when…
1. You need to give an extra boost to the existing fleet during the busy season: So, if every summer, your work gets doubled but remains stagnant during the other parts of the year, then it makes sense to rent the CE during busy season to supplement the existing fleet. This can help in avoidance of storing and maintaining CE during the slow season.
2. You want to keep your repair and maintenance costs low: When you rent the CE, it is the rental company that handles the maintenance needs of the equipment. This frees up a considerable amount of time, labour and cost required for maintenance.
3. You want specialised equipment for a short-term job: Some one-off jobs may need specialised equipment. Here, renting CE may be a smart option. Further, it is better to rent CE rather than buy a new one, especially for projects with duration of less than three years.
The best part about renting CE is that it is the rental company that will incur the maintenance, depreciation and insurance costs and pay taxes related to the equipment. However, the equipment renter may have to pay for the expenses such as labour and fuel costs associated with the equipment. Another downside of renting the equipment is that the cost to rent is typically higher than a lease payment. Apart from the above mentioned few cons, renting CE can offer a host of advantages.
If you are looking for Renting Construction Equipment and the right partner, then Mahindra Construction Equipment (MCE) should be definitely considered. MCE provides a complete range of equipment solutions to its customers. The unique proposition of MCE includes robust and maintained equipment, trained, competent and experienced manpower resources with the equipment, onsite repairs and maintenance to reduce machine downtime and production loss at customer site, advice on equipment suitability based on applications and training of operator level personnel for various industries. The other benefits of renting Mahindra EarthMaster Backhoe Loader (BHL) model from MCE include less need of capital as rates are affordable, new and updated technology, reduction in down time as 24*7 service support is provided, saving on storage, repair & maintenance, manpower and administrative cost, ease of equipment tracking as the equipment posses highly advanced IT-enabled systems and no issue of equipment obsolescence.
Buy the equipment
Buying is one of the most prominent options for obtaining the equipment if you have a consistent and long-term need for it and have the necessary finances as it can help you save money in the long run. The general benefits of buying technologically-advanced CE include ownership of the equipment, good ROI over long period of time and greater flexibility as equipment is available with you at all times. However, the equipment owners are responsible for all the maintenance, repair, transportation and asset depreciation costs. It is to be noted that many of the costs such as taxes, interest, insurance, repairs and depreciation are tax deductible.
Buying CE can be a good decision when…
1. The equipment would be used regularly: If you have a lot of projects in hand for the coming few months or even years, then it definitely makes sense to invest in the CE which would give you good return of investment in future.
2. You can easily afford to store and maintain the new equipment: If you have the adequate space for storage, then buying CE can make more sense. Also, if you have enough finances to take care of the maintenance costs, then also buying CE can be beneficial.
So, if you are looking to buy multi-purpose and highly versatile CE like BHLs, then MCE’s EarthMaster BHL definitely deserves a special mention. Equipped with superior technologies like REMOTECARE feature and joystick controls, DITEC Engine which can help save over 10 per cent additional diesel every hour, Banana Boom with 7 per cent more reach, superior style and premium looks, Mahindra EarthMaster can offer a host of other benefits to you and undoubtedly drive profitability in your business.
Lease the equipment
Leasing combines some of the benefits of both the options i.e., renting and buying. If you wish to keep the ownership cost of the equipment to a minimum for a specified period of time, then leasing the equipment can be a good option for you. When you take equipment on lease, you are responsible for all the repair, maintenance, insurance and other operating costs associated with the CE for the given period of lease. After the lease period is over, you have to return the equipment back to the company from whom you have leased it. Generally, there is heavy penalty when any of the lease agreement terms are violated or you end the lease before the decided time period or there is any damage to the equipment.
Leases are usually identified as either a capital lease (where you are considered to be the owner of the equipment and held responsible for all the maintenance and depreciation costs) or an operating lease (where the company which leases the equipment is considered to be the owner of the equipment and this type of lease agreement is similar to a rental agreement).
Leasing can be a good decision when…
1. You want the equipment for a short-term: When you know that you need an equipment particularly for two years and after that, you would not need that equipment at all, then it make sense to lease the equipment.
2. You don’t want to put higher finances at stake: Leasing solutions offer a lower monthly payment than rental rates and loan payments. Simply put, when you lease, you incur lower up-front cost since you don’t have to make a down payment as compared to purchasing the CE.
MCE offers following operating lease options to its customers:
1. Dry lease: Here, only the equipment is given on lease and the customer is responsible for all the maintenance, fuel and operator costs.
2. Wet lease: Under this, two types of options are provided by MCE. In the first option, MCE provides equipment as well as operator support and the customer is responsible for maintenance and fuel related expenses. In the second option, MCE provides the equipment with operator and maintenance support and the customer is responsible for fuel support.
Rent, buy or lease: Choose what is best for you!
Looking at the above comparison, it can be said that be it renting, leasing or buying the equipment, each one of the options have their own merits and demerits. Hence, you need to consider all the factors carefully and take the decision wisely. No doubt, MCE can be your one-stop-shop destination for all the requirements!
Things to Know Before Buying a Motor Grader
Typically, they are self-propelled machines that have long adjustable metal blade positioned between the front and rear wheel of the equipment. The motor grader models have three axles with the engine and cab situated above the rear axles at one end of the vehicle and a third axle at the front end of the vehicle with the blade in between. Generally, motor graders are employed for creating smooth and flat surface after using bulldozers and scrapers.
Motor graders come in a variety of forms and sizes and they can be found on every major construction site all over the world. Since, there are many models of motor graders found in the market, buying the right one that suits all your job requirements demand careful attention and comparison. Thus, it goes without saying that buying a motor grader is a very complicated task as this calls for consideration of many important factors.
Below are the few things that you need to know before buying a new motor grader that gives you best results…
1. Your exact requirement: Since buying motor grader is a costly affair, you need to have a clear understanding of what it can and cannot do and whether it is the right equipment for the job that you are planning to perform with it. Various types of motor graders can be used for performing similar but different grading tasks. So, before buying any type of motor grader, you need to know your exact requirement and determine the purpose for which you will be using the motor grader. Generally, motor graders are used for making smoother surfaces, fine grade, levelling soil, shifting small amounts of dirt, preparing the topmost layer for laying asphalt on top of it, removing snow and debris and to set native soil foundation pads to finish grade prior to the construction of large buildings. Simply put, motor graders can be used for construction work, forestry and mining applications.
2. The engine power: A powerful engine can help any equipment to work the best. Hence, before buying any motor grader model, you need to look at its engine power. Generally, the engine power of the motor grader defines the type of work it can do and has an impact on the cost too. Most graders that can be found in the market today are equipped with engines that provide horsepower ranging from 100-200 horsepower.
3. The equipment price: One of the most important things to be kept in mind while purchasing a motor grader is price. Well, most of the rates at which the motor graders are available on purchase are highly competitive, yet you need to ensure that you buy the motor grader which fits well within your budget and does all the tasks that you want it to do.
4. Manufacturer details: It always makes sense to buy a motor grader model that is designed and manufactured by a well-known, reliable and reputable manufacturer that offer machines with unique features at reasonable prices. For example, Mahindra Construction Equipment (MCE) is known for making best quality motor graders. Their Mahindra RoadMaster G75 motor grader offers an affordable, un-compromised and mechanised grading solution for small and medium roads in India. It is an ideal grading machine for spreading and grading of earthwork in different types of roadwork across the nation. The equipment is designed to provide optimal output at affordable cost with its simple yet rugged design. The RoadMaster G75 comes with GPRS based remote monitoring system dogosense that keeps a track of your machine with the touch of a finger. Hence, you can definitely consider Mahindra Construction Equipment and its RoadMaster G75 motor grader before making any purchase decision. Overall, you can study the equipment online or ask for a demo from the identified brand dealer.
5. Supplier who gives after-sales service: Post-sales service is often one of the primary components that can ensure long-term ROI of your purchase. Hence, it is important to choose a supplier that offer good after-sales support in terms of onsite visit and the like. Always choose a supplier who is ready to help during or after business hours.
6. The maintenance cost: It is important to know about the maintenance cost of the equipment that you are planning to buy as motor graders are highly subjective to wear and tear. If the maintenance is done properly, then the component lifecycle is extended, resale value remains high and downtime is rarely a concern.
7. New or second-hand motor grader: Last but not the least, you need to decide whether you wish to buy a new or second-hand equipment. If your budget is not such that you can buy a new motor grader, then you can definitely opt for a second-hand motor grader. Many suppliers of heavy-duty machines sell their old graders for affordable prices. In fact, you can easily find a second-hand motor in good working condition at a good price. However, just pay attention to the frame i.e., always check the frame and make note of any metal reinforcements placed over or even behind a repaired crack and look for wear (the amount of wear will depend on the type of environment in which the mini grader was operated) in the articulation point. In addition to it, check the hydraulics of the machine thoroughly and for that look at the ground beneath the machine. This way, if there are any fluid leaks, you can find them there. Also, take a good look around the machine. Further, observe the cylinders, lines and hoses closely within the engine compartment, circle drive housing, etc.
Be informed and make a wise decision
So, before making the final purchase decision, look at the machine’s capabilities to perform the task you wish it to perform. Consider the price, manufacturer and the supplier as well. Thus, look carefully before you leap to buy the specific motor grader for your jobsite.
Equipment Appraisals are Important Before Selling any Heavy Machinery
Same is the case with used heavy equipment too. But the irony is that they don’t command good value when the companies wish to resell them.
There is no doubt that every company/seller would want good value for their equipment as per the market demand but most of the times, it does not happen. Here comes the most vital aspect as to how to determine the right price of the equipment after you have used it for several years and now don’t have any need for it or want to buy a new upgraded equipment or any other factor and thus, want to sell it.
Well, selling a used equipment is definitely a complex process involving various important aspects. It is not that easy to assess the right cost of the equipment after all the wear and tear and constant use since many years. However, if you have done the equipment appraisal correctly, then you will be able to command good value for your used machinery. Thus, it goes without saying that equipment appraisals are important before selling any used heavy machinery and you should take this task very seriously.
Imagine a scenario, where you have put up your used equipment on an online auction site and it is not catching the due attention of the buyers. On finding out the reason, you realise that the cost of your equipment is significantly higher than the other sellers and this is why, you are being neglected by the buyers. Hence, in order to avert such a situation, you need to ensure that you set an accurate starting price for you heavy CE. But how to arrive at the right cost? Well, here is where equipment appraisals come into picture.
Here is how you can do the equipment appraisal…
1. Adopt the cost approach: Determining the replacement cost of the machinery and then subtracting any value that has been lost due to economic obsolescence, functional obsolescence or physical deterioration is the cost approach. Simply put, it is the current cost (as if new) less all forms of depreciation. The main prevalent logic behind this approach is the principle of substitution i.e., a careful buyer will not pay more for an equipment than the cost of acquiring a substitute equipment of equivalent utility. The three types of depreciations that affect the cost of the used equipment include:
a) Economic obsolescence: Outside factors like increased raw material, labour cost or competition, changes in the industry and various other things may result in the loss of value of the equipment. Hence, you need to look at all these factors to determine the right cost for your equipment.
b) Functional obsolescence: There may be loss of value of heavy machinery due to technological advancements. This is termed as functional obsolescence and should be looked at carefully while deciding on the price of your used equipment.
c) Physical deterioration: The loss of value due to wear and tear on machinery is termed as physical deterioration. Often, as the equipment is operated regularly, it experiences physical stress and is exposed heavily to the outside environment. This results in wearing of the machinery and requires regular maintenance. If the regular maintenance is not performed, then the machinery may deteriorate faster. This physical deterioration affects the equipment cost greatly. So, you need to look at physical deterioration to assess the cost of your equipment rightly.
2. Adopt the market approach: In this approach, you need to look at the cost of similar machines that were sold recently. This method is considered to be the best way to arrive at the best cost for your used equipment. For applying this method, you can talk to dealers, auction houses etc., for getting the data. Some of the other factors that you may consider when comparing you equipment with the others include manufacturer, model, effective age, condition, capacity, price, time of sale, type of sale, location and accessories amongst other things. You should also gather information about the market trends, present demand and statistics and future growth scenario of CE business. However, this method may not work, if you machinery is unique in its nature.
3. Adopt the income approach: In this method, you calculate the future income or benefits you will be able to earn with the given equipment and based on that, you fix a cost. However, this approach is not widely used as it is difficult to calculate the future benefit that a specific equipment can bring to an owner, though, it can be used as an indicative method.
Apart from the above factors, you need to look at all the exemplary features that your equipment is providing as compared to its competitors in the market and then establish a suitable price range for your equipment. Generally, you should keep your quotes at par if not lower than that of the competitors because more often, customers compare rates.
Overall, equipment appraisals are extremely important. The above mentioned equipment appraisal steps may seem time consuming and laborious but they are extremely important when you are selling any used equipment. You need to pay heed to each of them so as to not suffer losses. However, most of the times, you may not be able to assess the worth of your equipment correctly as it requires special analytical skills. Here, an expert appraiser can come into picture. Expert appraisers can inspect the equipment thoroughly and provide a certificate indicating an accurate value for your CE. It is very important to have a reputable and fully-certified appraiser to appraise your valuable equipment as after all, huge money is involved. Generally, certified appraisers use the right methodology to arrive at the right price.
So, do remember to appraise your used equipment before selling. Moreover, equipment appraisal may help you for insurance claims purposes too!
6 Aspects that Control the Cost of Second-Hand Huge Equipment
This is giving a huge rise to the second-hand equipment market. Apart from this, the other reasons responsible for the growth of second-hand huge equipment market include increasing economic uncertainty, lack of capital, technology upgradation, unpredictable construction and infrastructure growth, depreciation woes, costly breakdowns and limited space availability.
When it comes to the price of second-hand huge equipment, then they are also not less costly but yes, their price is definitely lesser than the fresh equipment. No doubt that if you are dealing with larger quantities or entire fleets, there is huge financial investment involved even in the case of second-hand huge equipment and there is no harm to be sure that you’re getting the best value when you are buying such an equipment.
So, if you are also looking to buy second-hand huge equipment, then you need to understand what all aspects control the cost of such equipment. This can very well help you to determine the accurate price of such equipment.
We list the six major aspects that generally control the cost of second-hand huge equipment…
1. Demand and supply: Just like any other product, the rules of demand and supply impact the second-hand huge equipment cost too. This means that as the demand for the equipment goes up, the cost also increases and when the supply becomes less, the price decreases.
2. Market situation: The market conditions also highly impact the cost of used heavy machinery. For example, in case of slow economy, it is obvious that low money would be spent on construction and infrastructure development. This impact the price directly as this leads to fewer potential purchases for second-hand huge equipment, thus, driving down the prices and giving an opportunity to the buyers to negotiate more. Seasonal and location-specific factors also have a huge impact on the cost of used heavy equipment.
3. Manufacturer’s and sellers reputation: There may be many manufacturers who manufacture an equipment but there are only few who control the market as they are well-known because of the superior quality of their equipment, market reputation or trust earned through the years and thus, people don’t hesitate in giving more money for second-hand huge equipment of such a brand. For example, if you buy Mahindra Construction Equipment’s second-hand heavy machinery, then it is sure that they are equipped with the latest technology and offer high flexibility. As a result, the cost of these machines is higher than others in the market as these machines can ensure productivity and efficiency for years to come.
Not only manufacturer’s reputation is important but second-hand huge equipment seller’s/vendor’s reputation also counts when it comes to the cost of the equipment. This factor becomes all the more important when you are buying from an unknown vendor. For example, an authentic vendor will have a detailed service history of the equipment, thereby, verifying the fact that the regular maintenance of the equipment has been performed to the highest standards. Also, the reputed vendors give some minimum warranty on the equipment. This highly impacts the cost of second-hand equipment.
4. Age of the equipment: It goes without saying that second-hand huge equipment devalue with the passage of time due to wear and tear, obsolete technology and various other reasons. Hence, age of the equipment has a huge impact on its cost. However, the cost of used huge equipment does not depreciate in an evenly manner. If the equipment is properly maintained and it is in a good condition, then the depreciation value becomes consistent. Here, the number of hours on the equipment comes into play. Generally, an older machine with low hours and which has been properly maintained is more costly than the comparatively new one which is not maintained properly.
5. The condition of the equipment: Second-hand huge equipment which are better equipped, flexible and are able to perform majority of the tasks at the job site command a higher price than the models which are less equipped and flexible. The appearance of the second-hand equipment also has a huge impact on its cost. If the equipment is painted, repaired and cleaned properly and its maintenance and repair documentations are right in place, it is generally higher priced.
6. Model and features: Last but not the least, a standard model of second-hand equipment sees less fluctuation in terms of price over the time. However, a specialised equipment may see major price fluctuations. Further, second-hand huge equipment that come with many features and attachments generally command a better price.
Apart from the above factors, ability to inspect and test the equipment also has a huge impact on the cost of second-hand huge equipment. Generally, sellers who allow the purchasers to have a good look at the equipment and inspect and test it thoroughly, keep the cost of the equipment high as they are confident that their equipment is worth it.
In a nutshell
Every construction site requires a range of efficient heavy and huge equipment to do the task with zero defects and in the given timeframe and for that constructors need to buy them. However, most of the times, the cost of the new equipment is sky-high and one may look for second-hand huge equipment as they perform the same tasks but the purchasing cost associated with them is not that high. However, they are still costly and it is important for you to understand what influences the price of second-hand huge equipment as this can give you a better idea of its true value in the market.
As discussed above, there are various aspects that control the cost of second-hand huge equipment and you must pay heed to each one of them, so that you are not cheated by the seller. Overall, you need to have your proper research in place before making the purchase decision for second-hand huge construction equipment.
The Top 3 Major Second-Hand Machines of Construction Field in 2018
Out of all, earth-moving and road Construction Equipment (CE) segment accounts for close to 70 per cent of Indias CE market. Typically, earth-moving equipment are referred to as heavy equipment or heavy-duty vehicles designed especially for executing construction operation which mostly involves earthwork operation. They are most commonly used to move large amounts of earth or to dig foundations and landscape areas.
If we talk about the Earthmoving and Construction Equipment (ECE) rental industry, then it is expected to grow at the rate of 30 per cent per year in the future. Since, the earth-moving equipment category is the largest in the CE segment, we throw light on the most commonly used second-hand equipment in the category and which will be in major demand in 2018 as well…
1. Motor graders
Motor graders or graders are heavy equipment which are majorly used to fine grade and move small amounts of dirt. They are usually self-propelled machines with an adjustable blade to meet certain angles to create a flat surface. Typical motor grader models have three axles with the engine and cab situated above the rear axles at one end of the vehicle and a third axle at the front end of the vehicle with the blade in between.
Motor graders are used for making smoother surfaces, fine grade, levelling soil and shifting small amounts of dirt. The most traditional use of this CE is in the construction and maintenance of roads with its main function being preparing the topmost layer for laying asphalt on top of it. Motor graders are also used for earth-moving purposes. They are even considered to be easy-to-use equipment for mining underneath the ground.
Generally, motor graders are classified into two categories based on the structure and arrangement of the frame i.e., Rigid Frame Motor Grader and Articulated Frame Motor Grader. A small motor grader within a range of 80-150 horsepower is perfect for jobs that need to be completed in a tight spacing environment, while larger motor graders can be used in broader spaces.
As per Off-Highway Research, the motor grader market is expected to grow from 750 units in 2016 to 850 units by 2020. Given, the high purchasing cost associated with the motor graders, the demand for used motor grader is expected to increase in 2018.
2. Backhoe Loaders
One equipment in the earth-moving equipment category that is and will be rented the most all throughout 2018 is the backhoe loader. This is because they are highly versatile and perform multiple tasks at any construction site.
Also known as digger, backhoes are generally used for working on rugged terrain and perform tasks like moving dirt, backfill, digging trenches, crushing, lifting, grabbing objects, small demolitions, laying pipes, asphalt breaking, paving roads etc. With various attachments, they can also perform various other tasks.
Backhoe loaders are very similar to tractors but the difference is that they contain an adjustable shovel in front a small bucket in the rear. They are considered to be medium sized equipment and are tyre mounted. Overall, they are usually the best choice for jobs which need to be completed in a more restrained space.
It is expected that backhoe loaders will account for over 68.23 per cent of total sales of CE by 2018. Further, sales of BHLs in India is expected to increase from the 21,192 units sold in 2015 to 28,000 machines by 2020, a +32 per cent increase, according to Off-Highway Research. Obviously, with such growth expected, the backhoe loader rental market will also increase considerably. Given the various benefits offered by backhoes, the demand for second-hand equipment is touted to increase drastically in 2018.
When the discussion is about second-hand backhoe loaders, then Mahindra Construction Equipment (MCE) with Mahindra EarthMaster backhoe loaders deserves a special mention. The unique proposition of MCE include robust, maintained and technologically advanced equipment at affordable rates; trained, competent and experienced manpower resources with the equipment, 24*7 service support, onsite repairs and maintenance to reduce machine downtime and production loss at customer site, advice on equipment suitability based on applications and training of operator level personnel for various industries.
3. Excavators
Excavators are generally used for excavating various types of soils, carrying huge amounts of mud or debris and moving them carefully from one place to another. Further, excavators are also majorly used for crushing and levelling the ground surface for the construction purposes.
They consist of a boom, dipper or stick, bucket and cab on a rotating platform known as the house. This house sits on the top of an undercarriage with tracks or wheels. Excavators are usually employed together with loaders and bulldozers. Typically, excavators are steady, powerful and extremely work-efficient machines. Like backhoe loaders, they bring flexibility and versatility at any construction site. They are available over wheels or tracks.
There are different types of excavators which are used for a variety of applications like digging trenches, holes and foundations; material handling; forestry work; mulching; general grading/landscaping; construction, demolition, mining; river dredging etc.
As per one of the reports of Research and Markets, Indian excavator market is to grow at a CAGR of 7.86 percent over the period between 2014 and 2019. Obviously, with such growth rate projected for excavators, the second-hand excavator market is also bound to rise. The two major reasons that can be seen behind such unprecedented growth of used excavator include the fact that excavators are highly versatile equipment and come with a myriad of attachments and provide better productivity.
In a nutshell
The high infrastructural growth in the country and various technological developments are fuelling the growth of CE industry and this is leading to increasing need for second-hand equipment like backhoe loaders, excavators and motor graders. A few key contributors to the growth of the above mentioned second-hand CE include the rising cost of purchasing equipment, increasing economic uncertainty, lack of capital, technology upgradation, unpredictable construction and infrastructure growth, depreciation woes, costly breakdowns and limited space availability. Thus, second-hand CE sellers in the country have all the reasons to smile.
How to Choose Right Construction Machine for Your Project?
Now the question is how? Well, we will tell you as to how to go about it. But before getting into the details regarding how to choose the right construction machine for your project, it is necessary to have some information about the segment as a whole.
So, the Construction Equipment (CE) sector includes a variety of equipment that can be divided into various categories. Typically, the CE sector is made up of five main segments i.e., earth moving equipment, road CE, concrete equipment, material handling equipment, and material processing equipment. While the earth moving equipment and road CE segment account for close to 70 per cent of Indias CE market, the concrete equipment is the second largest segment with a market share of approximately 14 per cent. Material handling equipment and material processing equipment segment account for 10 per cent and 6 per cent of the market respectively.
Finding the right construction machine
So, now that you know about the various CE, here is how you should go about selecting the right machine for your project…
1. Due diligence is extremely important: You need to thoroughly investigate and research before buying any long-term asset like CE. You need to define your requirements well in advance and then look for the models of CE that can meet all your specific needs.
2. Identify the type of job: The type of job that you want to perform will help you to determine the type of CE that you need. So, before choosing any equipment, take some time to determine the technicalities involved with the job that you are planning to do at the construction site. For small demolitions, light transportation of building materials, digging holes/excavation, landscaping, breaking asphalt, paving roads, laying pipes, planting underground cables, laying foundation for buildings and drainage systems, you might require a backhoe loader. Take note that backhoe loaders come in various specifications, so consider this fact as well.
3. Know about the size of the project: After knowing about the job type, it is necessary to figure out the size of the project as well as this can also help you to find out the right equipment. Bigger projects may require very heavy equipment for long term as against the smaller projects. So, it is good to know about the project size.
4. Identify the job conditions: Apart from knowing the job type and size, it is also necessary to find out the job conditions like whether it is a hilly, rocky or uneven terrain, loose soil or valley where the equipment will be used. Even the climate and weather conditions should be taken into account in order to select the right equipment.
5. Consider the size of CE: After knowing the job type, size and condition, if you have found out the equipment you need, then before finalising, do consider the equipment size as that is also important. Very large and heavy construction equipment give higher output on full load and if there is part load only, then the cost of production increases. Typically smaller equipment working on full load saves lot of production cost. Further, larger equipment need expensive spare parts, more storage space and even their repair and maintenance cost is expensive. However, larger machines are usually more sturdy and suitable for tough working conditions. Hence, there are pros and cons of both smaller and larger machines. So, it is very much desirable to have equipment of the required size for the project.
6. Determine the unit cost of production: Another important consideration in selection of the right equipment is the economics of equipment. When calculating the purchasing cost, all related expenses such as transportation, insurance, commissioning etc., should be included to determine the right production cost.
7. Consider the price: Checking the cost of the equipment is also very important. You need to set the price range for yourself. If the price of CE is within your budget and it can do more than what you need it to do, then you can definitely select that equipment.
8. Check the availability of spare parts: While selecting a particular type or make of equipment, you need to ensure that you choose only those equipment whose spare parts are available at reasonable costs during the entire working life of the equipment. This is because any downtime due to shortage of spare parts can lead to long idle periods, thereby, affecting the jobsite efficiency.
9. Consider equipment versatility: You should always opt for a equipment which could perform more than one function and should be inter-convertible wherever possible. This way, your purchasing cost can be justified.
10. Buy the equipment from trustworthy manufacturers: It is always good to buy the equipment from an authentic manufacturer or quality and committed dealers whom you can approach at the time of crisis. Always opt for a manufacturer or dealer who is sincere and capable of extending prompt after sales service.
11. Determine the adaptability for future use: You should always choose a machine which could be used in future as well. In fact, obsolescence of the machine should not be overlooked.
12. Choose a machine that offers safety and efficiency: Last but not the least, the reason behind using the construction machinery is to make work easier and more effective. So, if you are choosing any equipment, then ensure that it offers more efficiency to your project. Further, only those equipment should be chosen that meet the international safety standards as through this way, you can easily ensure the safety of your workers. It is a known fact that substandard equipment always cause a lot of problems when it comes to safety.
Overall, standard equipment that are commonly manufactured and are easily available in the market should be selected. Since, they are manufactured in large numbers, they are moderately priced too. Their spare parts are also easily available at an affordable rate.
Undoubtedly, selecting the right CE is always a difficult process for many people but with proper research and methodology in place, the task can become much easier. So, if you have considered all the above mentioned points, then definitely go forth and buy the equipment of your choice which can give you good return of investment in the long run and add up to your list of efficient CE.
Check the Market Before You Buy or Sell Your Equipment
This is because, there are clear benefits of using CE over manual labour and traditional methods like improved quality, timeliness, better project financials and safety. In fact, it is believed that the CE market will grow by a healthy 20-25 per cent over the next few years, says 2020. Obviously, this would mean buyers demanding more equipment, thereby, leading to increasing sales. Hence, both the buyers and sellers in the CE market need to be fully-equipped with the market knowledge to make the best of the present scenario.
As easy it may look but buying as well as selling Construction Equipment is a daunting task and you need to check the market as well to keep a tap on various factors before taking any step.
Steps to be taken before buying the equipment
A lot of research is needed while buying any equipment. Research is not only needed for selecting the most appropriate equipment model and make but for choosing the right supplier/manufacturer too. Here are all the steps that you should take to know the market before buying any equipment…
1. Due diligence is extremely important: Like you thoroughly investigate and research before buying any long-term asset, the same approach is needed at the time of buying CE as well. You need to define your requirements well in advance and then look for the models of the equipment that can meet all your specific needs. You need to find out as much information as possible about the equipment, its overall demand and performance before buying it. Compare similar equipment built by different manufacturers, as different brands and models hold their value better than others. Make it a point to always opt for those equipment which have large supplies.
2. Do a research on the manufacturer: Find out everything about the manufacturers who are into manufacturing the equipment that you wish to buy. Look at the market report of their equipment and its features. Talk to experts to know whether the company’s reputation is good and its equipment are worth the buy. It is important that you take the previous or present customers’ feedback and read reviews about the company. It is always better to go for a quality equipment from a reputed company or supplier like Mahindra Construction Equipment and the like. This is because these companies are known for their better quality, innovative, energy-saving and high performance equipment.
3. Compare the prices of the same equipment offered by different sellers: Cost of the same equipment sold by different suppliers tends to be different. The same model may be available at a lesser rate at another vendor close by. Thus, you should be clear about what you want and then compare the cost of the equipment of various sellers offering the required features. You should choose the one which fits the bill in terms of price and features.
4. Check for post-sales services: Post-sales service is often one of the primary components that can ensure long-term ROI of your purchase. So, it is important to choose a supplier that offer good after-sales support in terms of onsite visit and the like. In addition, many suppliers/manufacturers give guarantee and warranty of the equipment. So, you should choose those manufacturers. However, due attention should always be given to the length of the guarantee and warranty period.
Steps to be taken before selling the equipment
Not only buyers need to exercise caution but even sellers need to take various steps before selling any equipment and to know the market. Take a look at these steps…
1. Study the market: The first and foremost step is to gain knowledge of the market. You should gather information about the market trends, present demand and statistics and future growth scenario of CE business.
2. Know your equipment’s worth: As a seller, you need to do your homework and do a thorough research on equipment pricing. You need to look at all the exemplary features that your equipment is providing as compared to its competitors in the market and then establish a suitable price range for your equipment. This will help you to negotiate confidently and help set realistic price expectations. Generally, you should keep your quotes at par if not lower than that of the competitors because more often, customers compare rates.
3. Adopt a proper marketing or selling strategy: You should conduct a thorough market research and set business objectives and goals for marketing and selling. Such a research can help you in creating and focusing on a niche market for your business. You should advertise to make your presence felt in the market or spread awareness about your business through word of mouth. In the beginning, you can even offer a promotion or other introductory rate so that you build up on the customer base.
4. Screen the potential buyers: There are many buyers in the market. You need to screen the sincerity of those as you would not want to waste your time on buyers who either are fake or don’t have the required finances.
5. Know your competitors: It doesn’t hurt at all if you know about your competitors. You should know about their offers and selling methods, so as to come up with your own unique way of selling the equipment. In fact, this can help you in providing additional benefits and this will lure more clients for you.
So, in a nutshell, what is needed for buying or selling CE is good planning and the required due diligence. The above mentioned steps may seem time consuming and laborious but they are extremely important when buying or selling any equipment. You need to pay heed to each of them so as to not suffer losses in the long run.
How Can You Determine the Fair Market Values on Used Heavy Equipment?
However, most of the times, the cost of the new equipment is sky-high and one may look for used heavy equipment as they perform the same tasks but the purchasing cost associated with them is not that high.
Also used equipment offer a host of advantages like…
1. Reduce the burden of up-front investment: Buying a new heavy equipment like backhoe loader or excavator can be a big investment and it may not always possible to make that huge investment at the time of need. Also, construction companies are always under a lot of pressure to trim capital outlay. Hence, in all such scenarios, you can opt for used heavy equipment which are generally less costly than the new ones.
2. Puts an end to depreciation worries: When you buy expensive equipment, you are always concerned about its resale value because of the fact that the value of a piece of machinery drops considerably as soon as you pay for it and you can never expect to get back exactly what you paid. Further, since the construction equipment market is highly influenced by the technological changes, the heavy equipment can become outdated very fast, thereby, depreciating its value. In fact, most of the heavy equipment lose between 20-40 per cent of their value within a year of being purchased and you might not want to see your new equipment depreciate so easily. So, if such concerns bother you, then buying used heavy equipment can be a good solution for you. When a heavy equipment is bought that is more than a year old, the initial depreciation is effectively saved while still getting something that’s relatively new and good for a lifetime of use.
3. Available warranties: Most of the reputable used equipment dealers offer comprehensive warranties, preventative maintenance plans and other service agreements for all the used heavy equipment that they sell. This means you can shop with confidence knowing your purchase will be backed up by a reputable team that will take care of any sudden maintenance or repair requirement.
Well, after looking at the benefits of used heavy equipment, if you have made up your mind to make a purchase decision and you are now bothered about the factors that affect the price of used heavy equipment and its fair market value, then your problem is justified. Well, we agree that it is not that easy and it needs meticulous detailing.
Generally, the fair market value of the used equipment is based on the current supply and demand for that piece of equipment and the competition in the market. So, determining the equipment’s value in the market can help you in indentifying the right price of the used heavy equipment. However, not only this but a variety of factors play an important role in determining the fair market values on used heavy equipment.
Factors affecting fair market values of used heavy equipment
When performing market research or purchasing used heavy equipment, always bear in mind the impact of the following factors on pricing:
1. Age and hours: The cost of used heavy equipment does not depreciate in an evenly manner. If the equipment is properly maintained and it is in a good condition, then the depreciation value becomes consistent. Here, the number of hours on the equipment comes into play and help in determining its resale value. Generally, an older machine with low hours and which has been properly maintained is more costly than the comparatively new one which is not maintained properly.
2. Used equipment’s ability: Used equipment which are better equipped, flexible and are able to perform majority of the tasks at the job site are often the best to be considered for buying and command a higher price than the models which are less equipped and flexible.
3. Manufacturer’s reputation: It is not at all surprising that the manufacturer’s reputation also play a huge role in determining the fair value of the used heavy equipment. For example, if you buy Mahindra Construction Equipment’s used heavy machinery, then it is sure that they are equipped with the latest technology and offer high flexibility. As a result, the cost of these machines is higher than others in the market as these machines can ensure productivity and efficiency for years to come.
4. Seller’s reputation: Not only manufacturer’s reputation is important but used heavy equipment seller’s/vendor’s reputation also counts in determining the right market value of the equipment. This factor becomes all the more important when you are buying from an unknown vendor. For example, an authentic vendor will have a detailed service history of the equipment, thereby, verifying the fact that the regular maintenance of the equipment has been performed to the highest standards. Also reputed vendors give some minimum warranty on the equipment. This highly impacts the cost of used heavy equipment.
5. Market factors: Last but not the least, the market conditions also impact the value of used heavy machinery. For example, in case of slow economy, it is obvious that low money would be spent on construction and infrastructure development, this impacts the price directly as this will lead to fewer potential purchases for used equipment, thus, driving down the prices and giving an opportunity to the buyers to negotiate more. Seasonal and location-specific factors also have a huge impact on the values of used heavy equipment.
After understanding the factors affecting the fair market value of used heavy equipment, you can visit all the reputed vendors that sell the specific equipment that you want to buy to inspect the equipment. You should then ask all of them for their quote for the same equipment, in addition to any extra fees that is not included in the quote. Make a note of the company name and the total cost quoted by each one of them. You need to total the amount quoted by all the vendors and divide it by the number of quotes you have received. The resulting figure would be the average or fair market value for the used heavy equipment. Knowing that, you can contact the vendor which is your first choice and ask them to match the lowest quote or bargain on the best price.
So, do have your proper research in place and know about the fair market values before making the purchase decision for used heavy equipment.
How to Qualify a Buyer to Ensure You Dont Waste Your Time?
Often, construction equipment buyers don’t realise the importance of the salesperson’s time and waste lot of their energy and efforts. Either buyers do it unknowingly as they are highly confused or highly sceptical about their investment or they do it knowingly to get the maximum benefit from the salesperson. So, the time has come that salespersons should take charge.
Qualifying buyers to reduce time wastage
Enough has been said about the buyer’s time and money, it is high time that we discuss about the salesperson’s time too. So, here are some tips for salespersons to help them qualify a buyer to ensure that their time is not wasted unnecessarily.
Generally, in a sales transaction, it is only the buyers which are seen as the decision makers. However, even salespersons need to decide as to whether they want to entertain the buyer or not and to what extent. Most of the times, salespersons are seen investing lots of their time and resources only to find out that it is a poor lead and the buyer may actually not buy any equipment. Thus, looking at the buyer and his requirement, salespersons should decide as to how much time and energy should be dedicated towards the buyer in question. For that sales persons should ask certain questions so as to identify the right potential buyer. It’s called the ‘BARTS Method’.
Let’s take a look at those questions…
1. Does the buyer have the requisite Budget?
This is one of the most challenging questions that should be answered by the salesperson at the first as ascertaining the buyer’s budget is not easy. Most of the times, the buyers reveal information regarding their budget in the beginning only, however, if they don’t do so, salespersons should ask the buyer this question either directly or indirectly. If the buyer fails to provide a definite answer or even give a slight indication of their budget, few follow-up questions should be asked by the salesperson to get the right answers. These questions can be:
- Based on what we have discussed, the right equipment that you are looking for can fall in the range of…So, does that fit within your budget?
- Our equipments typically fall between…Does it suit your budget and this is what you are expecting?
These questions will definitely reveal some information about the buyer’s budget. The buyer might say, “That’s out of my budget” or “That is what I am looking to buy? This can help the salesperson in deciding about how much time he should give to the buyer in question.
2. Does the buyer have the Authority to strike the deal?
The buyers that come to any salesperson may or may not have the authority to finalise the deal or sign the payment check. Hence, salespersons should find out about this in the beginning only as often this may lead to time wastage and repeat efforts as they might have to convince the right authority all over again. In order to determine who the decision maker is, a salesperson should ask the following questions…
- If we strike a deal, how and who would make the final decision?
- Is there anyone else who will be coming into picture when making the final decision?
It is very much possible that the answers to these questions will reveal who really has the authority to take the decision.
3. Is the Revenue generated from the deal worth your time?
It is very essential for a salesperson to assess the revenue potential of the buyer in early sales process as this can save a lot of his efforts and help him decide whether the buyer is worth investing time or not. A salesperson can know this easily if he has been able to uncover the budget of the buyer successfully.
4. What is the buyer’s Timeframe for making a decision?
It can be really frustrating when you invest hours after hours into a sale and the buyer to only find out that even after 6 months, the buyer has not been able to make the buying decision. Thus, it is extremely essential that salespersons determine buyer’s timeframe for decision making. This does not mean that they should ignore the buyer completely.
To determine the buyer’s timeframe, they need to ask the following questions to the buyers…
- Tentatively, by when you would make the final decision?
- What is your deadline for closing this deal?
Chances are that the buyer would tell his point of view clearly but if the salesperson fails to get any specific answer, then the alarm bell should ring in his mind and he should motivate the buyer to make the decision as soon as possible. However, due to various complexities, some deals might take a very long time to get closed. So, salespersons need to keep their cool and don’t let the buyer go. In fact, they should nurture that buyer at all times.
5. Does my Solution add value?
Salespersons should never sell anything that does not add any value to the buyer and his business. For that, salespersons should ask this question and determine the answer of it at an early stage. If a salesperson feels that the product or equipment that he is offering is adding value, then he should go ahead and sell it to the buyer. If not, then he should step back and should not sell anything that the buyer does not need and thus maintain his position as a trusted advisor in the eyes of the buyer.
In a nutshell
Thus, if as a salesperson, you have an opportunity where the buyer has an appropriate budget, buyer has the authority to make the buying decision, the revenue generated is worth your time and energy, decision will be made in a timely way and the solution you are offering adds value to the buyer, then it is absolutely worth your efforts and you should invest considerable time on that buyer!
How to Buy Heavy Equipment Safely and Avoid Unethical Sellers
Today one has various options of buying new machines, old machines, renting machines and even leasing them. Of all these buying is a tricky task especially of you are an individual buyer with a small or medium sized business. While larger business owners do have the benefit of bulk buying machines, striking a good deal is still a task. While Most new machines can be brought directly from dealers, getting a good deal on it is a bit of a task. Buying old machines is an even meaner task in terms of the time and effort required to find and seal a good buy. Lets take a look at how to to buy these heavy duty marvels of engineering safely at the best price form ethical sellers.
Decide on your machine: The most important part of the buying process is deciding on the machine you want to buy and wether you need to buy a new one or an old one will do depending on your work prospects. Next up is deciding on add ons like attachments, insurance, maintenance plans and warranties etc on the machine and its various parts. There’s no denying that heavy equipment require comprehensive care if one wants to make the most out of it. Check the various brands available for the required machine and check the specifications against each other and your job requirements. Its best to go for a machine that suits your current and short term requirements and while still leaving space for future improvements like attachments or the possibility to sell the machine at a good price in the future.
Get multiple quotes: Once decided on the machine, make a list of all the dealers in the market that sell your machine. For new machines, its best to go with manufacturer authorised dealers. When it comes to buying old machines, it is a different ball game entirely. Old Machines are usually not sold by authorised dealers and the market is laced with people trying to make a quick buck. Additionally the old machine maker in India is not organised enough to protect the buyers from being defrauded. Buying old machines is a risky business to begin with. So its important to meet various dealers and vendors to get multiple quotes on the same machine. For new machines one can even pit the dealers against each other to land a good deal. With Old machines, the only way to get a good bargain is to educate yourself about the actual going price for the machine in question so you dont end up paying more for the machine.
Ask questions: Asking questions is always a good idea. For new machines, ensure that you ask the right questions especially pertaining to the fine print of the buying contract. Ask questions about the getting a better deal, extended warranties, maintenance and service contracts and possible attachment requirements and how all these can be clubbed for a bulk deal. When buying old machines, one should make it a point to inquire about the machine’s working, repair and maintenance history and demand the paper work for the same. Additionally ask for vial inspection of the machine in addition to having the machine being inspected by an expert of your choosing. That way you are more likely to get a better picture often machine’s condition and the actual value of the machine. Ask to try out the machine before making the purchase. When buying old machines, ensure that the paper work is in place else it will become difficult to sell the machine at a good price when you eventually decide to sell it off.
Get references and reviews: Reviews are not just required for the machine and services but the dealer too. Take the time to meet with the old clients and hear from them first hand about their experience with the dealer/ seller. References and review go a long way to help in making a good buy. Always ensure that you read the reviews both online and offline form people actually owning and using the machines on a daily basis. Check the sellers good will in the market before finally trying to negotiate a deal. For New machines it is highly unlikely that that a plethora of dealers will be available for the same brand in a certain area so ensure that the dealer is credible and that you have a good rapport with them for better service.
Pay attention: This is one of the most basic step one can take when buying heavy equipment. Pay attention to the person trying to sell you the machine. Ask questions to gauge their knowledge of the machine, the market realities and their sincerity in wanting to see you a good machine that suits your requirement. Look out for sellers trying to rush you into making a decision or insisting on speeding up the purchase. Ensure that the paper work is in place and credible before making any kind of payments. One must be wary of sellers making claims that seem too farfetched for the machine and size of the sellers operations. Particularly when buying old machine’s its important to cross check the claims made by the seller.
Proper documentation: Insisting on proper documentation ensures that unethical sellers are weeded out to begin with. Once the documentation is in place, do make it a point to check its authenticity in case of old machines. For new machines, read the fine print and confirm the conditions that apply to the purchase contract and what might and might not be considered a breach of contract leading to the insurance or warranties lapsing. Such lapses can lead to unrequited expenses that should have been covered in the insurance and or warranties.
Payment: When paying for the machines or looking into payment structures ensure that adequate documentation is available as proof of payment. It is a good way to ensure that only ethical sellers remain in the game. Given that heavy equipment are pricey, one should insist on making payments that leave a paper trail and can be used as proof of payment. Its best to avoid making any cash payments, especially if the seller shies away from providing a proper receipt even for the booking amount or part payment.
Simply put, one should take the time to educate themselves about the machines, the industry and the tricks that sellers use to close deals fast. While its best to do it ones self, one can take up services of an expert to ensure that you get the best of machines at the best possible prices and are protected against frauds. Being aware of the red flags is a must to ensure your safety as a buyer and to protect the interests of your business in both the short and long term. When in doubt about the machine or the seller, its best to either get the doubts cleared or simply move on to the next seller