Hiring Excavators and Balancing Return on Investment

November 9, 2021

The success of construction projects mainly depend on the margins that are made which justifies the project as a business activity. Positive margins related to projects in return depend on how well the projects are managed. Hence it is all usually about ‘dollars and sense’ whereby project managers need to manage budgets, people and as far as the construction industry goes – equipment management and logistics. Among the equipment that are commonly and generally used for most construction projects are john deere excavators and dumpers apart from hydraulic auger attachments.

The reason that these items are mentioned here is due to the fact that they are capital intensive and maintenance costs could sometimes sky rocket to the extent that it has a negative impact on margins which goes against the fundamentals of any business establishment. Buying excavators is certainly an option for construction companies as the requirement to use these machines are rather consistent as they are multi-purpose machines. From basic landscaping jobs and demolition work to complex and dangerous marine structure building and diverting gigantic rivers, excavators are critical every step of the way.

However, not all of these jobs warrant or justifies buying an excavator as the costs of excavators are anything, but cheap. Even mini excavators have the potential to dent a medium sized construction company’s capital funds seriously. Ranging from anywhere as low as $10,000 for battery powered excavators right up to mega excavators that up to a million or more dollars that we see in mining, for some projects it is better to hire excavators on a daily or weekly basis rather than buy them, based on the simple fact that buying excavators and not using them constantly erodes profit.

Excavators for hire are actually the best way to go about executing projects and achieve good margins, this especially holds true for medium or small size construction companies that must maintain a good level of working capital at hand to be able to pull of projects effectively and efficiently. Looking at excavators as asset investment for large projects that are stretched over a lengthy duration with the excavator in use consistently is acceptable, but investing in equipment such as an excavator for small projects that do not last more than a few weeks is not exactly a wise business decision.

Nevertheless, since the use of an excavator for almost any kind of construction project is inevitable, the most viable solution is to rent one. Excavators for hire are available for from as low as $200 a day on a daily basis and lower than that on weekly rates. Taking this into consideration, a construction project that requires a high end Kubota mini excavator that costs about $ 20,000 for 3 days, could be accomplished for less than $600 dollars and this also means no maintenance or upkeep cost.

There are also other cost elements such as auger attachments that cost quite a bit that need to be purchased at steep prices, which would cost only a fraction on hire.

 

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