How to reduce the costs of equipment acquisition?
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How can I reduce my equipment cost?
Construction owners rely heavily on heavy equipment to get the job done. These are primary factors that contribute to the success or loss of a project. If the machinery is not functioning well or well maintained, the owner will get a bad reputation. However, machines are expensive. It is expensive to buy them and it is expensive to maintain them.
One of the most important thing that matters to equipment owners is the ownership cost. The primary objective of any business is to procure a piece of productive equipment. And, at the same time, keeping the operating costs low.
The total cost of ownership of an asset over its life cycle is significant. As you know, it affects the profitability of the business and helps to determine the ROA (Return on Asset).You must know and understand the factors that go into deciding whether to buy or rent equipment.
The total Cost of Ownership
A Used Heavy Equipment cost is more than just its purchase price. There is other expenses that go into owning the equipment during its ownership. These expenses are the following:
- Registration costs
- Insurance
- Maintenance cost
- Depreciation
- Repairs, spares, and replacement costs
- Interest cost
- Cost of tires and tracks
- Fuel cost
- Driver/operator cost
All the above costs add to the total cost of construction equipment ownership.
How do you control or reduce the total cost of ownership?
Construction equipment is expensive and requires substantial capital outflow when purchased in cash. It blocks the funds which could have been used in other productive areas. You can increase you profitability by managing your assets more prudently. Even if you are working in businesses such as construction, infrastructure, or manufacturing. How to do so? By investing your money in used construction equipment. The decision to buy used machinery in Dubai could help you a lot. To do that, check your cash flow position of the firm, check if you can afford to buy it with cash or lease rental .
Buying second hand could lead you to a better financial management. Buy, you should know that buying used equipment may result in the model getting obsolete. This means that, you might have incurring higher maintenance costs. Another alternative is to go for acquiring contraction equipment on lease rentals.
1-Reduce ownership costs and maintenance
The construction company will require multiple equipment and models for its various projects. Purchasing all of them will cause a massive initial capital outflow. It also needs to set aside funds for maintenance, insurance, and other expenses. Also, the asset’s depreciation will mean erosion of the value of the equipment. A dealer of Used Construction Equipment in Dubai gives out construction equipment on an operating lease model where the lessee pays a fixed monthly rental to the owner or lessor.
The fixed monthly rentals include for the most part insurance, maintenance and replacement. In many cases, the operator/driver’s salary is included. This fixed all-inclusive monthly rental will help the company to budget its monthly expense on equipment and save on initial capital outflow.
2-Protect Against Depreciation
Construction tools operates in harsh conditions and depreciates quickly. The wear and tear are higher. For that, the machines require regular maintenance and spare parts replacement. These costs increase over time. In many cases, maintenance price rises more than the equipment cost. For this reason, renting is a better option as it has many advantages. In particular, It helps protect the user from depreciation, maintenance, and repairs cost. The hassles of maintenance are outsourced to the leasing company.
3-Protect Against Obsolescence
The construction industry is also prone to changes. Construction manufacturers keep introducing new models leading the old models getting obsolete. If the equipment is owned, there is a huge erosion in value. By renting it, one is protected from obsolescence. Also, the user can return the old model and replace it by renting a new model. The flexibility to have the latest equipment fleet helps companies to bag more projects and increase their profitability.
4-Eliminate Secondary Expenses
Owning equipment means undertaking additional expenses like Road Taxes. Road taxes are mostly for equipment like mobile truck cranes, excavators, and forklifts. Also, owners need to also look at the insurance, salaries, and storage yards when the machinery are not in use. Rather than having to deal with all this issues, you can try renting the equipment. Once the project is completed, the equipment can be returned to the owner/ lessor.
What can you buy as second hand tools?
Basically, you can buy all the new heavy machinery available. The only condition is that, if you are living in the UAE, you need to know where to find them. In particular, Dubai has rules on the location and how to reach these dealers. In other words, you need to be fully aware of several things: The legal aspects, the current licensed dealers and where to find them.
-> Check our guide on where to buy heavy equipment in the UAE? This article will give you a general overview on the process and where to find the dealers so you don’t get in trouble.
To enumerate some products you can buy, here is a short list of what you can buy used:
- Buy Used rollers in Dubai
- Get Used wheel loaders in Dubai
- Find Used bobcats in Dubai
- Buy Used welding machine in Dubai
- Get Used generators in Dubai
- Get Used compactors for sale in dubai
- Find Used JCB in Dubai
- Buy Used concrete mixers in Dubai
These are some of the products you can get your hands on. Furthermore, you can also find products related to the agricultural industry. You can find Used Agricultural Tractors in Dubai , Used earth moving equipment or even Used Mini Excavators For Sale in Dubai. With this in mind, you can check products we offer at Anwar Al Quds
The cost of ownership of construction equipment is not cheap. Construction companies have to compare the earnings from a project and the operational cost. This allows them to see if there is a surplus at the end of the asset life cycle. Otherwise, it will not be profitable. The problem happens when the equipment is lying ideal for a significant part of its life cycle . Resulting in an extensive loss in its resale/ salvage value.
Lastly, to know more about buying used machines, check out our Articles on the:
- Benefits of buying second hand construction equipment
- Things to consider when buying used construction equipment
-
5 tips that will help you choose the best used heavy equipment
-
Five questions to ask before purchasing used heavy equipment
- Heavy Equipment in the UAE: Where Can I Buy it?
- All you need to know about agricultural tractors
- How to choose the right brand for your construction project?
If it’s your first time digging into the second hand market, you will be anxious. Of course, you will need to have more information and knowledge to not be scammed. But if you choose the right dealer and read enough articles you will be OK. With this in mind, AAQ machinery also known as Anwar al Quds, is your best option. AAQ is a family-owned company that was established more than 40 years ago. AAQ cares about customers and we are so proud in our excellent highly skilled professionals.
As a matter of fact, we pride ourselves through customer loyalty, integrity, and optimum transparency. Besides, we are currently one the strongest in the field. We are one of the most recognized in the industry. Our work ethics and value has made us a visiting hub for all dealers and contractors as they trust our expertise and products.
Also, you can check our Instagram to see more about the latest updates and current new offerings. if you like anything from us do not hesitate to contact us.