Using old construction equipment isn’t as cheap as you might think
The other day I was watching a mobile crane lifting items from a truck onto the roof of a 3-story building. Now nothing unusual with this, except the operator sat in a cab which could be raised up to a height where he was actually level with the roof. He could see exactly where the load was being placed in the middle of the roof. He wasn’t dependent on someone talking to him on a radio or standing on the edge of the roof guiding him with hand signals. When he collected the load from the truck he was looking down into the truck and could clearly see the load. The whole operation went quicker and more safely than it would normally go with a conventional mobile crane with the operator’s cab placed a couple of meters off the ground. Furthermore, the operator wasn’t craning his head upwards at an awkward angle to see the roof 12 meters above him. He also didn’t have to look straight up into the sun.
I marveled at how the design of construction equipment has improved over the years. I was reminded that many years ago the company I worked for operated cranes that were 20 and more years old. In fact, the head of the equipment department took particular pride at how his team kept these old cranes running, sometimes long past their life expectancy. The cranes had been paid for many years ago so the rental rates the projects were charged were nominal. Our estimating department used these low rental rates when they priced new projects which gave many projects a winning price advantage. However, this sometimes caused problems when the cranes weren’t available when the project began, and the project team found they had to hire cranes from external sources at rental rates nearly double what the estimator had budgeted in the project price.
Now it was one thing having an item of equipment that was cheap to rent, but it was another thing when the equipment broke down repeatedly. In fact, the cheap item of equipment suddenly became very expensive when teams were left standing because the crane was broken! The project was delayed. Teams had to work late to compensate for the time when the crane was out of action. Supervisors and workers became frustrated. Quality was compromised when the crane broke down in the middle of pouring concrete. Furthermore, the equipment division had to rush mechanics to the project to undertake emergency repairs. Sometimes the item couldn’t be repaired on the project and had to be transported back to the yard and a replacement item had to be ordered and shipped to the project. Costs mounted!
I realized the folly of using old equipment and eventually persuaded the company to purchase a new fleet of cranes which were more expensive to rent but far more reliable.
This same company had an extensive fleet of earth-moving equipment and had kept meticulous records of the maintenance and finance costs of the items. They carried out various studies relating the purchase price of new equipment, plus the cost of repairs and maintenance of the item over time and taking into account the resale value of the item when the company sold and replaced it. Now the cost of the repairs and maintenance increased the older the item was, and the resale value decreased the more hours the machine worked. By plotting these values it was possible to work out the optimum point when the item should be replaced – after this point the item became more costly to maintain and keep. This optimum point varied between different items of equipment (excavators, loaders, graders, etc). Of course, this does generalize slightly as not every item of equipment is exactly the same, or has operated in the same conditions, or with the same operator. Indeed I’m sure many of us have owned the dud vehicle that has given trouble from day one while others with the same vehicle haven’t had one iota of problems. Then there are other items that just seem to go on and on, as good as the first day they left the showroom.
The disadvantages of using old construction equipment
Construction companies that own their own equipment often face challenges of deciding whether to purchase new or used items. Then when should the item be replaced? Projects that rent or hire equipment often rent the cheapest item without considering the age or reliability of the machine. Making the wrong decision can be very costly – but often these costs aren’t obvious. So what are the disadvantages of using older equipment?
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