The Alarming Truth about Using Old Construction Equipment

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-storey building. Now nothing unusual with this, except the operator sat in a cab which could be raised up to a height where he was 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 metres 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 marvelled 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 was proud of the fact that his team kept these old cranes running, sometimes long past their life expectancy. The cranes had been paid for several years before 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 realised 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 earthmoving 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 generalise 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?

1. When equipment breaks down the team is left standing which impacts productivity – this can be costly as the team relying on the machine is left standing. A crane breaks and the project can’t lift materials. An excavator breaks down and the trucks it was loading are left standing.
2. When an item is broken the project is often delayed which means the project incurs additional costs as well as risking the client imposing delay damages.
3. Often management becomes involved with the repairs, which takes their time away from other tasks. I have known supervisors that have spent hours wrestling with a machine to get it repaired while their team has been left unsupervised. Certainly, management have to arrange repairs and replacement machines which takes time from their other duties.
4. The project team becomes frustrated and sometimes demoralised when equipment frequently is broken. Employees may eventually leave the company in frustration causing further problems for the project.
5. If the item is owned by the construction company then they have the cost of the repairs which could include; the cost of the repairman, the spare parts and the cost of shipping the parts to the project. Often these repairs are urgent and parts may have to be airfreighted at additional expense. The more remote the project site the more costly this exercise can be.
6. In all of this our clients become frustrated. They want to see progress. They don’t want to see their project delayed when the contractor’s equipment frequently breaks down. Clients want to employ contractors they can rely on, and this means employing contractors that use reliable equipment.
7. If the item cannot be immediately repaired, or it cannot be repaired on the project, it has to be transported back to the company’s equipment yard or the nearest place where it can be repaired, and a replacement item has to be taken to the project. This can be an expensive operation, particularly for large items. But sometimes it’s not as simple as this and a replacement item isn’t immediately available, or the replacement comes at a higher cost.
8. As mentioned at the start of the article new equipment comes with new improved features which enhance the ergonomics of the machine. It could mean that the machine is more comfortable and easier to operate which results in the operator being less fatigued – which helps productivity and is better for our employees’ health. Often efficiencies and speed are enhanced which means the item can produce more and the productivity is better. Fuel efficiencies are better which reduces costs. Sometimes maintenance costs are less.
9. A company’s equipment is an advertisement for it. Equipment with logos are often what the public sees. An older piece of equipment, leaking oil and belching smoke isn’t a good look for any company. Some of our clients complimented us on the new equipment we were using, even when these items weren’t ours, but were rented. Equipment that looks new, appears modern and is well looked after creates an impression that the company is professional and can be relied on.
10. New equipment is safer. It normally comes with better safety features. Being new usually means it is less likely to break down or fail. But also, consider the example of the crane above – if the operator can clearly see the load at all times, it’s got to be safer than working ‘blind’, guided by someone else.
11. New equipment is usually more environmentally friendly. Older equipment can leak oil and when hydraulic hoses break there is often a major spill which must be cleaned up. Older equipment is often noisier and belch smoke which is detrimental to workers as well as neighbours and the public. As mentioned earlier older equipment often uses more fuel.
12. The resale value of the equipment decreases with the age of the machine, while the maintenance costs increase.

Choosing the right construction equipment

Construction companies need to carefully consider whether to purchase new equipment or previously used equipment. Then they should consider when to replace the item. These decisions can have major financial consequences as well as impacting the success of their projects. In some cases, when the company doesn’t have the financial ability to purchase a new machine, or a replacement item, it may be better not to own the item, but to rather rent the item from an external provider.

​Projects should carefully consider when they hire equipment for the project whether the cheapest item available is really going to be the best, and ultimately the cheapest item for their work. A broken piece of equipment can be very costly and disruptive to the project.
​#constructionequipment #constructionmachines #constructionmanagement #contractors 

​This article was first published on the ClockShark website. 
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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. 

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