The topic of buying (new or used) vs. tower crane hire (renting) is one that comes up with our clients all over the world. There are many pros and cons to each decision, and I hope to tackle some of these issues in this week’s blog.
Purchasing a New Tower Crane
When purchasing a tower crane ensure it is from a reputable dealer. With regular maintenance and servicing you can expect the crane to have a working lifespan of 25 years. That being said, we have come across some cranes in developing countries that are 40 years old and still working well.
Consider the forecast of your company more than the project that the crane will be first used on. Knowing that the crane will have a 25-year lifespan is a huge advantage if you can foresee a full 25 years of work for the crane on your construction sites globally. This will allow you to be very economic when it comes to breaking down the initial costs of the tower crane vs. the amount of jobs it has worked on for you over 25 years. The rate of return would be very high, making it a great investment for the company.
Purchasing a Used Tower Crane
If you need a crane, but don’t foresee a very big workload for it over the long term, I’d advise you to purchase a used tower crane. For example if you will use the crane for 2-10 years you’ll want go the used route. Like with new cranes, make sure you buy from a reputable source to ensure the crane has been well maintained and serviced. Once you are finished with it you can resell it to gain back some of the initial capital spent on the purchase. This in a way is more economic than tower crane hire if you can use of the crane for many years.
I have found that the best deals on tower cranes can be found in models that are between 5 and 10 years old. They are still at their peak in terms of performance, however there has been a new model released by companies at this time which dramatically drops the price point of the previous models. Cranes in this age bracket tend to hold their value until they hit the age of 15—where they usually take another price drop.
In order to acquire the best deals for cranes you must take a look and consider the world market, as this will give you a good reflection of what economies to buy from at any given moment.
For example, presently there are a lot of great deals occurring in Europe due to the unrest of the Euro and the stoppage of any major projects in Portugal, Greece, Italy, and Spain. Many construction companies are selling of their assets (including tower cranes) to gain equity and keep their company afloat during this tough time. At the moment you can acquire cranes in these regions for up to 25 percent less than anywhere else.
Another consideration you must make when purchasing a used crane is the legislation of the country where the crane will be arriving. For example, in Israel, you are not permitted to bring tower cranes older than 10 years inside the country. This is a small thing you must consider just to ensure there are no delays in the arrival of the crane once purchased abroad.
Tower Crane Hire
Renting of a tower crane is a viable option; however it’s best only in a limited number of scenarios. Firstly I would only recommend tower crane hire when you do not foresee more than one project worth of work for the crane. This allows you to not have the hassle of having to buy a crane, ship it to your location and maintain and service it at your own expense. All of these works will and should be carried out as part of the rental agreement for the extent of the project.
The second scenario when tower crane hire is best is when you’re dealing with a specialty crane. For example, a Derrick King crane would be something that is so unique that it is only needed for a very limited time on site and thus it’s more economical to rent it rather than purchasing it. Another specialty crane would be a heavy-duty tower crane only used on very rare projects around the world. These cranes are rarely used, and it is more economical to rent them as supposed to buying them.
Here is a price comparison in terms of Rent vs. Used vs. New. Please be advised that pricing differs from country to country, but this will give you a ballpark idea.
As you can see from the chart made above there are some major differences between them. I have based the calculations on the anticipation that the crane will have a working life of 25 years. However I can only calculate an 18 year life cycle for the used crane due to the fact that it already has been working for 7 years.
What you must consider with regards to buying new or used is that it will be your responsibility to replace all parts on the crane as needed once the warranty runs out. There’s also the additional payments for the erection, climbing and dismantle of the tower crane.
Generally when you rent a crane the servicing of the crane is included in the price, however you must pay additional costs for the erection, climbing, and dismantle of the crane. All parts however are generally covered as part of the servicing contract unless it was a construction error that caused the problem and not regular maintenance such as a shock load to the crane, or site personal tinkering with the equipment themselves without proper training or authority from the crane rental company.
This is a good reflection as well as to the purchase or resell price of the tower crane you can expect once the crane is about 7-8 years old. If we work out exactly how much the crane would cost you per year if you sold a new crane once it reached the age of seven it would cost you roughly £35,000 per year, however you would gain back £240,000 worth of capital.
These prices are based on what we would have been charged within the UK in 2006. It gives you a good perspective as to the advantages and disadvantages of each option.
Also if you think that it is feasable to rent out some of the current fleet of cranes that your company has and is not currently using these are the prices which you can consider receiving. It will definitely make for a great source of additional income for the company during the downtime of the crane.
We provide a full service and can help your specific situation if you are looking to buy or rent a crane.
Contact me today and I can provide you a complimentary overview.