We come across numerous clients that have a fleet of 20-ton excavators. These machines have been the focal point of their work. They often, however, wonder if they are leaving revenue on the table by not having a larger machine in their fleet. By adding a 30-ton machine not only do you widen your versatility in terms of jobs on which you can bid, but you are also able to increase your job site productivity.
In this blog, we look at the additional considerations you need to take into account when upsizing so that you go into this expansion with your eyes wide open and all the facts at your fingertips. If you are seriously considering adding a larger machine, before you do anything you need to ask yourself the following questions:
1. What’s driving your need?
It is possible that your current fleet is meeting all your needs but at the same time, you are finding that your clients are increasingly looking for larger machines. You, therefore, need to ask whether a bigger machine will offer a better return on investment? If your current equipment is not meeting your needs or daily production goals, then it may be time to move up to a larger size. If you do not want to go all-in with the acquisition of a new machine, you can dip your toes into the market through a short-term rental. This will provide you with a temporary lower-cost solution to assess whether there is a real demand for the heavier machine.
2. What size do you need?
As a current excavator owner, you may be tempted to stay in your comfort zone and buy what you’ve always bought. However, this concentration and lack of diversification may be limiting the number of contracts you are winning. You need to be aware, however, may also bring with it logistic complications. You may need a permit to transport the machine from site to site. You may also confront difficulties when it comes to accessing job sites.
The size of the machine should be determined by the application, environment, tasks you anticipate, transportation, and storage requirements. An important step in selecting the right size machine is to determine daily digging and loading production targets. Since the most common attachment for the excavator and wheel loader is a bucket, the logical configuring is to match the size and capacity of the bucket to the density of the heaviest material you expect to handle.
Once you have determined the material density, you’ll need to calculate the number of loads and passes it will take to fill an articulated dump truck or hopper. Pairing your machine with the right size buckets can reduce the number of passes you and your operators have to make.
3. Are there additional maintenance considerations?
You what to keep your maintenance surprises down to a minimum. Bigger machines always attract bigger maintenance costs. The most important exercise under this consideration is to assess the availability of parts for this new machine. Do you have easy access to new, refurbished, and/or used final drives, track adjusters, tracks, slew motors, valve banks, engine, cylinders, buckets, etc. If so, you would be well advised to get a better idea of the cost of these replacement parts. You may be successful in picking up a decently priced second-hand machine but then have endless problems in finding parts. COVID has done a great job in lowering the production of new parts and disrupting logistic and transport channels. This means you may be forced to make use of used parts. Do you have a reliable provider? Are these parts competitively priced?
Larger machines are also more expensive to service because they use more lubrication and fluids, more expensive filters. As with your smaller machines, it is vitally important to hedge against unplanned maintenance costs in construction and infrastructure applications. If you are looking to acquire a brand of machine with which you have not worked up until now, it is advisable to get hold of the dealer to get a better idea of maintenance intervals and maintenance costs.
4. What about fuel considerations?
Every heavy machine operator knows that their diesel bill can run into hundreds of thousands of rands, and big machines are thirsty beasts! If you are considering upsizing your fleet, look for built-in fuel efficiencies, such as automated idling functions, power-optimization systems, advanced transmission, and hydraulic systems, programmable engine control units, and sight gauges that monitor fuel efficiency by the minute—all of which contribute to the more economical operation.
5. What are the costs associated with transportation?
We have already mentioned that is more expensive and complicated to move heavier excavators. It is also more difficult to offload machines on specialist sites such as scrap yards and quarries. If yo9u anticipate that your larger machine will require frequent transportation, and if that transportation requires permits, you will need to factor that into your operating costs.
6. What should you do next?
If you’ve decided that upgrading your equipment is right for you and your business, do not ignore the used market. With so much high-quality used equipment on the market at any given time, there’s really no need to go for new equipment. There are three reasons why used equipment is better than new. Firstly, lower cost. The cost of one new piece of equipment could equate to two or more used pieces, depending on availability and demand. Secondly, you avoid the initial depreciation. New heavy equipment is no different from new cars in that the minute you drive them off the lot, they depreciate in value – as much as 20 to 40 percent in the first 12 months. Thirdly, used equipment holds its value. Although used equipment has depreciated, it can hold its value if it’s well-maintained. When it’s time to sell, it’s actually possible to get close to what you paid if you sell at the right time, to a market where your equipment is in demand.
You also want to have lots of insurance. No one likes to buy insurance. It is not an impulse buy. No one is filled with joy and satisfaction when their insurance policies need to be renewed. We don't want insurance but we know that we need it. It is prudent to transfer specific risks to a third party. You take enough risk in your business – it is not prudent to expose yourself to additional risks that can easily be covered. If you do not insure the risks over which you have no control, you are placing your business at risk.
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