Construction Companies: Renting vs. Leasing Fleet Vehicles
Construction has a notoriously feast or famine reputation. Depending on what type of construction you do, whether it’s building houses, laying miles of new roadway, or building a geothermal steam power plant, construction jobs are generally shorter term and a set amount of money. The main focus of most construction companies is to keep their workers busy all year round.
It’s hard to find good solid construction workers and once you’ve found them, you want to keep them busy. Equipment is another requirement and buying construction equipment and fleet vehicles can be expensive, especially if you know you’ll only need the vehicles for a short time. There are many equipment rental places that easily accommodate longer and shorter term projects.
But what about fleet vehicles? What is the best way to make sure you’ve got enough vehicles for your crew without overbuying and having trucks sitting in your yard collecting dust instead of making money for you.
That’s where leasing or renting a fleet vehicles come into play. Both are great options and have some similarities, but also have glaring differences. Let’s explore both options to better understand their value for your company.
Here’s the scenario, you’ve just learned that you got a contract to start next week for a job to build the foundations for twenty four homes in a subdivision. The total project will about three months to complete. All the paperwork has been handled and the client is excited to get started. The problem is, you’ve committed to finishing that project in Missouri until the end of July and you’ve got the manpower to move on this new project but the project is in Texas and you’ve got no way to transport your split crew.
The idea of buying more vehicles has crossed your mind, but you’re sure this won’t happen again. It’s a one off situation or one that only happens occasionally, so there’s no justification to buy. Let’s go through the options, then.
Leasing is well known in the construction industry for equipment and sometimes well worth the investment to make sure you’ve got the equipment you need, when you need it. Fleet vehicles are another story however. Leasing usually requires a contract for at least a year and comes with very strict rules about mileage with high fees if you go over. They are great for longer term projects that you can bake the cost into the project.
Because you can depend on that vehicle and many leasing companies are also sales lots, so your lease can come with an option to buy at the end of the project. You also have a greater selection of the type, style, and make of your vehicle. But, if your project ends up finishing, it’s almost impossible to get out of that lease and you’re paying for a vehicle that will just be sitting there.
- Long term contract so you don’t have to worry about having a ride next month.
- There is a bit more leeway on damage and wear because of the long term use of the vehicle
- You might have an option to buy at the end of the contract
- Strict rules on mileage. If you go over, you’re going to pay and probably pay a lot.
- If your project gets done early, there’s usually a hefty early termination fee.
Renting a fleet vehicle is a bit more rare, but you can get what you need for a short term project from companies like Flex Fleet. Because most fleet rental companies contract for month to month, it’s much easier to get out of a rental agreement with little expense and if your truck is sitting for fifteen days, that’s much better than five months. Rental companies are easy to work with and usually have what you need, but they may not have what you want.
The selection is normally small because companies are looking for something perfect, just for something to fit that need at that moment. They are a bit more strict with damage because of the shorter time you have the vehicle. And there are horror stories of companies being charged for damage they didn’t do. You also, won’t have an option to buy the truck at the end of the project. But, if you’re looking for a short term rental to get your crew to that jobsite and tow the equipment trailer, fleet rental is the way to go. And many rental companies will deliver and pickup at your jobsite, making your life easier if you’d have to drive all the way back to Missouri from Texas when the project is done.
- Great for short term contracts and easy to get in and out of agreements.
- Will usually have what you need to do that short term job.
- Will sometimes deliver and pickup the vehicle from your jobsite.
- Might not have a good inventory to get the vehicle you want.
- Are quite strict about damage to vehicles and can sometimes create high costs for damage you didn’t do.
- No option to buy the vehicle at the end of the contract.
For the scenario we detailed above, the best option would probably be to rent fleet trucks to get your workers to the jobsite and use for that short period of time. But, if the project were longer or these types of projects happened often in the past, then leasing might be a better option. That way if your situation changes and you’re back to regularly scheduled projects, you won’t have to sell a truck. But if you will continue to have overlapping projects, then you’ll have the option to buy that truck at the end of the lease.