- Construction businesses require a significant capital outlay, with faulty equipment increasing costs and reducing profitability.
- Faulty equipment causes equipment damage, safety hazards, project delays, increased costs, and legal liabilities.
- The adverse effects of faulty equipment can result in serious injuries, fatalities, and legal action against a construction company.
- To mitigate these risks, construction companies can opt for equipment rental, consider refurbished equipment, and implement preventative maintenance.
- Construction companies can maintain smooth operations and profitability by understanding potential issues and taking preventative measures.
The smooth operation of any construction project depends on the equipment quality. However, even a tiny defect in equipment can result in significant damage to not only the project but also to the workers. In most cases, faulty equipment endangers workers’ lives and costs additional time. Therefore, construction managers must ensure the equipment is reliable and poses no risks. Here’s what you need to know about the average expenditure of construction companies, how faulty equipment can drastically increase your expenditure, and creative ways to avoid these costs.
Table of Contents
The Capital of Construction Businesses
It’s estimated that construction businesses should have at least $250,000 to spend on liabilities annually. This amount includes the costs for equipment, materials, employee salaries, and legal fees. However, many construction companies spend more than that due to unforeseen circumstances such as faulty equipment.
This excess expenditure increases the company’s liabilities and affects its overall profitability. For instance, a company spending $300,000 per year on liabilities instead of $250,000 translates to a 20% decrease in its profit margin. Therefore, construction businesses must keep their expenditure optimum to remain competitive.
The Cost of Faulty Equipment
Faulty equipment can drastically affect your expenditures in your business. Here’s what you need to know about it:
1. Equipment Damage
One of the significant effects of faulty equipment is that it can cause damage to the equipment itself. Equipment damage is often caused by improper use or lack of maintenance. In most cases, equipment damage results in downtime for repairs or replacement, leading to projects running behind schedule. To prevent equipment damage, it is essential to establish a maintenance schedule, train operators on proper usage and care for equipment, and invest in quality equipment built to last.
2. Safety Hazards
Faulty equipment can also pose significant safety hazards to construction workers. For instance, malfunctioning cranes, excavators, or bulldozers can result in devastating accidents that can cause serious injuries or even fatalities. In addition, equipment that produces excessive noise can lead to hearing loss, while equipment that emits harmful fumes can lead to respiratory problems. This is why it’s important to inspect your equipment annually. This is doubly true for cranes, a significant cause of falls in the industry. An extensive crane inspection can check for any damage that may have occurred during use. Furthermore, it can reduce costs such as large-scale repairs or replacements before they increase.
3. Delays in Project Completion
Another adverse effect of faulty equipment is that it can cause delays in project completion, which can lead to financial losses. It’s estimated that delays can cost projects up to $15 million annually, and any delay in the construction project can increase overhead expenses and disrupt the project timeline. In addition, late project completion can mean a loss of credibility and result in fewer future clients. To prevent delays, construction managers should identify the project’s critical path, set achievable deadlines, plan for contingencies, and invest in reliable quality equipment.
4. Increased Costs
Fixing faulty equipment can be expensive, and in some cases, it may result in equipment replacement. The replacement and repair of equipment add to the already high construction costs, increasing the project’s cost significantly. Such costs can lead to reduced profits, loss of future clients, and financial instability. Construction managers can minimize the costs of faulty equipment by investing in quality equipment, conducting regular maintenance checks, and properly training equipment operators.
5. Legal Liabilities
Lastly, faulty equipment can lead to significant legal liabilities. Accidents involving workers in a construction site are common, and using faulty equipment can worsen the situation. If the injured worker can prove that the cause of the accident was due to faulty equipment, legal action can be taken against the construction company. To prevent legal challenges, it is essential to establish safety protocols, invest in quality equipment, conduct regular safety inspections, and provide adequate training to the equipment operators.
Creative Ways to Avoid Costly Expenses
Now that you understand the potential costs associated with faulty equipment, let’s explore some creative ways to avoid these expenses and ensure smooth operations on your construction project:
1. Rent Equipment Instead of Purchasing
Purchasing new equipment can be costly, especially for small construction companies. In such cases, it may be more cost-effective to rent equipment instead. Renting equipment allows for better budget management, and the rental company is responsible for maintaining the equipment.
2. Consider Refurbished Equipment
Refurbished equipment can be a more affordable alternative to purchasing brand-new equipment. These pieces of equipment have been restored to their proper working condition, making them a cost-effective option while still providing reliable performance on construction sites.
3. Implement Preventative Maintenance
Implementing a preventative maintenance plan is crucial for identifying any potential issues with equipment before they become major problems. This can help reduce downtime, increase productivity, and extend the life of your equipment.
The importance of reliable equipment in the construction industry cannot be overstated. Faulty equipment affects the overall project costs and can lead to safety hazards, project delays, and legal liabilities. By understanding these potential issues, implementing preventative measures such as regular maintenance, and considering cost-effective alternatives like renting or buying refurbished equipment, construction companies can mitigate these risks and maintain profitability. As the adage goes, prevention is always better than cure, and in construction, this certainly holds.