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on subcontractors, service providers and suppliers as well.
When working on a tight budget there is a need for finding
creative solutions and cost-effective ways to limit expenses,
without compromising the quality of the work and still
fulfilling the requirements of the customer.
A fleet without the hard work
What are the alternatives to owning or setting up an
extensive equipment fleet without having the burden of
financing and maintaining such a fleet, and without the
certainty of a consistent workload?
Joint ventures
For large-scale projects, it is common practice that joint
ventures (JV) are formed. This enables companies to
combine their knowledge, workforce and equipment fleets,
increasing their capabilities and spreading the financial risk.
For single companies, however, this does not relieve them
from the fact that they have to bring technically sound
equipment to the JV, which is maintained to the latest
standards.
Renting
Although there is always the first impression that it is
better to pay for equipment to outright own it, renting
provides not only a possibility to be very flexible as
a construction company, but is also a flexible way of
acquiring machinery in itself.
Technical
A good rental fleet is maintained at all times and complies
or can be easily made suitable for any of the current
standards, for whatever customer or country. These mostly
incur no separate costs, but are included in the monthly
rental fee.
Logistical
Any decent rental company should be able to provide
its machinery on any location in the world, at any given
time, within reason of course. This can relieve the pipeline
construction company or pipeline project from the
challenging task of collecting all specialised machinery
from different parts of the world, and then getting it in the
right place at the right time.
Support
At the start of a project, a rental company can provide
start-up assistance and an operator and maintenance staff
instruction. But more importantly, if there is a breakdown
of equipment during a project, the rental company provides
the necessary technical support and in a worst-case
scenario, even a replacement machine. Therefore, a rental
company can provide knowledge and experience regarding
construction equipment, but also ensures the continuity of
the project.
Financial
When buying equipment for a project, either new or used,
CAPEX is sizeable and not backed by any actual project
revenues at that moment. Moreover, such an investment
can hardly ever be justified by one single project. Without
the security of a next project needing exactly the same
equipment, this can bring risk.
When leasing equipment for a project, almost the same
risk appears. Although CAPEX is more manageable (often
15% or 20% of the equipment value), here the financial
commitment mostly remains beyond the duration of one
single project. This means that, although there are no actual
revenues from a project anymore, huge monthly payments
remain, for a long period of time.
When renting equipment for a project there is almost
no CAPEX. There are always the costs for mobilising the
machinery, but this is regardless of buying, leasing or
renting. A rental contract is only for the duration of a
project, with flexible start and end dates – which means
that costs and revenues run parallel. The absence of high
investments and long-term financial commitments means
that the financial risk is minimised.
If, during the execution of a project, a new project
is awarded where the same machinery can be used, it is
even possible to negotiate the purchase of equipment
that is currently on rent. In such a case, it is possible to
have a percentage of the paid rental reimbursed, giving the
possibility of extending the equipment fleet against more
favourable prices.
Conclusion
Owning a basic equipment fleet with specific pipeline
construction equipment is mandatory for every pipeline
construction company. It provides flexibility and the
possibility to mobilise fast for smaller projects. This fleet
should, however, be kept up-to-date and compliant with
general legislation, and should cover the most common
pipeline diameters.
With the volatility in the market and the current
domination of large projects, with sometimes huge
demands regarding specialised construction machinery, it
is inevitable that such a basic equipment fleet is hardly
sufficient for most pipeline construction companies.
In such a case, rental of specialised pipeline
construction equipment is a valid option. This enables a
construction company or a pipeline project to:
)
Have machinery that is always up-to-date and compliant
with project specifications.
)
Upscale and downscale the equipment fleet as required.
)
Rely on technical support and back-up machinery from
a specialised rental company.
)
Clearly oversee the financial commitment.
Rental of equipment can give a pipeline construction
company the flexibility to increase and decrease an
equipment fleet at any moment to any required size. It can
relieve a construction company of a financial burden when
in between projects and allows them to focus on their daily
business.
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World Pipelines
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MARCH 2020