September 2013, Vol. 68 No. 9
Features
Drilling Deeper: Beyond The Purchase Price
Among the most important factors that influence decisions to purchase one product over another is cost. Yet all too often, especially in the world of construction equipment, buyers neglect to look past price and dig deeper to uncover the not-so-obvious ongoing intangible expenses. Such is the case for many trenchless contractors as they navigate their way through the process of acquiring a new horizontal directional drill.
“There’s a lot more that plays into the equation than simply the purchase price,” says Chad Van Soelen, business manager; underground products for Vermeer. “Even though you may buy a less expensive rig up front, if that drill costs you more on a day-to-day basis it may be more expensive over the course of the drill’s lifespan.
“Taking into account cost of operation is a more accurate representation of what the investment will be long-term. Obviously, there will be expenses to operate the drill daily, so looking solely at purchase price isn’t always a true reflection of what you’re actually paying.”
Another factor that comes into play is individual predispositions about price and value. Assuming features, capabilities and options among models being considered for purchase are comparable, for some individuals, the higher-priced model will likely represent better quality and craftsmanship. For others, however, the higher cost can be detrimental due to budget constraints or a price-shopping mentality.
Cost of ownership vs. cost of operation
According to Van Soelen, consideration for what will be required to keep the drill operating efficiently and in good condition for the lifespan of the drill will provide a more accurate reflection of actual cost. Things like parts, service and maintenance costs, and proximity to a local dealer, all play a role.
For calculation purposes, distinguishing between cost of ownership and cost of operation is important. Cost of ownership includes dollars spent to purchase the drill, minus trade in allowances or proceeds from private sale of used equipment. Cost of operation, on the other hand, may include day-to-day operational expenses including maintenance, repairs – even tooling to some degree. Things like drilling supplies can also play a role.
“At the time you’re buying a new drill, specifics like drill rod life and wear part pricing may not be foremost in your purchase decision,” says Van Soelen. “However, these things add up significantly and can be a major factor in your daily cost equation.”
The process of detailing the many less obvious factors that, collectively, play a role in cost, should begin by defining the wear items. Also, consideration for how drilling conditions will impact the condition of a drill over time will allow contractors to get a more accurate handle on service and maintenance costs over the drill’s lifetime. Then, securing service agreements that cover most maintenance and repair costs will be an important expense management tool that allows contractors to more accurately project expenses.
“Once the primary operational components of the drill – those most prone to wear – have been identified, owners can get a more accurate handle on what will be necessary to maintain the drill,” Van Soelen says. “Void of a dealer service/maintenance agreement, drill owners will need to estimate how much it will cost them to complete service and maintenance internally.”
Enhancing productivity, max value
According to Kevin Sebolt, trenchless new product testing coordinator for Vermeer, equipment manufacturers are continuously evaluating methods for monitoring peak operational performance.
“Just like anything, there’s a point where it gets to the age that technology bypasses it, or the hard components of the drill will wear out,” Sebolt says. “As time goes by, there will come a time when the resale value becomes diminished by cost of operation; when repair costs outpace productivity and efficiency. It is important to know when the life cycle of a drill is at its premium point; and when it’s time to replace it. The owner also needs to understand that when the drill peaks within its life cycle, anything after that point, the cost of operation may start to increase, simply due to wear and tear.”
There are several steps contractors and drill operators can take to enhance and preserve the residual value of a drill during the prime operating years; much of which can be accomplished simply by being diligent. When problems surface, HDD equipment experts like Van Soelen and Sebolt say it’s critical to get them taken care of right away.
“The longer service and maintenance issues are delayed, the greater the likelihood the drill will experience more serious, long-term problems,” says Van Soelen. “An effective way to avoid neglecting recommended service intervals is to secure a full blown service or maintenance package with your local dealer.
“They can be doing the work, tracking and recording it, but also checking over the rig for other possible problems. Having these records at the time of reselling could potentially help enhance the resale. Probably the simplest thing contractors can do is keep the machine clean. Appearance goes a long way in enhancing resale value.”
Many drills are now equipped with onboard diagnostic systems that monitor primary operating functions and help keep equipment operating at peak efficiency. Onboard diagnostics systems help protect contractors’ equipment investments, while also playing an integral role in maximizing drilling performance. The ability to monitor operating functions also helps operators extend the useful lifespan of equipment. A simple example would be the devices that monitor heat any time the drill is operating under stressful, challenging conditions.
“Such diagnostic components have been placed there to help drive efficiencies, and hopefully improve and reduce cost of operation while protecting engines from overworking, or worse, underachieving,” Sebolt says.
FOR MORE INFO:
Vermeer Corp., (888) 837-6337, www.vermeer.com
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