Anyone who runs a construction company knows that equipment costs are one of the leading expenses they face. Construction projects, whether for a new house or a multi-level office block, each are complex and unique–as are the risks that go with them. Despite the fact that construction equipment often takes a beating and given the arduous conditions which it is usually called to perform — less depreciation — it can still add value to the company as a potentially salable asset. Having the ability to leverage equipment value can make all the difference when you’re trying to grow your company.
We often talk about why it’s important to have a construction equipment appraisal. After all, we know the impact of crawlers, dozers, backhoes, excavators, loaders, earthmoving equipment, cranes, and drilling equipment, has on the ability to sustain profitability — so keeping an accurate and current value on your equipment is essential.
When insuring your equipment, a fair market value must be provided. Should a question arise about any insured property loss, the first strategy is to turn to the insurance contract itself. Valuation issues relating to your equipment can be very complex and it’s best to have a professional interpret the language in the contract and the individual facts pertaining to value and loss. Establishing insurance values in machinery and equipment appraisals requires a certified appraiser to understand the machine being appraised.
Because construction companies need to be as prepared as possible for the unexpected, a sufficient amount of insurance coverage is necessary. If equipment is damaged, or destroyed, current appraisal records will be required in order to negotiate a fair settlement with the insurance company.
Just think what adding a drone to your equipment fleet will do to your appraised value!
Besides keeping an accurate record for your current equipment value, if you’re adding new equipment, a professional machinery valuation gives managers the edge they need in the decision-making process. For example, have you considered the use of drones? Analysts predict if your small construction business isn’t in the drone game by 2020, your competitors are going to start gaining an edge on you, and you risk losing bids.
Drones are more than just a gimmick—they have multiple, highly practical uses on a construction site that will help save money. The three main uses for drones are:
- Surveillance and security – Drones let you have direct contact with work sites, even if you’re thousands of miles away.
- Inspections and surveys – Construction site inspections can be dangerous and the risk of falls or other accidents is something you want to avoid at all costs.
- Photography – Drones can take amazing photos of your construction project! This can be a great way to keep your client in the loop, and make you stand out against your competition by adding another layer of professionalism to your operation.
If you are considering an equipment purchase, you need to thoroughly evaluate whether your operation will benefit. Because construction projects involve numerous stakeholders – owner, contractor, project manager, architects, site supervisor, structural engineer to name a few, keeping everyone on the same page is vital to your project’s bottom line. The success of a construction project rests on the ability of all stakeholders to communicate accurate data to one another, effortlessly and in a timely manner. Using drones for monitoring construction sites can facilitate better communication.
If you’re considering a construction equipment appraisal for any reason, it is best if the appraisal report is assembled and reviewed by an accredited appraiser. An accredited appraiser is well-trained and experienced. If the appraisal report does not meet the Uniform Standards of Professional Appraisal Practice (USPAP) guidelines, it is not considered a “qualified appraisal,” and will not pass scrutiny from buyers, attorneys, bankers, the IRS, or the courts.
At MRG, we’re much more than an insurance broker and through qualified risk assessment, we get to the core of each of our partners’ true exposures. Our goal is to make sure our clients are covered—from all angles.