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 Glen H. Barber, Sales Manager
L. B. Foster Company, Equipment Division, Pittsburgh, 173i 15108

For presentation a t
Associated Pile & Fitting Corp. PILETALK Seminar
Miami Beach, Florida, March 1978 I

ii
t G L E N B A R B E R has worked with piling for tw enty years, starting on inspec-
P
$ tion; he has supervised pile installation for Candler-Rusche and for Ford
f 1 Motor Co. He loitled 15. B. Fosfer as pile driver specialist zn 1970 and served
6 in New Orleans artd Houston before ass~fminghis present t op management
1%
1: position at I*. B. Foster corporate headquarters.
ii

Pile drlving is perhaps o n e of the oldest forrns of heavy construction. Our

/ i. distant ancestors probably beat a few sticks into t h e shoreline t o tie u p their
I1 boats or t o provide a means for reaching them in early Bible times. The
! .
i.
,
builders and engineers of the day proved highly ingenious in t h e ways they
devised t o set piling with various crude forms o f d r o p hammers, which used
i:. .
gravity as the source of energy. A number of t h e structures they erected are
il
stiU standing to this day.
i Then, as now, soil was the greatest variable in t h e pile-soil-hammer chain
for support o f structures over areas where adequate bearing material is a t con-
siderable depth. T h e type of pile can be a choice; the hammer can b e selected
I

I
for energy and characteristics. T h e soil is what is there and generally is not
what is desired; if it were ideal, piles would n o t be needed. Fortunately for
those o f u s who try t o make a living in t h e foundation field there are a lot of
difficult areas where soils are a problem.
! Soils easily divide i n t o cohesive-which have a clay base that binds the soil
I together-and non-cohesive-usually gravel o r sands with no binders holding
the particles together.
Cohesive clays can be dry and stiff, requiring strong blows to force a pile
t o bearing strata. Or they can b e soft, permitting penetration under little
I more than t h e weight of the hammer.
I
Gravels o r coarse t o fine sands with little o r n o clay binders are classed as
non-cohesive soils. Douhle o r d i f f e r e n t i a l - 1
work we11 in The vibratory drivers are especially efficient in highly
-
?
-
w&er bearina s o b . B ~ u b s e ~ s a r ~they e rmay-not
all. Some soils are mixtures of cohesive and noncohesive soils-me
s penetrate at

densities and w a u content of t h e soils make it difficult t o apply any hard

varva

7 and fast rulcuqadinoardinr! hammer selection and application.

Knowledge of t h e characteristics and composition o f the soil may b e
obtained through various methods. Consistency of cohesive deposits o r the
relative density of non-cohesive deposits can be determined and further classi-
fied by the results of a penetrometer test. This test, which involves n o drilling
for samples, utilizes a device that is pushed o r driven into the ground t o mea-
sure t h e soil's resistance t o pcnetr3tiow.
T h e most c o m m o n and widely used test for indication of the consistency
o r relative density o f most soils is the Standard Penetration Test (SPT). The
 .- LU I 4 I OIILL MNU JCI I L rhut't K 1 1 kb . . ..__. _.. _ ._ _
. ...
4. highly refined a n d colllpletely reliable, its values d o give a m n d i c r t i o n o f
N; BASIS OF THE STANDARD PENETRATION TEST t h e consistency o r relative density o f most soil deposits wk . o n t r i b u t e s to
t h e final selection o f t h e pile h a m m e r as well a s o t h e r a s p e c i d a pile driving
SANDS (NON-COHES IVE SO1 LS) CLAYS (COHESIVE SOIL'> project.
NO. OF BLOWS R E L A T l VE

1
NO. OF BLOWS
PER F T . I
DENS I TY PER F T . CONSISTENCY
r"- CLAYS (COHESIVE SO1 LS) TABLE--3
0-4 VERY LOOSE 2
-- BELOW VERY SOFT P l PE
OPEN
PIPE
CLOSED H-BEAHS
SHEET
PILE CONCREl
4-13 LOOSE 2-4 SOFT
10-33 NED IUM VERY SGFT V (NB) DA V (NB) V DA
30-59 DENSE
-- 8-15 STIFF
-
OVER 5 0 V E R Y DENSE
15-30 VERY STIFF

test consists o f driving a 2 in. O.D. split s p o o n t o a distance o f 1 8 in. i n t o t h e

soil below t h e b o t t o m o f the casing o r drill rods o f a cleaned b o r e h o l e b y t h e
blows from a 130 Ib. h a m m e r frec falling 30 in.
T h e n u m b e r o f blows f o r r : ~ c h6 in. of t h e t o t a l I S in. is r e c o r d e d . T h e i
first 6 in. o f soil below t h e b o t t o m o f t h e casing are considered t o be tiis-
t u r b e d , a n d t h e h a m m e r blows corresponding t o t h a t p e n e t r a t i o n are ignored.
T h e n u m b e r o f blows f o r t h e secont1.and third 6 in. o f p e n e t r a t i o n are t h e n DA---DOUBLE-ACTING (DIESEL OR A1 R/STEAE)
added to give the SPT value "n" in blows p e r f o o t . In a d d i t i o n t o t h e measure SA---SINGLE-ACTING (Dl ESEL OR A1 R/STEA!I)
o f penetration resistance t h e SI'T provides a soil sample which can b e visually V ---VIBRATOXY DRIVER
examined and classified.
NS---NO BEARING FORMULA RE3U I RED
S m *Charts 1-3 are for q u i c k reference as a general guide in selecting a hammer. 1
readily a p p a r e n t , soil OII a specific j o b will rarely b e h o m o g e n e o u s ; therefor4
TABLE--2 applying t h e c h a r t s t o a particular j o b , the c o n t r a c t o r must decide which t y p
PIPE
WOOD OPEN SHEET
soil m a k e s up the majority of t h e drivirlg conditions.
VERY LOOSE DA V (NB) V (NB) V (NB)
Pile Evaluation
DA DA DA DA
.The t y p e o f pilc t o be driven is a n o t h e r m a j o r consideration in t h e choice
LOOSE DA V (NB) V (NB) V of ;I pilc h a m m e r . Although t h e c o n t r a c t o r is no1 o f t e n t h e deciding a u t l ~ o r i t y
DA
DA DA DA DA o n t h e t y p e o f pile t o be installed, for him t o select a pile h a m m e r t o drive
t h e piling, he must evaluae t h e piles from various s t a n d p o i n t s : What are their
MED I Uil SA V (NB) V (NB) V functions'? Are t h e y steel, w o o d , c o n c r e t e o r a cornpination thereof? Are
SA
DA t h e y displacement t y p e o r non-displacement t y p e piles? Vertical o r b a t t e r
DA DA DA piles? What is their t o t a l length and weight a n d probably most i m p o r t a n t ,
DENSE SA V (NB) V (NB) V what is t h e i r r e q ~ ~ i r epenetration
d a n d / o r des.igned capacity? A c o n t r a c t o r
SA
DA SA DA must give almost equal consideration to t h e t y p e o f pile t o be driven as h e
DA does t o t h e soil c o n d i t i o n s in which t h e y are t o b e driven.
VERY DENSE SA SA SA SA V T h e r e are o t h e r requirements t h a t must b e given consideration in t h e h a m -
SA
I DA mer selection process: Noise and Aic Pollution are t w o which are becoming
increasingly i m p o r t a n t . Speed o f irlstallation in critical areas of t h e project.
DA---DOUBLE-ACTING (DIESEL OR A I RISTEAM) Size o f available cranes which would b e handling t h e pile driving; overall site
SA---SINGLE-ACTING (DIESEL OR AIR/STEAM) c o n d i t i o n s are others. Evcn availability o f e q u i p m e n t is a criterion. Not all
V ---VIERATORY DRIVER piling c o n t r a c t o r s o w n hamrners ot-varying types'and ratings; t h e availability
NB---NO BEARIN(] FORMULA REQUIRED o f pile h a ~ n ~ n c rlocally
s o n a rentill o r lease basis could be a delermining
f a c t o r in which h a m m e r is chosen. There will b e m o r e about rental later.
 F
energy is derived from b o t h t h e weight of t h e falling ram anqcornpressed
air o r steam pushing it d o w n w a r d . -'

T-ificant difference between double-acting and differential-acting is

the rrianner and sequence o f exhausting on t h e upward and downward strokes
o m c l e . i n t h e differential-acting h a m m e r there is n o d r o p from t h e
entering prcSsure t o t h e main effective pressure moving t h e piston o n the
downward stroke. I

Double-acting and differential-acting hammers normally give b e t t e r results

in granular n o n c o h e s i v e soils o r in soft clays. Used in proper soil conditions
with t h e right pile, almost twice t h e production can b e obtained as with a
single-acting hammer.

Single-Acting Diesel Hammers: T h e single-acting diesel pile h a m m e r operates

o n the same working principle as a t w o cycle diesel engine. T h e ram, o r pis-
ton as it is sornetirnes called, is lifted b y a tripping device t o a predetermined
height and is autornatically released. T h e ram falls under its o w n weight and
actu;ites t h e c m o f t h e fuel p u m p which injects a measured a m o u n t of fuel
into a specially designed receptacle in t h e anvil. Continuing its downward fall,
the ram closes t h e intakejexhaust ports and compresses the air in t h e cylinder
ahead of t h e ram. T h e cornpression of the trapped air tightens t h e anvil and
drive cap against the t o p o f the pile in preparation for the impacbblow. T h e
compression also assists in starting t h e pile downward, Fig. I .
T h e ram strikes t h e anvil and delivers its impact energy t o the pile, driving
DIAGRAM-1 b t h e pile d o w n w a r d , Fig. 2. AS t h e ram impacts the anvil, t h e fuel is simul-
I I I/2 taneously atomized i n t o t h e annular combustion chamber around t h e ram
2 and t h e anvil. T h e h o t compressed air ignites t h e air-fuel mixture, and t h e
WORKING HOURS t resulting explosive force pushes the pile further into t h e soil and propels t h e
ram upward. T h e expanding gas in the cylinder is discharged when t h e rising
ram o p e n s the intake/exhaust ports, Fig. 3.
So0 .DlAGRA?I-2 A S t h e ram rises above t h e intakelexhaust ports, fresh air i's drawn into
the cylincler d u e t o t h e negative pressure which is created. T h e fuel p u m p
can1 returns t o its original position in preparation f o r injection of fuel o n t h e

-
/ -
/

/
-C
next stroke. T h e ram continues freely upward until arrested by gravity and
/
/ A I R COOLED T Y P E then again begins its downward stroke for the next cycle, Fig. 4 . T h e hammer
+ is slopped hy disengaging t h e fuel purrlp for a short period to shut off the
375
/
,-
/ flow of fucl.
Diesel pile harnrners are cooled either by water o r air. T h e cooling system
of a diesel h a m m e r tleserves particular attention because o.f t h e close relation-
/
250.1
I
i shi!? it has with t h e overall p e r f o p a n c e and life of t h e hammer. A water-
cooled h a m m e r dissipates the heat generated by the combustion in t h e cylin-
der through evaporation o f tlie water surrounding the cylinder in the water
jacket.

25
WATER COO1 Fn TYPF i
t
T h e air-cooled haninrer depcnds greatly u p o n the convection of the sur-
rounding air and there is a stronger tendency for the cylinder t o become
overheated. An overheating condition may cause t h e lubricants t o lose their
W
a
z
W
+
>A-W I
;
viscosily o r burn and the lubricution of t h e inside of thc cylinder becomes
unsatisfactory causing the compression rings t o collapse. This results in loss
of c o n ~ p r e s s i o n ,a decregsc in the generated blow and reduced striking force.
h
Overheating also causes pre-ignition o f t h e fuel prior t o the impact blow o f
0 tlie rani, which cushions t h e impact blow anti reduces t h e effectiveness of the
1.12 I I I/2
clownw;lrd push o f the explosive forc-e, tlrus udversely affecting the perform-
2 ance o f t h e hammer. Diagrams 1-2 show t h e results of coniparativc test of
WORK1 NG HOURS air-cooled arid watcr2cooleci dicsel pile hamnlers ; ~ f t c rtwo hours o f continu-
, ous operation.

WE I GHTS
ELECTRIC GENERATOR
VIaRATORY DRl VERiEXTRACTOR
E L E C T R I C A L TYPE
tlic tall. i l e ~ g t ~o t fall is tile m a x i m u m albwable s t r o k e stat( .-.,,
facturer. Rated energy o f single-acting diLSel pile hammers rar"?he r o m 9,000
VIBRATING CASE - ft Ih to 2 9 8 , 0 0 0 ft Ib. T h e y o p e r a t e at 3 5 t o 60 blows per mir.,
Diesel hammers have certain advantages over air/steam hammers. T h e y are
operated without auxiliary equipment such as air compressors o r boilers. q e
w e i ~ h to f a diesel pile h a m m e r is generally a b o u t 112 t o 113 t h e weight o f a n
airlsteam h a m m e r having the same drivink energy. Thus, smaller capacity
cranes m a y be eriiployed. . T h e design o f t h e diesel hammer provides a pre- I
setting of the anvil and drive cap against t h e t o p o f the pile which minimizes
damage t o t h e pile head.
Diesel hammers operate best in medium t o hard dribing conditions on all
types of piles. In s o f t ground conditions, t h e lower resistance does n o t force
the ram t o recoil sufficiently t o permit t h e needed compression f o r ignition
t o occur.
Double-Acting Diesel Hammers: T h e double-acting diesel pile hammers o r
closed end as it is sornetunes called, is similar t o t h e single-acting diesel ham- '
mer in opera.tion. T h e double-acting, however, employs a bounce c h a m b e r
1 / CABLES
above tlic ram, arid 011 t h e upstroke o! t h e ram t h e air is compressed between
tlie conrpression rings at t h e t o p o f tlie ram and t h e enclosed t o p o f t h e ham-
mcr. T h e compressed air limits t h e upward travel of t h e ram and t h e n adds t o
the force of gravity t o accelerate tlie ram downwards. It is this f o ~ c eof the
rapiil expansion of t h e compressed air o n the ram, in addition t o t h e force o f
gravity, that results in increased ran1 velocity and the increased n u m h e r of
blows per minute. T h e mill weight o f a double-acting h a m m e r is approxi-
mately twice t h a t of a single-acting diesel h a m m e r of similar energy rating,
while the height of stroke is approximately half that of t h e single-acting
hammer.
Rated energies o f these hirnmers range from 8 , 0 0 0 t o 8 0 , 0 0 0 ft Ib and
speecl rangrs from 8 0 t o 1 0 0 b!ows per ~ i i i n u t c Double-acting
. diesel hamniers
are riiost effective in non-cohesive 2nd soft clay soils.
Vibratory Pile Driver: A U o f the previously disciisszd pile driving hammers
have o n e corninon denominator: i.e., they pound the pile into the ground.
A little c ~ v e r adccailc ago tlie vibratory t y p e pile ciriv.er-extractor was
introtlucerl t o tlic Anierican pile driving industry. Instead o f pounding the
pile into the grounli, tlie hanirner installs them using vibration. Driving rates
in non-cohesive soils or1 non-displucernent t y p e piles are u p t o eight times
faster tIi31i ir~ipactt y p e lia~iimrrs. Pile darnage is practically eliminated, since
there is n o impact.
i\tlditional advantages o f the vibratory t y p e driver is that it does not
require leatlers o r guides but s o m e units can be m o u n t e d t o operate 011 lead&
if rCqilircd. T h c vibratory driver operates m u c h quieter than impact hammers
SYSTEM and I ) e c o ~ n e san excellent e x t r a c t o r by applying substantial line pul! o r ten-
sion t o tlic crane link. T h e vibration breaks the grip o f the soil o n t h e pile
and t h e crane pulls tlie pile o u t .
T h e vibratory driver-extractor has three main components: a vibrating
case which contains the rotating eccentric weights; a suspension system with
vibration sulipl.essors; and a driving o r extracting head with a hydraulic clamp.
Electric vibratory units have electric m o t o r s m o u n t e d within the suspension
systc.111, while hydraulic vibratory units have hydraulic drive motors m o u n t e d
o n 111e vibrating case. In b o t h t h e electiic and hydraulic t y p e vibratory units
tlie p o w r r source is external 2nd separate from the vibratory driver with t h e
power supplied t o t h e rriotors b y cables orhoses. Figs. 5 and 6 illustrate the
 ,L" L..' .-.L.\..'.L d.1" J I ~ U I L I ~ . . I .L
,U,Y."., " I . .. . .....
c o n ~ p o n e n t sof each called out.
A simpiif~eddescription of the working principle of a'v j r y driver-
extractor is that electric or hydraulic motors rotate t h e eccentn-eights con-
tained m the vibrating case at high speed. The eccentric weights, which are
equal in welght, are rotated in opposite directions and only vertical vibration
is created in the v~bratlngcase. The vibrat~onis transmitted undiminished to
the p ~ l ethrough the hydraulic clamp of the driving o r extracting head. The
SUSPENSION
vibration of the pile breaks the grip of the soil o n t h e sides of the pile and
SYSTEM
also permits the soil at the tip o f the pile t o be readily displaced during driv-
ing. The vibration also loosens the pile for extraction. ,
\ The vibrating case is isolated from the crane line by the suspension system
VIBRATING containing the vibration suppressors, s o only the minimum of vibration is
1

a
CASE transmitted to the crane boom in either the driving o r extracting mode of
h r operation.
ECCENTR IC The total effectiveness o f a vibratory driver-extractor is dependent upon
the balanced inter-relationship o f the performance factors inherent t o a vibra-
W E l GHTS 7 tory unit. The inter-relationship o f these factors may seem complicated, but
it is quite similar t o an impact type hammer where the ram weight, ram
stroke, hammer speed and pile weight all affect t h e drlving results. The per-
formance factors common t o a v ~ b r a t o r y driver-extractor are amplitude
eccentric moment, frequency, d y n a n ~ ~force, c vibrating weight and non-
>
vibrating weight.
HOSES
I I A m p l i t u d e is t h e amount of vertlcal movement of the plle produced by
the vibratory unit and is measured in inches. It is the direct result of the
REMOTE-CONTROL P E N D A N T k applied force generated by the rotating eccentric weights. Plle penetration
rate is directly related t o amplitude.
Eccentric hloment of a vibratory driver is the value, expressed in inch-
pounds, equal to the weight o f the eccentric multiplied by the distance from
the center of rotation to the center of gravity of the eccentric times the total
number of eccentrics t h e unit uses. The rotating eccentrics generate the
HYDRAULIC vibratory force which creates amplitude of vibration of t h e pile. Therefore,
increasing eccentric moment will increase amplitude.
0I L
Freorrcrlcy is the number of vertical movements o r vibrations per minute.
RESERVOIR The velticd movement is created by the rotation of the eccentric weights.
Each rotation of the eccentric weights causes one complete up and down
moverncnt of the pile. The number of vibrations per minute is the same as
.he revolutions per minute of the eccentric weights.
I Dynamic Force, o r centrifugal force as it is commonly referred t o , is gen-
erated by the rotating of the eccentric weights. The calculation of this force,
HYDRAULIC POWER P A C K
in tons, is:

Dynamic Force = M e n c v 2 x Eccentric Mom-

(Tons) 70.4 x 1 0 6
VIBRATORY DRI VER/EXTRACTOR SYSTEIY
HYDRAULIC TYPE Comparing t h e dynamic force of different vibratory hammers u applicable
only when t h e eccentric moments are equal.
Vibraritlg Weight is the weight put into vibration which includes the vibrat-
ing case, driving head ~ n the
d pile itself. Non-vibrating weight is basically t h e
suspension system. Non-vibrating weight pushes down on the pile and aids in
drivi~ig. Solne non-vibrating weight is helpful, but too much niakes a bulky,
difficult-to-handle unit.
 . i G ; , u L ~UII'VCI-2xi1-actor
, ~ ~

frequency, rnedium frequency and l o w frequency. Iligh f r

3
tiar~iniers are classitied Into t i ypes-high
ncy drivers,
also called "sonic" o r "resonant" drivers, operate at a speed..Jrequency in
the range of 3,500 t o 10,000 vibrations per minute. T h e y generate amplitude-
the ve,rtical movernent of t h e pile tip-by actually expanding and contracting
the pile. Maximum amplitucle is achieved when t h e frequency of vibration
approaches t h e resonant frequency of t h e pile material, hence, the name
"resonant pile driver". High frequency vibratory drivers have had limited use ;
and success. T h e large power requirements and high operating and mainten-
ance costs have restricted their conimerciai success.
While high frequency drivers expand and contract t'he pile, medium, and
low frequcncy drivers m o v e t h e whole pile as a rigid unit. However, despite
this sin~ilarity,medium and low frequency drivers d o differ in basic design
concept. Vibratory force o n a pile can be created t w o ways, i.e., rotating
light eccentric weights a t high frequency o r by rotating heavier eccentric
weights a t low frequency.
T h e low frequency driver has generally been t h e most successful. T h e fre-
quency range o f low frequency vibratory units, 400-1,500 vibrations per min-
ute, covers t h e range o f minimum frictional forces, medium frequency drivers,
at 1,500-3,500 vibrations p e r m i n u t e , operate above the range of minimal
frictional forkcs. .krnplitude increases as frequency decreases because t h e pile
can move down farther before the rotating eccentrics pull it back upwards.
Therefore, low frequency units can be expected t o give higher penetration
rates since their amplitudes are higher.
0 IS 30 45 60 75 90 105 120 I35 Generally, vlbralory drivers are m o s t effective in non-cohesive soils and
DYNknlC FORCE IN TONS f soniewhat less cffective in cohesive soils. In granular soils and sands, t h e
vibration easily forces tile pile downward. T h e effectiveness o f a vibratory
GRAPH NO. 1 driver is greatly enhanced if t h e soil water content is high as t h e water acts
DETERMINATION O F REQUIRED DYNAlMIC FORCE I as a lubricant o n t h e pile. In cohesive soils o r ciays, t h e vibratory motion
keeps the soil from developing m u c h o f a grip o n t h e pile and the larger
vibratory drivers are successful in forcing t h e pile tip to c u t through.
Tfie type o f pile being driven also influences t h e effectiveness o f a vibra-
tory driver-extractor. Displacement t y p e piles with large tip areas such as
closed-end pipe, concrete o r w o o d piles must move, o r displace, the soil a
relatively large distance t o permit t h e pile's downward movement. Vibration
rnay riot b e able t o move t h e soil this far. However, with non-displacement
t y p e piles, such as sheet piling, t1-sections, open-end pipe o r caissons, the
soil particles rleed t o move only a short distance t o allow the pile t o pass.
There are n o sct rules t o determine where o r when a vibratory driver
will be tlie most effective tool t o use. T h e y should definitely be considered
for driving non-displacement piles in a n y soil and also, for a n y kind of
extraction job. Although displaccrnent piles have been and can be driven b y
vibratory tlrivers, these applications should be studied carefully.
However, when it has been decided that a vibratory driver is t h e best
Locate the known total p ~ l elength on the horizontal axis and project a line verti-
cally upwards until the diagonal line of the graph is intersected. selection, it is possible t o determine t h e size o f the vibratory driver based o n
After intersecting the diagonal line, project a horizontal line to the left vertical t h e dynamic force and amplitude b y utilizing graphs 1 and 2, if t h e "n" value
axis of the graph. This will give the amplitude in tenths of an inch required to (blow c o u n t ) for t h e soil is k n o w n at t h e desired d e p t h , the total length of
drive the pile. pile t o be used and the weight o f the pile per lineal foot. These charts are
0
valid for noncohesive soils where non-displacement t y p e piles are to b e
0 15 50 75 1W 125 150 installed.
P I L E LENGTH IN FEET When t h e required dynainic force and amplitude are known from the
graph; a vibratory harnrner c a n be selectett that will produce these require-
GRAPH NO. 2 ments. Most manufacturers and distributors make available t h e maximurn
DETERMINATION O F REQUIRED AMPLITUDE dynaniic force and alnplitudc o f their various size vibratory hammers.
 U ~ ~ I I I I C U e
I qL u ~ p ~ i l ~ :anctq u ~ s ~ t l ocnh o ~ c e . i Ills d e c l s ~ o ns o ~ n e l ~ ~ ~ l k s
LIIC
me:>" difference between job profit and loss.
Equipment Acquisition
- costs, between-job moves, and insurance. Renting m a y b e the
A c o n t r a c t o r is faced wit11 many equipment acquisition choices. Cash pur-
chases, various installmenl plans, rental plans, and a n u m b e r o f different
leases and loans arc available t o contractors w h o want t o acquire equipment.
T h e question is: what financing alternative offers the most advantages for
a certain piece o f equipment o n a particular project: T h e alternatives here
must be considered as carefully as those project variables which led t o t h e
choice of equipment in t h e first place.
Basically, in t o t a l dollars spent, t h e least costly m e t h o d o f financing a
piece o f e q u i p m e n t is the cash purchase; ,the most expensive is renting. But,
there are o t h e r costs t o consider: costs imposed b y missed tax deferrals, and
costs o f lost profits f r o m work missed d u e t o lack o f f u n d s o r bonding capa-
city, a n d costs o f lost dollar value because o f inflation.
When a contractor weighs the alternatives, all costs must b e figured in.
A knowledge o f t h e effects of each financing alternative o n business ratios,
bonding capacity, income tax, equipment salvage value k e p t o r lost, and o n
future profitable projects is imperative.
In s o m e instances, a future cash-flow analysis will s h o w a cash purchase t o
be impossible. In o t h e r cases, business ratios and bonding needs necessitate
leasing; in still othcrs. paying m o r e per m o n t h in rental fees could be the
most profitable m e t h o d of a c q u i s ~ t i o n .
Let's discuss t h e advantages and disadvantages of buying, renting and
leasing
Cash Purchasing
T h e advantages o f outriglit purchase o f equipment are m a n y . It allows c o n -
tractors t o d o whatever they want with t h e equipment. It is n o t dependent
o n future income. It allows contractors t o dispose o f t h e e q u i p m e n t whenever
t h e y wish and earn profits from t h e transaction. Buying gives t h e c o n t r a c t o r
greater freedom o f choice. It allows using t h e equipment as collateral for
credit in future acquisitions. Lastly, t h e equipment's depreciation value,
investment tax credit and repair allowance always belong t o t h e contractor.
Major disadvantages in buying equipment are also numerous. Cash pur-
chases freeze large a m o u n t s o f capital t h a t might earn more. elsewhere. It
hurts business ratios and bonding capacity. Due t o prevailing t a x laws,
t h e tendency is t o keep a piece of equipment longer than is e c o n o m i c d l y
feasible. In addition, obsolescence o f t e n c u t s d o w n a machine's competitive
value. And, inflation causes t h e contractor t o pay'for the e q u i p m e n t in high-
value dollars, while it depreciates and earns i n c o m e with dollars o f less value.
Renting E q u i p m e n t
There has been a greater tendency during recent years f o r contractors t o
rent equipment. Renting is, in effect, instant e q u i p m e n t ; t h e c o n t r a c t o r gets
what h e needs, 'when and where h e needs it quickly. A n d , rental firms are
obliging b y building u p their heavy-duty inventories, offering m o r e services
than ever before and expanding their product lines.
Contractors are o f t e n n o t sure o f what lies d o w n t h e road, t h u s t h e y dislike
7,. ntenance
have t h e m o n e y t o buy. Others want t o get o u t from undc
Paying m o r e p e r m o n t h for a rented machine could b e mu,,.iore
able than allowing it t o sit rusting in t h e yard f o r half its useful life. Most
profit-
contractors orlly o w n equipment they can keep working for : ~ tleast 6 0 per-
cent o f its life. A popular rule of t h i ~ m hmost contractors follow is: rent
equipment that will b e used for less t h a n o n e year.
O t h e r advantages in renting are: it can improve business ratios because
there is n o major capital expenditure; all rental payments are t a x deductible;
modern, efficient and well-maintained equipment is always available; con-
tractors can use specialized o r high capacity equipment, and various models
without accumulating a parts inventory; and renting eliminates o r drastically
reduces storage costs, repair costs, and administrative overhead.
In addition, inflaJion d o e s n o t affect rental rates, cash flow c a n b e planned
more effectively through equipment rental, and rental allows contractors
greater flexibility. Renting is also a hedge against losses o n equipment O ~ S O -
lescence, and an aid in estimating and preparing bids.
Most renters calculate rates o n a m o n t h l y basis. Weekly rates run about
one-third of m o n t h l y rates, and daily rates one-third of weekly rates. Number
o f shifts the equipment will work, site conditions, and length o f working.sea-
son all affect rental rates.
.Choosir~gtile best rental firm is also an important consideration.iThe best
organizations have t h e foliowing qualifications:
Itlidc ratlgc of e q u i p m e n t - Ex'perienced rental firms in t h e construction
I business have a tailor-made inventory t o provide t h e types o f equipment
needed now.
Quick Delivery - If a good rental firm doesn't have what is needed, it
knows where t o get it. And, Can get it fast.
i Trained Person,~cl - A good rental c o m p a n y has management, salesmen,
and yardmen w h o are farniliar with the equipment. T h e y can answer all y o u r
questions, which gives y o u help in choosing t h e right piece o f equipment a t
the best price.
Corrlplerc Recordkeepirlg - Better agencies maintain an accurate history
of each piece of e q u i p m e n t , including total rental time, uptime and various
cost and ~ n a i n t e n a n c efigures.
Corr~plctrService Deparrrnerlt - When y o u rent a machine, it has t o per-
f o n n properly. If there is a breakdown, you want the repairs m a d e as quickly
as possible. Trained mechanics, a good parts inventory and emergency ser-
vice all mean less d o w n t i m e and b e t t e r profits.
Pickup a n d De1iver:y - G o o d rental firms deliver t o t h e jobsite and pick
u p ' the machine when y o u are d o n e with it. This service is a n o t h e r time and
money saver to y o u .
Modern L'quipment - Top-notch rental firms dispose o f old equipment
through sale o r auction, maintaining a line o f modern, efficient equipment.
I Conrracrs are Clear - A g o o d rental contract spells o u t all terms in detail;
repairs, maintenance, transportation, insurance a n d accidents are clarified
!
before y o u sign.
A final n o t e to renting is the rental-purchase option (RPO) plan. Many
contractors favor this o p t i o n because t h e y c a n rent a n unfamiliar machine
and if it works well and they like it, most o r all rental payments can be
applied t o t h e purchase price. Most rental firms subtract a finance charge
fro111 all payments and apply r h c rest i o t h e purchase price; others apply aU
1 of t h e first month's payment and declining a m o u n t s o f further r e n t d s ; and
~easi.9 ipment
W
Leasing provides the contractor with yet another alternate form o f equip-
ment acquisition. Many hanks are willing to offer lease contracts. Distrib-
utors are well equipped t o put together a lease package; many major finance
companies are deeply into leasing construction equipment.
Advantages in leasing are: leasing allows the contractor to pay for equip-
ment with tomorrow's more inflated dollars; leasing conserves capital when
money is tight; leasing offers certain tax advantages (rentals paid o n leased
equipment may be fully deductible operating expenses); leasing allows
greater control over a contractor's expenses; and leaslng can help a contractor
find a way around budget Limitations.
Lezsing offers t h e widest number o f options available to contractors
acquiring equipment. It also offers the widest range of costs. Two major d ~ s -
advantages are: It usually prevents contractors from taking profits from
equipment salvage value, and leasing is often Inore expensive than borrowing
to purchase.
To- conclude, realizing profits by selecting the right pile hammer is the
result of two major decis~ons: choosing the right hammer for the l o b and
deciding on ;he best method of equipment acquisition. There are no hard
and fast rules in making either choice, Each situation calls for individual
evaluation based or1 all the variables discussed. There is no one hammer that
will "do it all" and no one method of equipment acquisition that w i l l assure
profitabd~ty.