Should I Repair, Rebuild or Replace My Machine?
Category: Equipment and Solutions
Heavy equipment is a major investment for any organization, so when you begin experiencing problems with a machine, you need to make the most economically sound decision about what to do with it. Some organizations have mandatory replacement schedules, and they automatically replace a machine once it hits a certain amount of hours or after a certain amount of time has passed.
Otherwise, you’ll have three options:
- Repair
- Rebuild
- Replace
The right option for your organization depends on several factors, including your finances and the machine’s age and overall condition.
It’s important to understand these practical and financial factors before determining what to do with a faulty machine. We made this guide to help you through the decision-making process so you can make the right choice.
What to Consider When Deciding Between Repairing, Rebuilding or Replacing
As machines age, the repairs they need will steadily increase in both cost and severity.
A good guideline for determining what to do with a machine is the 50/50 percent threshold rule. This rule states that you don’t need to replace the machine until the cost of repairs exceeds more than half the cost of replacing it.
While this rule is helpful for many scenarios, individual circumstances mean the point of failure is different for every machine.
For example, a poorly maintained excavator that has experienced hard use at the hands of inexperienced operators will reach the end of its useful life long before it should. An excavator that experiences rare usage and undergoes maintenance according to the manufacturer’s suggested schedule may exceed its expected lifespan.
It might help to conduct a life cycle cost analysis (LCCA) to get a more accurate view of a machine’s projected expenses.
An LCCA usually takes a two-pronged approach to expenses:
- Ownership: The costs of owning the machine, including purchase price, interest, insurance, taxes, depreciation and disposal
- Operation: The costs associated with regular operation of your machine, including repairs, maintenance, fuel, tires, operator labor and fluids
You can create and analyze hypothetical scenarios to determine the most economical option for your organization. For example, you could analyze the costs for keeping and repairing the machine and compare those results to the projected costs of replacing the machine altogether.
When to Repair Equipment
If you only need to swap out or fix a few components, you should choose to repair your machine.
A major factor in choosing to repair a machine is a valid warranty. If your warranty covers the cost, repairs are your best bet. Similarly, if you still owe payments on the equipment, it’s a wise idea to extend its lifespan either through repairs or a rebuild.
Repair is also the right choice if you need the equipment for an upcoming project. It’s much quicker to tune up or replace a few parts than rebuild whole systems or purchase a new machine.
Some dealers also offer field repair and maintenance services, where a technician travels to your job site to perform repairs in both emergencies and non-emergencies. This service reduces your downtime and saves you money on transportation. Check with your dealer or a trusted mechanic to find out whether this service is available to you for the replacement of equipment.
When to Rebuild Equipment
Rebuilding heavy equipment involves replacing all of a machine’s major components and many minor elements. This process restores the equipment to like-new condition, significantly extending its lifespan.
Where you get your equipment rebuilt is just as important as how much you expect to pay for the service. You need to ensure the technicians working on your equipment are qualified and capable before you invest.
For example, you should always take Cat® machines to a certified Cat service provider for a rebuild. The Cat Certified Rebuild process involves running 350 tests and replacing more than 7,000 parts and is specifically designed to enhance Cat machines. Going to a provider that is unfamiliar with Cat equipment could result in a poor rebuild job or even a damaged machine.
Rebuilding vs. Repairing Heavy Equipment
The most obvious reason to choose to repair a machine rather than to rebuild it is the cost difference — repairing is more cost-effective than rebuilding. A rebuild also takes longer than typical repairs, which can lead to longer downtime for your organization.
If you’re looking at extensive repairs, rebuilding is the more economical choice, especially if you still owe payments on the machine. Rebuilding older equipment can often increase your resale value, as you can replace and upgrade more systems than you could through repairs alone.
When to Replace Equipment
Replacement involves purchasing a new machine in place of your old one.
It’s smart to hold off on replacing your equipment until you’re facing excessive repairs, which is usually after your warranty or protection plan expires. When your ownership costs are lower than your operating costs, it might be time to purchase a replacement. At this point in your machine’s life, repairs are likely to increase in frequency and severity, making a replacement the more cost-effective choice.
Additionally, if your machine is overly outdated, it’s time to replace it. Upgrades may be possible in a rebuild, but there comes the point where it’s no longer financially practical due to high repair costs.
Buying a new machine is a significant investment, but it’s often worth it to get the latest in technology. New equipment is especially advantageous for organizations looking to expand their operations and improve their bid competitiveness. Plus, new machinery will require fewer repairs than existing equipment initially, saving you money and creating less downtime, which can help offset the purchase price.
Rebuilding vs. Replacing Heavy Equipment
Rebuilding a machine is less expensive than replacing it — typically, a rebuild costs around 50-60% of the price of a brand new machine. However, you should still thoroughly assess the situation before choosing to rebuild.
It’s important to consider that new machines depreciate quickly. Rebuilding allows you to bypass that depreciation by extending the life of your existing equipment, which in turn prolongs the replacement interval.
Of course, every machine reaches the end of its life at some point. If your machine reaches obsoletion or breaks down frequently, replacement might be better.
Contact NMC Cat for More Information
At NMC Cat, we’re proud to offer various services for Cat machines. From genuine Cat parts to Cat Certified Rebuild programs, we’re here to help you get the most from your equipment.
If you’ve still got questions about repairing, rebuilding or replacing your machine — or any of its parts — please contact us. We’ll answer your questions and give you the peace of mind you need to make your decision.
