How to Calculate Total Cost of Ownership (TCO): When to Repair or Replace Heavy Equipment

Managing construction equipment efficiently goes far beyond the purchase price. To make smart, cost-effective decisions, you need to understand the Total Cost of Ownership (TCO)—and know when it makes sense to repair versus replace a machine. In this guide, we’ll cover what factors influence TCO, how to reduce long-term operating costs, and how modern tools like telematics and machine control systems can boost your profitability.

What is Total Cost of Ownership (TCO)?

TCO represents the full lifecycle cost of owning a machine—from the initial purchase to its final resale or trade-in. This includes:

• Initial purchase price or lease costs
• Fuel and fluid consumption
• Routine maintenance and unexpected repairs
• Downtime and productivity loss
• Operator training
• Depreciation and resale value

By understanding and managing these variables, you can reduce costs, extend equipment life, and make smarter replacement decisions.

1. Reduce Idle Time to Cut Fuel Costs and Improve Emissions

Modern machines require high exhaust gas temperatures to function efficiently, especially with today’s emission systems. Excessive idling not only wastes fuel but also leads to more frequent regenerations or system failures.

Use your machine’s auto shutdown settings or idle management tools to reduce unnecessary runtime and track idle hours using telematics for better insight.

2. Inspect and Maintain Tires and Undercarriage Components

Tires and tracks are among the most expensive wear items on heavy equipment. Daily inspections can prevent minor damage from turning into major expenses.

Pro tips:

• Remove debris like rocks and rebar from undercarriages.
• Avoid spinning or counter-rotating on slopes.
• Choose the right tire/track type for your surface.

3. Increase Utilization with Attachments

Attachments increase versatility and allow a single machine to perform more jobs year-round. For instance, adding a snowplow can help landscapers generate revenue during winter months. This maximizes ROI and extends the equipment’s usefulness.

4. Maximize Performance with Operator Modes

Most modern machines have configurable modes for throttle response, hydraulic flow, and power delivery. When used properly, these modes:

• Optimize performance for specific jobs
• Reduce fuel consumption
• Lower wear and tear

Review the operations manual or consult with your dealer to ensure your team is leveraging these settings.

5. Implement Machine Control & Precision Construction

Machine control systems (2D/3D grade control) significantly reduce passes, limit rework, and extend equipment life. Though a premium add-on, they can pay for themselves in as little as one or two jobs.

Some benefits include:

• Faster, more accurate grading
• Lower fuel consumption
• Less operator fatigue
• Improved resale value

6. Rent, Lease, or Own? Choose Based on Usage

Understanding how long and how often you’ll use a machine helps determine the best acquisition strategy:

• Own: Best for high-use equipment. Offers tax advantages and higher resale value.
• Lease: Lower upfront cost; includes warranty and maintenance over a 2–4 year period.
• Rent: Ideal for short-term or seasonal needs without long-term commitment.

7. Equip Machines for Growth

Think ahead when purchasing equipment. Features like high-flow hydraulics or two-way auxiliary lines may not be necessary now but can future-proof your fleet. For example, buying an excavator with a thumb circuit gives you flexibility for future brush or material handling jobs.

8. Match Attachments Properly

Oversized buckets or mismatched attachments can overload your machine and reduce productivity. Smaller, appropriately-sized tools may actually increase efficiency, especially in hard or dry soil conditions.

9. Invest in Planned Maintenance Programs

A planned maintenance contract ensures regular service with factory-trained technicians using OEM parts. Many of these programs will cover:

• 3 years of telematics
• 3 years of factory warranty
• 3 years/2,000 hours of planned maintenance

These contracts help avoid surprise costs and maintain peak performance.

10. Use Remanufactured Components

Using remanufactured parts can save up to 40% versus new components—and may even include better warranties. From hydraulic pumps to transmissions, these parts are built to OEM standards and integrate recent design improvements.

11. Understand Your Machine’s Emission System

Today’s machines use systems like SCR (Selective Catalytic Reduction) and DPF (Diesel Particulate Filters). Knowing how your system works—and how to prevent downtime—ensures smooth operation.

Look for features that reduce or eliminate DPF needs. Many machines offer DPF-free operation or simplified emission systems on compact equipment.

12. Leverage Telematics and Oil Sampling

Telematics systems like CASE SiteWatch provide real-time data on:

• Idle time
• Fuel consumption
• Engine load
• Hydraulic and coolant temperatures

Combined with oil sampling programs, you can spot issues before they become catastrophic failures—reducing downtime and extending machine life.

Repair or Replace? Here’s How to Decide

The Bottom Line

Reducing the total cost of ownership requires a proactive mindset—tracking machine usage, performing timely maintenance, selecting the right features, and leveraging tools like telematics. Whether you’re operating a dozer, skid steer, or excavator, applying these best practices will help you make smarter investment decisions and keep your job sites running efficiently.

Need help evaluating your fleet’s TCO or selecting the right attachments and services? At Eagle Power & Equipment, we’re committed to helping our customers achieve more than just operational efficiency. We’re dedicated to aiding in your success–from equipment selection and maintenance to tech adoption and future scaling strategies.

Need the very best quality construction machinery for your next project? Contact us today and see why Eagle Power & Equipment is your go-to option for construction gear sales, rentals, service, and repairs!