As a custom builder, I used to take on about three new homes or
large additions a year. Most of our work was done by my
employees, but like most builders I hired subcontractors for
special tasks. Using subs has many advantages, but maintaining
control over the building schedule is not one of them. If an
excavation sub is late for any reason, your schedule is ruined,
because all the subsequent trades are affected.
After calculating how much money excavating delays were costing
me, I realized I could no longer afford that approach, and I
began doing much of my own dirt work. At first, I rented
equipment as needed, which worked fairly well except during the
busy season, when I had to wait for a machine. I also
discovered that some of the overworked rental equipment wasn't
So I started thinking about buying my own machine.
The Decision to Buy
Since heavy equipment is expensive, it has to pay for itself.
To determine whether buying my own excavator made financial
sense, I looked at budget vs. actual job costs on my projects.
I wanted to see what the excavation delays were costing me in
wasted crew time and how much money I was spending on my
excavation sub's services. On the other side of the equation, I
added up what the machine would cost me, including the machine
payment, fuel, insurance, and maintenance.
The payment, in my case, was $785 per month. Insurance would go
up by about $40 per month. Maintenance is related to use, but I
guessed at an average of $100 per month. Fuel would run about
$20 per day, and would vary with use. I figured that a total of
$1,200 per month ought to be pretty close. At first, I didn't
factor in an operator, because that would be me; as the site
supervisor, I'm already there.
So, at the local going rate of $65 per hour for machine time, I
needed to run this machine 19 hours a month to have it pay for
itself. I was surprised to find that if I started three houses
a year on time and did all of my own dirt work, the machine was
That said, the monthly payment is nothing compared with the
related expenses of owning a machine. For example, if the
machine is abused or if a careless operator causes damage, the
cost can quickly outweigh the benefits. Even with proper care,
wear items like bucket teeth, tires, and tracks need replacing.
You will also need to store the machine and trailer somewhere,
which can be a problem, depending on where you live.
Choosing the Right Machine
I already knew I didn't want a full-size backhoe or excavator.
What I needed was something inexpensive, small enough to fit
through tight spaces and up against the walls of existing
buildings, and powerful enough to handle everything from
footings and trenching to landscaping.
At a construction trade show, I happened to see several compact
excavators in the 3- to 5-metric-ton class. Unlike little
rental machines, these were functionally identical to a
full-sized track excavator but small enough to make sense on a
As I looked more closely at the compact excavators, I realized
that beyond the obvious advantage of being able to put dirt
behind you as you dig (something a backhoe can't do), they
could get into all kinds of places. Plumbed for auxiliary
hydraulics, they could run a variety of accessories, and with a
hydraulic thumb, they could pick up or tear down almost
anything on a residential site.
Best of all, these machines could be towed behind a pickup
truck on a small tandem-axle trailer. I didn't want a gooseneck
trailer because I needed the use of my pickup bed. A little
simple arithmetic told me the machine had to weigh less than
8,500 pounds and be no more than 6 feet wide. With that in
mind, I went shopping for a compact excavator.
Picking a Model and Brand
After price, rated horsepower and maximum dig depth are the
first things a new buyer should consider. Do not fall into the
trap of thinking that a bigger machine with more power and more
reach is always the best choice. I have run 54,000-pound
excavators with 35 feet of reach that pull dirt out of the
ground a pickup-truck load at a time. And believe me, in no
time at all, you still want more power and more reach.
A better approach is to match the machine to the job. The
smallest machine that will do the majority of your work
efficiently is the best choice. The old 80/20 rule applies
here: If you can find a machine that will do 80 percent of your
work effectively, you can deal with the other 20 percent as the
Quality of construction is a judgment call. Better machines
tend to cost more, but you may not need the most expensive,
best engineered machine. One quality I would investigate no
matter what machine you choose is the competency and training
of the dealer's service department. Your best bet is a referral
from a satisfied and impartial customer. Similarly, if
customers have had a bad experience with a service department,
they are usually not shy about sharing that information.
I've had great luck with my Caterpillars — I've bought
three Cat machines: a dozer, a skid steer, and a large
excavator — in the past 15 months. These machines are
reliable and rewarding to operate and I've paid for nothing
more than oil changes. I've had only one occasion for warranty
service, and that was handled in the field, within eight hours
of my call, at no charge.
Conversely, my Volvo — the compact excavator I ultimately
decided to buy — had some built-in maintenance problems
that the dealership charged me for, and on several occasions
the company couldn't provide on-site support when I needed it.
Although the Volvo is a highly productive and generally well
designed machine, the maintenance record reads like a sad
story. Repairs and maintenance have cost me roughly 10 percent
of the purchase price in only 1,000 hours of use, which is
My experience with these two brands of machine has shown me
that the dealer can serve as either an active business partner
who helps you be successful in your business or a roadblock to
that success. If the company can't be there when you have a
problem, it's going to cost you money.
Options and Accessories
Whichever machine you buy, I recommend adding a quick coupler
for the bucket and work tools. With a quick coupler, you can
change buckets in a minute or two. Without one, you'll need to
drive bucket pins, which is such a slow process you'll find
yourself using the wrong bucket rather than changing it (see
Figure 1). The $800 option will easily pay for itself in time
saved swapping buckets or backfilling a bigger hole or trench
than was necessary. (As with anything, though, you have to be
careful: There have been several recent OSHA reports of
operators seriously injured or killed while using a quick
Figure 1.Quick couplers make swapping buckets and
accessories much easier. With the hook end already on the
bucket (top), the threaded pin is inserted and tightened
(right). A whack with a hammer prevents vibration from
loosening it, and a hitch pin keeps it from coming off if it
I'd also make sure to get a hydraulic thumb. Demolition,
loading debris, placing large rocks, and removing stumps are
all easy with this tool. Unless all you ever do is trenching, a
thumb is a wise investment (Figure 2).
Figure 2.A hydraulic thumb makes it easy to pick
up rocks and other large, odd-shaped objects that won't fit
into the bucket. It's also a useful tool for demolition. When
not in use, it folds against the boom.
If your machine does not come equipped with a block heater, ask
the dealer to install one before delivery. These small diesels
can be temperamental in cold weather. If there is an optional
work-light package, I'd recommend that, too. I try hard never
to run machines in the dark or when I'm tired, but sometimes
it's unavoidable. When this happens — think broken water
line — you can never have too much light on the job
Figure 3.A light kit is a worthwhile accessory,
especially when you're struggling to finish a job. The most
useful kits have lights for the front and back of the cab for
crawling in either direction, and on the boom to see inside a
trench or hole.
Operator comfort is crucial. An uncomfortable operator is
unproductive and unsafe. When in doubt, spend the extra money
for creature comforts like heat, air conditioning, suspension
seats, and extra lights.
If you're planning to do your own routine maintenance, it's
also important to pop the hood and see if the filters and other
common maintenance items are readily accessible. One frequent
complaint about the newer compact excavators with little or no
tail swing is that they're tougher to work on because they have
smaller engine compartments (Figure 4).
Figure 4.Although the newer machines have smaller
engine compartments, manufacturers are doing a better job of
keeping filters and other maintenance items easily accessible.
This Caterpillar (top photos) has good filter accessibility
despite its small engine-compartment door. With the Volvo
(bottom photos), the oil filter is mounted lower in the engine
compartment, so it's a little tougher to get to, but still
Learning the Machine
While it takes only about five minutes to figure out the
controls of a machine, it takes a lot longer to actually become
skilled at operating one. Even more important than operator
skill is an understanding of good construction practice. If the
dirt work isn't done properly, the results can be expensive.
Nobody wants to see a foundation failure.
Most important of all, of course, is an attitude of alertness
and concern for the safety of everyone else on the job. The
first three rules of heavy-equipment operation are safety,
safety, and safety (see "Excavator Safety"). With this much
power and weight, there is no such thing as "oops" or
The first few jobs I did with my new machine were for my own
company, so pricing was not a concern. As long as I was getting
the job done on time and covering my expenses, I didn't give it
a lot of thought.
I soon realized, however, that I had discovered a market niche.
Calls from other contractors started coming in when word got
around that I had bought this unusual new machine that was
faster than a backhoe and would fit almost anywhere (Figure 5).
Footings for complex building footprints are no problem with
this smaller machine, and I have received several calls to dig
for infill houses that have 14 or more corners in a
2,500-square-foot floor plan.
Figure 5.A major advantage of compact excavators
is their ability to get close to foundations, fences, and
obstructions. With the cab rotated and the boom angled to the
left or right, excavators can dig in the offset position, which
makes excavating for room additions and trenching next to
Some excavation contractors price their jobs on an hourly
basis. This is similar to building on a time-and-materials
agreement, and, like T&M, it's okay when you're getting
started, but most businesspeople soon abandon that approach.
T&M is a lot riskier than it sounds, so I try to avoid it.
I still work hourly for some contractors who prefer this
arrangement, but we have a history of working well together,
and they understand how long a job should take.
I prefer to price all my work on the basis of unit cost. From
experience, I know that I can move dirt for a certain cost per
yard, and I can trench for so much per foot to a certain depth
(all of which varies with the soil conditions).
With a little practice, you'll learn to recognize the various
soil types in your area. I watch for rock outcroppings or
dramatic changes in elevation across a site, indicating erosion
patterns that expose hard soil. I also watch for especially
soft or sandy soil, which can be far worse to work in.
I find that customers are almost always more comfortable with a
fixed price, just as I am. On an hourly job, the customers will
always wonder if they're paying for the time you spent on
break, performing maintenance, talking on the phone, or pulling
your machine out of the mud.
The Bottom Line
As a custom builder, owning my own equipment gave me a definite
advantage. I had more control over the schedule, and paying
myself for excavation increased profits. Now I've made the
switch to working as a full-time excavation sub, and I'm still
making the same money I did as a GC, but with fewer
David Crosbyis an excavation contractor and the owner
of Crosby Construction in Santa Fe, N.M.