There are three payment options by which offshore assets can be acquired: lease, purchase, and lease-to-own. Deciding between the three can be difficult, as many factors influence which option is best for your project. The biggest of these factors is the project's duration and its capital and operational budgets.
Specialist Services RedGuard has manufactured modules for offshore installations around the world. From zoned cabins to accommodation modules, we have provided our clients with the modules their projects require with the payment option that best suits their individual needs. This article will break down the three different payment options, and when to consider choosing one over the others.
Offshore modules are modular buildings designed to withstand the harsh marine environment of offshore installations. They are constructed to meet multiple safety certifications, including ABS, USCG, DNV, SOLAS, and others. These modules are divided into multiple categories: accommodations, support modules, and office/workshop. Accommodations, also known as portable accommodation modules (PAMs), are made up of modules that provide sleeping quarters in various configurations, sizes and layouts. Support modules include modules that are configured as galleys, diners, recreation rooms, laundry rooms, and other layouts. Office/workshop modules provide office, workshop, and storage space in more hazardous locations on the installation. Because of this, they are built to even higher specifications, such as Zone 1, Zone 2, Division 1, and Division 2.
Leasing offshore modules is the most common payment option when adding modules to offshore installations for temporary use. As most installations have a set number of accommodation and office spaces, offshore modules provide additional sleeping and working quarters for temporary workers and third-party vendors brought in for specific projects. These projects last around three to six months on average. Because of this shorter duration, leasing the modules is a much more economical payment option. The cost of a typical offshore module package including multiple modules and auxiliary equipment, such as water tanks, marine sanitation devices, power distribution, etc., for this duration is typically under the cost to purchase just one module by itself.
The second option is the purchase of the offshore modules. This option is typically used when additional space is permanently needed on the offshore installation or when a project duration is so long that the rental price of the module comes close to or exceeds its purchase price. There are two ways offshore modules can be purchased, either as new builds or existing modules. For purchasing the new builds, the modules, such as accommodation, galley, diner, etc., are built from scratch. They can be a completely new design developed through engineering with the customer's feedback, or based on the provider's standard module design, then customized to meet the specifications and requirements of the purchaser and the offshore installation where they will be deployed. The second purchase option is to buy existing modules from the provider's fleet of rental assets. Purchasing existing modules is a more economical way to buy the modules and typically reduces the lead time for delivery. These existing modules can be purchased as a standard configuration or modified to provide a certain level of customization for the client. Depending on modifications required, the modules may need to be recertified by the appropriate governing bodies.
Lease-to-own is the bridge between the first two options. It provides a flexible structure where the client takes possession of the module and pays monthly installments for a designated term. This payment plan can be done in-house through the manufacturer, removing the need for the client to source additional financing. The term, or duration, of the lease-to-own contract is developed based on the commercial offering, budget, and project requirements of the client. A typical term will generally range from 12 to 36 months. To help the client, the lease-to-own option can be structured as an operating lease. This option allows the payments to be considered operating expenses and not recognized in the CAPEX budget, freeing up capital in the current year's budget. Lease-to-own also allows clients who require modules to purchase them even though their current year budget doesn't support the full cost of ownership.
These are the three payment options for offshore modules. Each has its advantages over another, depending on the project's duration and budget. Leasing is ideal for short-term projects and temporary projects where the modules aren't needed permanently on the offshore installation. Purchase is the most economical for long-term projects and for adding accommodations as permanent fixtures. Lease-to-own bridges the gap between the two other options. It allows for longer-term projects with limited yearly budgets to afford the modules they require without putting a financial burden on them.
If you need offshore modules for your next project, Specialist Services RedGuard has a wide range of accommodation and office/workshop modules available. We will work with you to develop the correct payment option to meet your project's requirements. Contact us today or get a quote on your next project!