You can’t operate a jobsite without equipment. For many heavy civil construction companies, it’s the most significant asset they own. Therefore, it can have a profound impact on your bottom line. While there are many fleet performance metrics to manage to keep a fleet productive and healthy, the following are five key metrics and definitions below directly impact the bottom line. Read on to find out how.
1. Utilization
Definition: A measure of use of a machine unit or a class of machines, i.e., 40 hours/week equates to 2,000 hours/year. If that is the maximum time of usage, that becomes 100% utilization.
Equipment is one of the most significant assets of any heavy civil construction company. It’s not uncommon to have a million dollars worth of equipment on a $150,000 job, for example. So, every fleet manager wants to make sure they utilize each of those assets to their fullest potential. Utilization also becomes a key data point in determining equipment rates, so it must be accurate.
Comparing “charged time” to a job, entered by field personnel, with “actual machine-hours,” from telematics or manually entered, can help you determine how your fleet is doing. You’ll want to set utilization target expectations for each equipment class, i.e., midsize excavators may be 1,300 hours/year (65%), while asphalt machines maybe 1,900 hours/year (95%). The better utilization rates you can achieve, the less equipment sits around idle, costing you money. And that means more profit for your company.
Technology can track the charged time from the field and show you which pieces and equipment classes are underutilized in your fleet. Telematics devices track the movement of your fleet and actual machine hours of usage.
2. Equipment Rates
Definition: A rate set to use a piece of equipment — a dollar amount per specified time period.
Equipment rates are a helpful metric that allows companies to bid on their expected equipment cost, to recover their costs/investment, and to compare internal equipment costs with published outside rental/lease costs to validate ownership versus renting. They typically include all fixed, ownership costs and operating costs. They should not involve operator and accident/abuse repairs.
It is generally recommended to set rates by class, and you might consider having rates for “idle” (ownership costs only), “running” (ownership and operating costs), “down” and “stored.”
The challenging part about setting equipment rates is that there is no right way to do it. However, industry experts have put together calculators to help give you a baseline. Equipment rates should be dynamic to account for changes in utilization, purchase prices, fuel costs and other factors — which means they should be revisited at least biannually, if not more often than that.
While executives, such as chief executive officers, chief operating officers and owners, typically have the final say on equipment rates, high-performing equipment managers track their costs to give data-backed recommendations.
3. Uptime Hours
Definition: The hours that a piece of equipment is available to be used during regular shift hours. The opposite of downtime hours, which indicates a piece of equipment is unusable due to needing an unplanned repair.
Whether you track uptime or downtime, it’s a valuable metric because it allows equipment managers to evaluate their brand/model choices, their preventive maintenance programs, their rebuild programs, their replacement process, their assigned operator program and more. Downtime calculations should include only normal wear and tear repairs and should exclude planned off-shift repairs. It’s those planned repairs like those included in a preventive maintenance schedule that leads to more uptime, which leads to more projects completed on time and budget for the company. Telematics devices can give mechanics and service teams access to fault codes, which can help decrease machine downtime by letting them know what items they need before they leave to repair. Preventive maintenance programs allow you to play offense and be proactive towards increase uptime hours.
4. Wrench Time
Definition: The time a mechanic or technician spends with a tool in their hand, performing actual maintenance work.
No employee can spend 100% of their time on only direct labor or billable hours. And the same is true for mechanics. In the best shops, direct labor (i.e., wrench time) maximums are estimated somewhere between 60% and 85%. The remaining time spent on indirect but necessary things like clean-up time, sick/vacation time, training, maintenance, and repairs to facilities and tooling.
But you don’t want to chip away at that wrench time even further with inefficiencies like difficulty locating equipment history or details, calling
several people for information on a work order, or repairing a piece of equipment only to find it back in the shop a week later for its scheduled maintenance. To avoid double work, make sure you are focused on efficient time usage when maintaining equipment.
Finding ways to reduce inefficiencies will provide your mechanics with more wrench time and, in turn, allow your company to do more without increasing headcount. Digitizing shop paperwork provides mechanics with all the information they need at their fingertips quickly with little to no hassle.
5. Age Balance
Definition: Replacing a portion of each class of equipment each year so that the average unit is at the midpoint of the projected class life.
Nothing lasts forever — including equipment. At some point, it will need to be replaced by purchase, rental purchase option, lease, rent, or other means. But, just as your equipment was not likely all acquired at once, you won’t want to replace it all at once either. So, it’s crucial to have a mixed-age fleet at any point in time to avoid large capital outlays or delays in availability. This is especially important in large unit classes and critical pieces for an operation like large excavators and plant loaders. Keeping your fleet age balanced will help your company maintain capacity and stabilize cash flows related to equipment costs and purchases.
The use of churn charts, modeled after C.E.M.P. Central Inc.’s color-coded method, can allow equipment managers
to visualize and identify whether specific equipment classes, or their entire fleet
of vehicles and/or equipment, are starting to skew away from a healthy age
balance.
