CFMA’s Electronic Newsletter for Heavy & Highway Construction

Volume 2, Issue No. 1
March 2005

In this issue ...

When Centralization Makes Sense
Does your company have an organizational structure in place to manage your fleet? Check out Construction Equipment’s Equipment Executive.

Are You Achieving
World-Class Fleet Management?
See the second installment of Preston Ingall’s article to learn how you measure up.

Leveraging PDA’s for Equipment Management
Would you like the world at your fingertips? Well, maybe just important job information.

Software to Maximize the Return on Your Equipment Investment
Maximize your ROI with the proper software tools. Check out Michael Ragan’s article to make sure you aren’t missing out.

E-Bay, E-Tickets, E-Gad!
What About E-Bidding?

Check out e-bidding, the new technology affecting construction!

What Are the Current
Hot Topics that Interest You?
View our list and be sure
to give us your feedback!


Let's Start Talking Heavy!

When Centralization Makes Sense

Every company sets up an internal organization structure to help manage its fleet; assign roles and responsibilities; and provide a focus for the expertise needed to keep their equipment reliable, efficient and cost-effective. Every company is different. Some adopt a decentralized style with all decisions regarding selection, operation, and maintenance made at the project level; others centralize decisions in a full-service shop that serves as an independent in-house rental organization. Many fall somewhere in between…

http://www.constructionequipment.com/equipexec/ce04la005.asp

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Achieving World Class Fleet Management
Part 2
This article is the second in a series focused on understanding maintenance in order to improve its performance and reduce its costs.  Read the first part here.

Inventory Control
The purpose of this practice area is to refine the maintenance stores and procurement process to streamline parts appropriation. It is focused on having the right parts in the right place at the right time.  Improving this can reduce the Mean Time To Repair (MTTR) which is the measure of the total time to perform a repair including all delays.  Parts acquisition can affect this number significantly.

The traditional process for this is called MRO for Maintenance, Repair and Operations inventory. It is a defined science and not an art to run the stores. 

This may involve studying the existing flow of requested parts and improving the process to reduce wasted effort and inactivity. This would involve standardized stores and inventory practices. 

By improving the turn rate (the turn over of parts), considerable savings can be realized by focusing on purging obsolete parts and closer monitoring of min-max levels and reorder points to optimize the numbers we stock.  In essence, we want to do more with less.  Another key strategy is to encourage vendor stocking or consignments or even the use of an integrated supplier to manage the parts process.

Minimizing poor use of the company’s working assets can be accomplished through improved turnover, cost control, efficient purchasing practices, judicious inventory counts through cycle counting, recorded issuances against actual equipment, secured access, and staffed coverage - as well as minimizing unofficial stocking or "squirreling" of parts can go a long way to ensure best use of spares and materials.  We also want to look at the most efficient and economic means to buy parts by applying the statistical formula, Economic Order Quantity (EOQ). 

Computerized Maintenance Management Systems
Successful maintenance practices depend a great deal on a robust information system. This involves having a CMMS program that is capable, well supported, and fairly easy to use. 

Modules should be consistent with industry standards and cover: equipment data management, work-order control, preventive maintenance, inventory control, documentation control, system security, ease of use, reports, user configuration and metrics.

One of the common issues we find is that so little resources are applied to its implementation that the CMMS gets off to a slow and inefficient start.  Another setback to overcome is the proper training of personnel, which should include basic computer literacy training for those who have little to no experience in computer usage. 

Taking the time up front to develop failure codes and action codes, as well as developing common conventions as to what things will be called and how parts will be numbered, can improve the quality of the CMMS.  

One of the most essential elements of a CMMS is its reporting abilities, which provide the tools to analyze and make decisions on facts and data, rather than on opinions and assumptions.

Preventive Maintenance
PM is often defined as "those timed or meter-based service activities used to extend the life of equipment and identify potential problems through inspection and early detection."

PM may include work performed on selected equipment through service contracts, inspections, cleaning activities, testing, lubrication efforts, and scheduled shutdown service. The most significant activity to occur in PM is inspection, which should lead to early detection and, therefore, correction.  Equipment manufacturers are a good source for standardized tasks, but take the time to analyze the history on particular equipment before over or underperforming PM on that equipment.

PM is a major component in moving from reactive to proactive through early detection and early correction. We must develop an organizational discipline to perform it and the skills and knowledge to perform it well.

Predictive Maintenance
A sound description of PDM is "the application of technologies and early detection processes to monitor and detect changes in condition to allow more precise intervention." 

PDM may include vibration analysis, shock pulse methods, ultrasonics, thermographic analysis, oil analysis, electrical surge comparisons, motor circuit analysis, coolant analysis, wear particle analysis, and performance trending. This information provides early warnings of changes in condition to allow corrective actions to be made prior to failure.

Planning & Scheduling
Planning is devising a process for doing, making, or arranging maintenance work. It involves preparing job plans and other resources to enable the craftsperson to perform the work quicker and more efficiently. It often deals with the "what" and "how.” 

Scheduling is creating a schedule for when the work is to be performed. Where planning dealt with the "what" and "how,” scheduling deals with the "when" and "who."

The lack of organized processes and standardized procedures can significantly restrict a maintenance operation from meeting its objectives of servicing the needs of the organization.

The majority of maintenance work can be planned and, for the most part, should be. Increasing productivity or value-added work of maintenance personnel depends a great deal on properly planned activities.  Proper planning and scheduling is the single most important tool to improve labor efficiency and productivity.

Work Flow
The work order is an integral part of an effective maintenance operation. It serves to:

  1. Identify work

  2. Request work

  3. Prioritize work

  4. Schedule work

  5. Activate work

  6. Track work

  7. Analyze work

A work order (whether a paper or electronic document) allows for the control and monitoring of work activities. One of its most significant purposes is to analyze work that has been performed in order to identify costs, losses, and trending of problems. As important as a work order is in the earlier steps, it is the ability to analyze and make improvements from the trends we see that carries the biggest punch.

Financial Control
This practice area deals with the fiscal control procedures of the maintenance organization. It may include budget control, contractor cost monitoring, and overall labor and material cost control. 

It may also include monitoring and affecting decisions on asset repair/replacement.  Another key component is having the proper measures in place to provide information before it’s too late to make changes.

Operational Involvement
It is becoming more and more rare to find organizations that have not broadened their level of operator involvement in basic care type activities. The logic includes having operators assume such basic responsibilities as routine cleaning, lubrication tasks, adjusting/tightening, inspections, and minor repair/replacement.  We call these frontline care activities CLAIR.

This may be in the form of Total Productive Maintenance or some other structured process to encourage ownership, involvement, and improved equipment reliability. 

Staffing & Development
To support the "improved" maintenance organization, jobs will have to be redefined to improve efficiency and effectiveness. Traditional views of restrictive job requirements and duties will have to be replaced with more flexibility and higher levels of skills.  Multiskilling is the future, while narrow and restrictive jobs are a thing of the past.

People will perform successfully if they are capable, have well-defined job roles, know what is expected of them, have the skills and knowledge as well as the tools and resources to perform, and receive feedback and rewards for good performance. We find that many organizations underspend on maintenance mechanic and technician training.  We often assume they have all the skills and knowledge they need.  However, this is often not the case because techniques and methods continue to change just like the technology of the equipment we ask them to service.

Training and skill development is a key component because it enables people to meet the expectations they face in their changing jobs. A minimum of one week per year per person should be invested in training.

Continuous Improvement
Continuous improvement is best described as constantly striving for better ways to do things. This often involves comparing one's operation to others to find those better ways. This is referred to as benchmarking. It also involves auditing and monitoring one's activities to reduce the possibility of slippage and not following standards. Reliability's greatest enemy is variation. Finding a consistent process to follow, but continuing to look for ways to improve the process, is one of the ways good companies become great companies.

Summary
Poor planning, improperly trained staff, unclear goals and objectives, lack of leadership, poor historical records, and inefficient manning can cause work to take longer, cost more, and produce poor results.

World Class organizations develop an improvement process to focus effort on strengthening these systems and processes.  A solid maintenance practice supports a strong fleet that is geared toward proactive activities involving the total organization. Improving those practices requires patience, strong management commitment and dedication, as well as the willingness to make it happen through well-conceived plans and actions. 

Measuring these practices is not only to assess how well they perform, but also to discover what to improve.

Article prepared by:
Preston Ingalls, President
TBR Strategies LLC

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Leveraging PDA’s for Equipment Management

Imagine being able to manage major equipment and small tools while walking the jobsite, completely mobile and synching real-time with other systems.  No need to have a full-blown computer; simply interface remotely with palm-based applications available in Personal Digital Assistants (PDA).  The major functions of a PC can be accomplished easily with the currently available pocketsize solutions available in PDA devices.  

Project managers can simply refer to their PDA to see which piece of equipment is currently on their job or what is available from the equipment yard or tool crib, without having to get on the phone and call the shop to get that information.  Access to the needed information is real-time and readily available.  The time saved by this function alone can be significant on a large equipment-intensive project. 

Walking the jobsite and recording meter readings becomes incredibly easy when utilizing PDA devices.  Streamlining operations with barcode scanning makes it possible to simply scan the label on the equipment, enter the meter reading, and move on to the next piece of equipment.  Employees are no longer required to key in the equipment numbers.

Having the ability to charge jobs with actual equipment usage versus using an arbitrary overhead allocation will provide a much clearer picture on what actual costs are for each project.  Jobs with heavy labor usage, but light equipment requirements, are not unfairly burdened as in a typical allocation scenario.  This capability is available for all major equipment, as well as small tools, using the quantity-based functionality. 

The assign transfer function allows for effective tracking of the movement of all jobsite or shop-based equipment, while at the same time setting up the charges for the corresponding jobs.  Actual usage is based strictly on the movement of the equipment. 

When equipment repairs become necessary at the field location, the technician can simply initiate a work order and then capture all of the information for charging that work order, either to the piece of equipment and/or to the job.  As field technicians make repairs or perform the tasks on a preventive work order, they can enter the details and parts used immediately into their PDA.   

While these tools are great, they are of little value if the field personnel find the system hard to use.  PDA’s have become increasingly more user friendly, and their applications and functionality have significantly improved.  Leveraging these simple devices can greatly increase the effectiveness of managing equipment at jobsites.  In order to facilitate the greatest ease of use, all functions should support the use of barcode scanning capabilities to enter equipment numbers, job numbers, and more.   

Take jobsite productivity to new levels by putting the right tools into the hands of the people that need them most.  Efficient, easy, real-time.

Article prepared by:
Rick Gott, VP of Sales Operations
Computer Guidance Corporation
rreber@computer-guidance.com

 

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Software to Maximize the Return on Your Equipment Investment

Equipment management software that is integrated with the rest of your business can improve utilization with better location and revenue tracking, minimize repair costs with better attention to scheduled maintenance, and reduce overhead by eliminating redundant record keeping. 

The three major elements of Equipment Management are Location Tracking, Revenue and Cost Tracking, and Maintenance & Work Order Management. 

Location Tracking, simply enough, deals with moving equipment between jobs or plants, and identifying where assets are located at any given time.  Software that helps you find equipment when you need it will save you time and money.   

Revenue and Cost Tracking treats each category and piece of equipment as a profit center.  When used at a job or plant, the equipment accrues revenue on an hourly, daily, weekly or other basis.  Conversely, the revenue to the equipment is tracked as a cost to the job or plant.  Close tracking of costs such as fuel, parts, and repairs can help to identify issues requiring closer attention. If a piece of equipment is not accruing sufficient revenue to offset its cost of ownership and repair, then alternatives such as rental or replacement should be considered. 

Finally, Maintenance and Work Order Management provides an organized system of files to address scheduled maintenance and repair requirements, and assemble this information into Work Orders and parts lists for mechanics performing the work.

What makes this type of software different from stand-alone maintenance programs is the integration of information with the rest of the organization.  In an integrated system, the foreman’s time card records the operators and equipment on the job, and hours get updated automatically.  When an operator moves a piece of equipment to another job, the location gets updated with his timecard.  Fuel purchases and repair parts get recorded at the time of invoicing through Accounts Payable.  With a stand-alone maintenance program, a mechanic or clerk either enters this information separately, or more commonly, it doesn’t get recorded at all.  Stand-alone maintenance programs for the most part depend on meter readings, and that is usually not enough information to manage equipment efficiently. 

In summary, managing equipment to maximize the return on your investment is simplified by software tools designed for that purpose.  Knowing where your equipment is, whether it is making or losing money, and keeping on top of scheduled maintenance and repairs will help your organization run more efficiently and more profitably.

 

Article prepared by:
Michael Ragan
Viewpoint Construction Software
miker@viewpointcs.com

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E-BAY, E-TICKETS, E-GAD!
WHAT ABOUT E-BIDDING?

E-Bay:  For shopping

E-Tickets:  For travel

E-Commerce:  For E-everything? 

Even the construction bidding process has been affected by this new technology.  While many state departments of transportation are offering heavy & highway contractors the option of submitting bids electronically, others are making it mandatory.  ADOT offers this as an option on all its projects, except A+B and design/build jobs. 

ADOT utilizes the Bid Express on-line bidding process.  Project information is accessible to Bid Express subscribers at www.bidx.com.  Bid Express is a two-way service that publishes bid-related information from state transportation agencies to the contracting community and also allows online, secure bid submission to the state transportation agency.  Additionally, it handles electronic bid bond verification.  Visit the Bid Express website for further information concerning security issues and fees. 

Currently, two bond validation companies are available for use with electronic bids for ADOT.  Contractors may choose from Surety 2000 (www.surety2000.com) and SurePath Network (www.insurevision.com).  These companies work behind the scenes to provide an electronic bid bond to accompany the contractor’s bid.  The process is quite simple, but you will need some lead-time to coordinate the process with your bonding company and bonding agent.   

If you submit bids to ADOT, be sure to look into the electronic bidding option.  It has great potential to save time and prevent costly mistakes in bids.  For further assistance, contact ADOT representatives Kimberly Whiteberg-Jafari (602-712-8270) or Ata Zarghami (602-712-6761).  In addition, Debby Anderson of Minard-Ames Insurance Group (602-273-1675 ext. 223) would be happy to visit with you about how this process works at the bonding agent level.

Article prepared by:
Mike Specht & Debby Anderson
Minard-Ames Insurance Group

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Heavy & Highway Hot Topics – Let Us Know What You Think!

  • Depreciation bonus on equipment purchases

  • Increases in pricing of fuel, steel & concrete

  • Technology helping the Heavy & Highway market get into gear

  • Asphalt plants, scale systems, hardware costs, running asphalt or batch plants

  • Tier 2 of new EPA diesel standards – how will this impact the construction industry

  • Equipment Maintenance

We are interested in the topics that interest you!  So, please take a few minutes to tell us what you think by completing this short survey! Results will be published in the next issue of the newsletter.

If you have any questions or comments – or just want to let us know how you like this e-publication - please feel free to e-mail Karen Schneider at HQ.

We also ask that you share this newsletter with other members of our industry so they will learn about the focus on Heavy & Highway within CFMA and join as a result. Individuals interested in membership can visit www.cfma.org to complete a membership application, or contact Karen Schneider at HQ for more details.

 

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Many thanks to the following Heavy & Highway Subcommittee members who were instrumental in developing this newsletter:  

Brian Cooney, Barriere Construction Jeff Robinson, PAS, Inc.
Scott Humrickhouse, FMI Rod Sutton, Construction Equipment Magazine
Phil Warner, FMI George Thomas, Sargent & Sargent
Christian Burger, Burger Consulting Group George Rebeck, Titan Construction Organization
Mike Richard, R.J. Grondin & Sons  

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© 2005 Construction Financial Management Association.  All rights reserved.
No portion of this e-newsletter may be reproduced without the expressed written permission of CFMA. 

The opinions expressed by the authors featured in Talking Heavy are theirs alone and do not reflect an endorsement by CFMA. The individual authors are responsible for the validity of any numbers and mathematical operations used in any examples and for obtaining permission to use any works cited in their respective articles.