January/February 2016
Read the article at CFMA Building Profits online
By: Jennifer Angrisano, B2W Software
Why and how heavy construction companies leverage specialized software to maximize equipment uptime, cut costs and drive profitability
Not much gets done in heavy construction without equipment. Keeping increasingly sophisticated assets on the job, maximizing their lifespan and minimizing cost of ownership are critical to profitability and command a substantial chunk of every operating budget.
The most effective enterprises hold maintenance costs to around five percent of revenue. Some spend ten percent, fifteen percent or more. For others, maintenance is a “black hole”. Reactive approaches and a lack of standardized processes and controls make it impossible to calculate actual costs or to make informed decisions.
With so much riding on maintenance and repairs – and with the technology available to assist in the process advancing rapidly – many companies are exploring options to set aside their paper- and spreadsheet-based systems in favor of specialized Maintenance Management Programs.
Why companies make the move to a Maintenance Management Program
Equipment has a big impact on every bid and every company’s bottom line, so it’s only natural to look at maintenance and repair practices for opportunities get more cost competitive. Many companies adopt Maintenance Management Programs when they acknowledge that this work is being done reactively, without standardized processes and with little or no enterprise-wide reporting, visibility or accountability. This makes it difficult to pinpoint causes and reverse the trends when maintenance costs are increasing annually, while utilization rates are decreasing.
A more advanced Maintenance Management Program can provide accurate, real-time and historical data about assets and what they are costing. That’s vital information that managers and executives can use to make better decisions about everything from parts inventories, work order scheduling and maintenance staffing to rental and replacement strategies.
Companies also move to comprehensive Maintenance Management Programs to break out of the trap of compensating for a lack of efficiency, visibility and controls by retaining more equipment, more resources and more inventory than they actually need.
Advancing software technology and the specific characteristics of the fleet are two additional factors that influence the urgency and the impact of implementing a Maintenance Management Program. Software options to manage maintenance have improved and expanded dramatically. They’re also far easier to use. Outdated or accounting-based systems that were intimidating and unwieldy in a construction environment have given way to intuitive options that mechanics and managers alike quickly find compelling to use.
Software on the equipment itself is also advancing. Telematics and geo tracking, for example, can deliver big maintenance benefits, but without a Maintenance Management Program, companies can’t maximize the obvious potential. With a wealth of data available and no way to process it efficiently and make it actionable, they’re left at a competitive disadvantage.
Companies with an older fleet usually have the most to gain, as maintenance requirements and unexpected breakdowns naturally increase with age. Operating over a wider geographic area with multiple shops and parts inventories also increases opportunities for added efficiency.
Essentials and Options
Maintenance Management Programs vary, but every one should serve as a single, comprehensive source for asset management, including maintenance information and processes. A strong program should make it easy to manage repair requests and work orders, streamlining and standardizing the processes and providing real-time visibility on the status of any piece of equipment across the enterprise.
Additional essentials include the ability to establish and track user-defined preventive maintenance programs and to plan labor, parts and tools to optimize productivity and efficiency. Inventory control should be part of the program too, allowing the maintenance team to see what’s available and where it is to manage the supply more cost effectively.
Management reporting and asset history are also vital capabilities. Aggregating key performance indicators automatically can heighten management knowledge, generate alerts for time-critical decision making and allow more effective, data-driven analytics. Having complete historical data instantly available allows companies to better manage lifecycle costs and it takes the guess work out of replacement strategies.
Finally, it’s important not to overlook security. Proprietary maintenance and repair information must be kept confidential, with role-based permission levels for appropriate access to various functions and reports.
Beyond these basic elements, these additional options increase the value and effectiveness of a Maintenance Management Program:
- Warranty Tracking: centralized proactive tracking to maximize coverage, generate automatic alerts in work orders and provide advance notification of expiration dates
- Mobile Mechanic App: specialized tablet application for mechanic functions, with real-time link to scheduling and management reporting
- Telematics and GPS: capture key meter readings, locations, and other data
- Purchasing Integration: streamline accounting and purchase order processes and automate the link with inventory
Preventive Maintenance: Going From Reactive To Proactive
Moving more work from the “unplanned” or “corrective” categories to the “preventive” category is a powerful incentive for adopting a Maintenance Management Program. The goal is straightforward: service equipment at predetermined intervals to detect and prevent failures before they occur.
Heading off unplanned problems before they occur is the best way to maximize uptime and prevent interruptions in productivity. Additional advantages include:
- Completing maintenance work more efficiently and at a lower cost
- Maximizing the efficiency and morale of the maintenance staff
- Planning work at advantageous times to avoid replacement equipment, including rentals
- Preventing repetitive problems and collateral, secondary damage that often goes along with unexpected failures
- Extending the lifespan and preserving the resale value of equipment
Keeping a piece of equipment in peak operating condition through preventive maintenance also makes it safer to operate. That reduces risks to operators, crews on the job site and the general public.
The challenge is establishing and sticking to a preventive maintenance regimen when there are dozens or even hundreds of pieces of equipment in a fleet. That’s where a Maintenance Management Program comes in. These programs put complete information about each asset – including the work-order history and preventive maintenance plan – in one place. They also alert and guide your team, making it easier for them to plan and execute preventive work on schedule.
How do you Measure Up?
There is no magic metric or one-size-fits-all answer to how much a construction company should spend on maintenance. Generally accepted industry benchmarks supported by various performance data and studies in recent years, however, provide a good indication of how much room a company has for improvement:
Maintenance costs as a percentage of revenue
Total maintenance costs, including overhead, for heavy construction enterprises range from 5% of revenue to more than 15% of revenue for companies with reactive, inefficient processes.
Preventive vs. corrective maintenance
Companies with the most effective, proactive programs spend 50 percent or more of their overall maintenance hours on preventive work, as opposed to corrective work.
Emergency breakdown hours
Unplanned breakdowns prevent productivity, cost more to correct, and often drive the added expense of replacement equipment. Companies should be able to hold maintenance hours devoted to emergency breakdowns to below 10% through preventive maintenance.
Scheduled vs. unscheduled hours
While less costly than emergencies, unscheduled maintenance and repairs are still a big threat to profitability. Using maintenance hours as the measurement, construction companies should aim to schedule and plan 80 percent of their work in advance.
Overtime Hours
Breakdowns and unplanned work drive up expensive overtime hours for the maintenance staff. Efficient companies emphasizing preventive maintenance should be able to hold overtime to below 11 percent of overall maintenance hours.
Labor and materials
For companies optimizing the efficiency of their team, the labor portion of the total cost of maintenance should be below 75 percent.
Percent of replacement value
Comparing maintenance costs to the replacement value of the fleet is one of the most effective benchmarks, especially in weighing whether to retain or replace equipment. A figure above 5 percent should be cause concern.
What to Watch Out For
Any Maintenance Management Program is only as good as the ability of a company to implement it and gain acceptance among employees. There are pitfalls that can threaten success, but most can be easily avoided.
One comprehensive program with the essential capabilities outlined above is preferable, as trying to integrate multiple niche applications adds complexity and frustration that can limit effectiveness and acceptance. Unifying the Maintenance Management Program with the software elements used for estimating and bidding, planning, scheduling and field tracking delivers additional advantages.
Resistance from the maintenance team is another threat when moving from paper-based processes to software-based processes in a construction environment. At the same time, most employees want to excel, work with the most effective tools available and contribute to profitability. Easy-to-use Maintenance Management Programs, training and an emphasis on how the software makes it easier to be more effective are strong incentives.
Once a company implements a Maintenance Management Program, it’s critical to follow through. Minor day-to-day challenges will arise and tempt employees to fall back to old, familiar processes. The management team can prevent that by advocating for the new program and keeping the focus on the big-picture efficiency and profitability advantages. Going the extra mile and providing training at the outset can minimize initial resistance. This includes software-specific training for everyone that will use the program as well as enterprise-wide education on how the program will drive new, improved processes.
Finally, while Maintenance Management Programs should be robust, intuitive and easy to use, it pays to pick a vendor that can back up its product with expert support resources that are accessible whenever you need them. Software technology also advances quickly. Pay attention to whether a vendor is committed to continuous development and has a core architecture that can support it.
About the author:Jennifer Angrisano has helped organizations improve maintenance practices in the heavy construction sector for more than 15 years. Before joining B2W Software as business analyst, she was a total process management consultant. Previously, she led the conversion to a software based program for a heavy highway construction enterprise with a fleet of more than 300 pieces of equipment, turning a $1.3 million loss in the shop into a $200,000 gain in a single year.
