What to measure and how do it to cut costs and downtime
By: Jennifer Angrisano
Business Analyst, B2W Software
In addition to personnel, equipment is essential to heavy civil construction operations. Keeping a fleet on the job and in safe, working order is a challenge with considerable financial risks and rewards.
Add maintenance and repair costs to the impact that out-of-commission equipment has on productivity, and the bottom line can suffer significantly. The logical solution is to put systems in place that drive preventive maintenance, maximize uptime, deliver data and increase profitability. So, how do you do that?
You Can’t Improve What You Don’t Measure
Construction companies cannot really improve equipment maintenance processes unless they first know how their current results compare to industry benchmarks. They need the right information and they need to measure performance in a consistent manner.
These are the top six key performance indicators (KPIs) for equipment maintenance that contractors should track, along with some industry accepted targets the maintenance team should shoot for and a few additional KPIs that can also be considered.
- Maintenance Costs as a Percentage of Total Revenue
Some heavy civil construction companies find themselves spending 15 percent or more of total revenue on equipment maintenance costs. The best hold that number to below five percent. That’s a huge gap, and any improvements go right to bottom-line profitability.
- Preventive Maintenance Hours
By servicing equipment at predetermined intervals, contractors can detect and prevent failures before they occur. This saves money, increases uptime, maximizes maintenance staff efficiency and extends the life of the equipment. These intervals are based on time or use, and typical preventive actions include inspections, cleanings, lubrication, adjustments, component replacement and minor repairs. Heavy civil construction companies with effective, proactive maintenance programs should spend 50 percent or more of their maintenance labor hours on preventive work.
- Planned Hours vs. Unplanned Hours
With dozens or even hundreds of pieces of equipment in a fleet, developing and following a preventive maintenance regimen can be challenging. However, the rewards are substantial. When maintenance work is planned in advance, contractors maximize the efficiency of their mechanics and minimize disruptions to production in the field. Using maintenance labor hours as the measurement, construction companies should aim to schedule and plan 80 percent or more of work in advance.
- Emergency Maintenance Hours
Anyone who manages construction equipment – or owns a car, for that matter – knows that breakdowns can be inevitable, but they are also far less likely, if the asset is serviced regularly. When equipment breaks down unexpectedly, productivity is impacted, and repair or replacement costs are often much higher than for routine, preventive maintenance. Maintenance managers at heavy civil construction operations should leverage preventive maintenance to hold the hours their mechanics’ spend on emergency work to below 10 percent of total hours.
- Maintenance Labor vs. Materials
If a construction company is optimizing the efficiency of its maintenance team, labor should account for less than 75 percent of the total parts costs. To calculate this, simply divide total maintenance labor cost by total parts cost.
- Mechanic Overtime Hours
More unplanned or emergency work inevitably means more overtime hours for the maintenance staff. With an effective preventive maintenance program, contractors should generally be able to hold overtime hours to below 10 percent of overall maintenance hours. Do the math, and ensure your overtime budget is being used as effectively as possible.
Additional equipment related KPIs commonly tracked by heavy construction contractors include:
- Asset uptime: the percentage of overall production time that a piece of equipment or the overall fleet is actually available to be used
- Mileage of mechanics: how many miles they drive to and from job sites to do maintenance/repairs
- Days to repair: the time it takes, on average, to complete repairs after a receiving a request or notification
- Maintenance costs as a percentage of the overall estimated replacement value of the fleet
- Schedule compliance: percentage of work orders complete on or before scheduled due date
Specialized Maintenance Software Plays an Important Role
Tracking and measuring KPIs gives contractors a clear picture of their equipment maintenance costs along with the opportunities for improvement. Specialized fleet maintenance software is an essential part of the process.
Without this type of solution, sometimes referred to as a computerized maintenance management system or CMMS, contractors typically rely on paper processes or spreadsheets to manage maintenance processes. These outdated tools can keep them in a reactive mode. They are generally focused on fixing problems after they occur and they tend to retain more equipment and maintenance resources than they actually need in order to compensate for a lack of efficiency and process standardization. Without a CMMS, it is also difficult to get reliable reporting and historical data. All of these liabilities make it difficult to measure performance, let alone improve it.
Specialized software automates preventive maintenance, with data from the equipment generating alerts based on pre-established preventive maintenance intervals. This makes it easier to stick to preventive maintenance schedules and increases efficiency. For example, when a mechanic goes to a job site to work on a specific piece of equipment, he or she can see within the system if other assets at that site have work coming up that could be completed during the same visit. Likewise, if an asset is brought into the shop for repairs, mechanics can easily see the upcoming preventive work required as well, eliminating the need to take that asset out of service a second time. These and other similar examples drive KPI numbers in a positive direction.
A CMMS also provides accurate, real-time and historical data about each asset and what it is costing to maintain it. Managers and executives can use that vital information to make better decisions about work order scheduling and maintenance staffing as well as longer-term replacement strategies.
Jennifer Angrisano has helped organizations improve maintenance practices in the heavy construction sector for close to 20 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.