Equipment Type

Construction Equipment Executive Institute

Learn the fundamentals of fleet management from our collection of articles and videos. The best in asset management for the construction equipment professional.

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Equipment Executive Articles

Should the shop make money?

It is surprising how often this question is asked and how much emotion is attached to almost any answer. Perhaps another way of looking at it is to ask, “Should the shop lose money?”

You cannot maintain the equipment of today with the tools, technologies and mindsets of yesterday.

A small book titled “Fundamentals of Earthmoving” published by Caterpillar in 1968 has a special place in my bookshelf. This is what it says about repair parts and labor:

Ron is the CEO of a large and busy construction company. Life has been a blur, but the business is a success. It is growing and making money. Ron is a busy guy.

Using the sample data for Annual Costs contained in the table below, these cost models allow for evaluation of various life cycles.

The difference between annual cost and full life cycle or life to date (LTD) cost is one of the most difficult things to grasp when it comes to understanding equipment costs. This is due to the fact that we have been trained to focus on next year’s cost and next year’s budget, which causes us to take a short-term view of cost. The snag is, you buy a machine for the long term.

Most construction companies have an equipment department or division within the overall organization. This responsibility center builds a specialized equipment team, gives it clearly defined and measurable objectives, and focuses management attention on a critical part of the business.

In my February 2011 column, I suggested that the number of equipment-manager positions was declining.

We constantly work to balance the cost of owning and operating our fleet with the revenue earned by charging jobs for the equipment they use. It occupies a large portion of every day.

C.E.M.P LEARNING MODULES

Session E/2 explains what is included in the hourly rate calculation, and how to do the actual calculation.

Session O/2 explains what role the hourly rate plays in an equipment-using company, and how the rate should handle transactions.

Learn how to understand and use activity metrics.

How to make your organizational structure work for you.

Understand the differences and use them to improve cost control.