Fleet Age Matters

Dec. 5, 2016

The percentage of equipment-owning organizations with formalized acquisition plans is small. Ask an equipment manager to explain how they ensure fleet age stays at an acceptable level, and most will not answer with reference to a 5-year or even an annual plan. The idea of regularly replacing a portion of the fleet as it ages is an underutilized management concept.

Instead, entire fleets age without regard to the inevitable point when a majority of machines record excessive repair costs or failure rates and budgets cannot absorb the necessary capital investment.

Mike Vorster, who has been writing for Construction Equipment magazine for more than 10 years and published a textbook based on his columns, has long advocated fleet-replacement plans. He’s shown how to track repair costs as a leading indicator and a means by which to determine replacement.

But as a percentage of the equipment-management universe, few are implementing these practices. This is particularly disturbing as the technology for tracking machine performance becomes more accessible and usable.

Machine data and information have always been available. Machine information can be recorded on paper, filed, and accessed periodically for review and evaluation. Data can be entered into digital spreadsheets, formulas inserted, and reports run periodically for review and evaluation. With today’s telematics, data can be imported into fleet-management software, and reports run periodically for review and evaluation.

Purchasing plans can logically flow from any of these three processes.

No, machine information is not the problem. The application of the information is what is missing for the majority of equipment-using organizations.

To be fair, not every organization employs someone with the title of “equipment manager” or even has a department set aside to specifically manage its equipment. This function could fall under the operations person, it could be the responsibility of the accounting department, or it could be the firm’s owner who makes decisions about equipment.

Followers know where I stand on the future of fleet management. The ability to manage capital investment, residual value, owning and operating costs, and other organization-specific financial metrics will become increasingly valuable to construction firms, regardless of fleet size. There are tools for learning how to do this at ConstructionEquipment.com/Institute.

The ability to manage maintenance and repair (a large portion of operating costs), however, could likely be outsourced. Rental is a growing option, and dealers are becoming more willing and able to help. The secret for both suppliers is telematics. Large rental operations such as United Rentals are deep into telematics, and equipment manufacturers are frantically working to bring their dealer networks up to speed.

It’s all about machine data. Conexpo is shaping up to be as much about technology as iron this year, and it would behoove attendees to find out how to apply technology to maintenance management. Then talk to distributors about data-based maintenance agreements.

Machine control changed the way earthmoving projects are bid and executed, and many firms that ignored the technology no longer move earth for a living. Integrated machine data will also change the way projects are bid and managed. Those fleets that are not able to keep close tabs on repair costs and fleet age, and that do not put in place a fleet-replacement plan that ensures long-term viability of its core capital assets, may also find themselves making a living elsewhere.

About the Author

Rod Sutton

Sutton has served as the editorial lead of Construction Equipment magazine and ConstructionEquipment.com since 2001. 

Our mission is to help managers of heavy equipment and trucks to improve their performance in acquiring and managing their fleets. One way we do that is with our Executive Institute, where experts share information and ideas that will enable equipment managers to accurately manage equipment costs so that they can deliver the optimum financial benefits to their organizations.

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