A Time for Conservative Asset Management

A Time for Conservative Asset Management

February 12, 2013

Managers of construction equipment face uncertainty these days, but they handle it with a level of conservatism that reveals a thoughtful approach to asset management. They are not distrustful, but rather depend on evaluation and history before committing to new courses of action.

We suspect this is not a new trait, but we have seen it exercised much in recent years.

The years of economic disarray certainly breeds a conservative approach to asset management. When the economy slugs along from quarter to quarter, or even month to month, long-range planning for asset management cannot anticipate the resurgence. An organization protects its assets in this environment, and the equipment manager is the key steward of a major portion of those assets. He is prepared, but he is conservative.

Machine evolution, on the other hand, has not slugged along. Much has changed in the five or so years. The most obvious is emissions compliance, but others include telematics capability and the development of various hybrid technologies. (The most recent: John Deere’s 644K wheel loader.)

As we’ve reported on and evaluated equipment and components over this same period of time, our enthusiasm often runs up against the cold reality of today’s equipment-management environment. Most often, we hear about machine cost driven up by the additional technology or by the manufacturer’s need to recoup research-and-development investment. New technology affects maintenance management, too, which requires internal adjustments to accommodate new equipment brought into the fleet.

Suppliers, not untruthfully, promise increased machine performance and productivity, decreased fuel burn, and improved maintenance management. Machines with new technology also boast decreased owning and operating costs.

Professional equipment managers know that no silver bullet will kill downtime or answer management’s demand for 100-percent fail-safe performance and productivity. In today’s environment of highly sophisticated machine development, the conservative nature reigns.

It cannot be allowed to overrule sound decisions, though. Successful asset managers do not delay; their conservatism does not replace sound judgment. Professionals evaluate claims, talk to their peers, and look for historical and comparative data to determine what and when to bring into their fleets.

Five years seems like an eternity in the age of Twitter and 24/7 news. It’s not for the equipment manager. The conservative manager effectively uses time to ensure that their asset decisions are based on sound, defensible judgments on equipment benefits, costs and return on investment.