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.

 

Stay tuned for details on the next Institute.

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Equipment Executive Articles

This table shows cumulative estimated depreciation charges

Every dollar received in a capital expenditures (capex) budget must be returned to the company treasury one way or another. In “The Depreciation Cycle,” we described that process.

The gray square in the middle is where we switch from the equipment manager’s world to the CFO’s world.

Equipment fleets represent a large and special kind of capital investment that does not last forever. Machines wear away in the production of work, so there is a constant need for replacement—of both the unit itself and of the capital investment it represents.

Here are four approaches to calculating the cost of downtime.

Everyone agrees that downtime costs money in terms of lost productivity, impacts on other operations, and the cost of returning the machine to work. There is, however, little agreement on how to quantify the impacts and include them in the equipment cost calculation. It is a controversial subject that can easily distract attention from the need to manage hard costs on a day-to-day basis.

Equipment managers can estimate cost per hour over the life cycle of a machine.

Last month, we introduced lifecycle cost as a subject that many people talk about but few people really understand.

Keep the machine for a short time, and lifecycle operating cost per hour is low

Many people and organizations talk about “minimum life cycle cost per hour” or “minimum hourly cost of ownership.” Few know exactly what they are talking about, and few, if any, provide the tools needed to implement the concept and understand how cost per hour varies over the life of the machine.

Consider not only what is spent on maintenance, but also what the results should be

Life is often not as difficult as it seems, and it is a good idea to ratchet back on complexity, keep things simple, and stick to what is important.

The input/process/output diagram above helps us do exactly that, and it can improve the way we measure and manage maintenance effectiveness.

The Financial Accounting Standards Board (FASB) has issued a new standard on accounting for leases (ASU 2016-02), and these will need to be fully implemented by public companies in 2019 and by private companies in 2020. Certain aspects of the implementation and transition methodology is retrospective, and now is time to become familiar with the new terminology and the required changes.

Equipment managers have six options when replacing a machine

We constantly wrestle with the replacement decision. Sometimes it is relatively easy, and we know we have made the right call. Most days, however, we go home and wonder if it would not have been better to keep the old unit a little longer.

C.E.M.P LEARNING MODULES

Session M/2 explains the principles and strategies of maintenance.

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.

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