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.

Registration is open for the next Institute, December 4-6, in Chicago.

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Much time is taken to define and measure what is spent on maintenance. But how much time is spent to define and measure what is returned or, even, what to expect in return? An equipment executive expects compliments for looking after the company’s assets. They expect longer lives and lower costs.…
The best thing about my job is that it gives me an opportunity to spend time with the best and the brightest in our business, work on real problems, and, one way or the other, come up with a solution. These articles—this is No. 145 stretching back to October 2003—are the result of being able to do…

The proponents of lean manufacturing have taught us two things. First, be clear in your definition of contributory work, the activities that add value and contribute to the final result. Second, focus on waste: define it, measure it, and have clear strategies in place to eliminate it from the…

Questions arise over the benefit of including residual market value in a rate calculation and the analysis done to set the economic life of machines. My answer used to be: “It is not a big deal, leave it out, you do not have good residual value data, and there is nothing wrong with being…

The equipment rate—the estimated cost to own and operate a given machine for a given period of time—is not a simple number. It is a complex, high-risk estimate that plays a major role in many aspects of the business.

There are three things to understand about equipment rate: the risks…

Job costing can be described simply as charging each job or each phase code for the resources they used to produce work, and crediting the job or job-phase code with the budgeted value of the work done.

The labor portion of a given job phase code is accurately and quickly known through…

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.

Above: This…

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. Maintaining a well-capitalized…

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…

Last month, we introduced lifecycle cost as a subject that many people talk about but few people really understand. We devoted Part I to two things: the calculation of the hourly operating cost for an example…

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…

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…

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.

The replacement decision is complicated because…

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