How Equipment and Operations Divisions Work to Common Goals

By G.C. Skipper | November 6, 2012

Reprinted with the permission of Equipment Manager magazine, the magazine of AEMP.

When it comes to asset management, equipment and operations are like an old married couple. They squabble and complain and irritate each other, but in the end they form a successful marriage.

Seven-Step Solution

Mike Vorster, CEMP Central, says following these seven steps will go a long way toward improving relationships between equipment and field operations.

1. Emphasize common interests.

Although each side of the business has different responsibilities, they share a common bond. Both function equally in reaching company objectives: undertaking and finishing construction projects efficiently and effectively. Both groups are interdependent. Nothing is achieved if one succeeds at the expense of the other.

2. Balance responsibility and accountability.

Although equipment managers, in many instances, are not directly responsible for 70 percent of the equipment budget, they can influence cost through good maintenance and well-timed replacement. The rub is the majority of costs depends on two factors over which they have little or no control: the work done by the machine and how machines are operated. That is operations’ responsibility. Since equipment abuse and safety go hand-in-hand, clearly defined lines must be established of what is and is not acceptable. Equipment should carry single-point responsibility to its budget. Field operations must accept its role in causing equipment costs to be what they are.

3. Accept that equipment works hard.

Although equipment is designed and built to work hard and efficiently, accept the fact that failures and the self-destructive side of a machine are a means to an end, but that end should come as late and as cheaply as possible. Nothing is achieved by deferring maintenance or abusing equipment in the name of productivity.

4. Recognize and manage abuse.

Abuse must be treated for what it is: unwarranted, unnecessary and unacceptable. Such instances should be recorded, discussed and agreed on. That defines the line between abuse and fair wear and tear, and it establishes facts that ensure the responsible parties carry the appropriate costs.

5. Focus on PM and find the time to do it.

Equipment failures are inevitable. PM relies on the ability to predict failure and the time needed to take action before failure happens. PM is useless unless there is a corresponding commitment to release the equipment from production and provide the time needed to make the repairs. If this isn’t done, the machine will pick the most inconvenient time to take itself out of production, and that will be more costly and take longer to repair.

6. Recognize the reality of cost.

Squeezing repair costs to meet budget and rushing repairs to move back into production isn’t a smart thing to do. Doing the right job once is better than doing too little too often. Realize that costs are real and the necessary time to do them is unavoidable.

7. Develop a common language.

Success requires close and clear communications between the equipment department and field operation. Both parties have to have a common language. Field managers must know the owning and operating cost calculations budget and how their decisions regarding utilization, operation and application affect the operating costs. Both parties must understand they work for the same business, and although their responsibilities differ, they share and contribute to the same success.

“Equipment sees the fleet as family,” says Mike Vorster, president of CEMP Central. “The field sees the fleet as a self-destructive means to an end. Good companies address the issues and get it right.”

Sunland Construction restructures

Louisiana-based Sunland Construction recently made major moves to “get it right.” It restructured from top to bottom in an effort to eliminate bottlenecks up and down the chain of command. The old structure slowed decision making and became rocks in the road for Sunland’s predominantly pipeline installation and repair projects.

Dennis Sullivan, corporate equipment manager responsible for more than 1,600 pieces of construction equipment and vehicles, says the highly diversified company has about 2,000 employees, only 60 or 70 of which work on the equipment and maintenance end of things. “We are not the dog, we are the tail,” he says.

Prior to improving the organizational chart, too many decisions were run all the way to the top of the company where they waited to be acted upon, Sullivan says. Decisions were then run all the way back down.

“Before, managers across the country reported to a single vice president,” he says. “Now we have a senior vice president and three regional vice presidents who report to him: one for the east, one for the west and one to oversee our integrated services. That group is made up of companies that don’t necessarily fit into dyed-in-the-wool pipeline work.”

The goal of the restructure was to push down decision making to the lowest possible level so action could be taken quicker, Sullivan says.

Equipment and operations, of course, were part of that restructure, and Sullivan says operations knows more about the equipment side than vice versa. In fact, it is his opinion that—at least in his company—operations knows more about equipment than any other entity, such as finance, safety and human resources. That’s because equipment and operations work hand-in-hand, he says.

“We can’t let our egos get in the way,” Sullivan says. “Without operations, nobody works. Accounting doesn’t work without them. The president of the company doesn’t have a job without them. Operations makes the money and keeps everything going. We are here to serve them, not the other way around.”

Aegion creates asset management for equipment

Guy Gordon, CEM, director of asset management for Aegion, agrees about the importance of a solid relationship with operations.

“If you don’t have that, there is potential for conflict of interest,” he says. “If that happens, all you’re doing is trying to keep up with fires. Equipment and operations have to work toward a common goal. I have talked to peers in some other organizations, and sometimes operations think they know how to run things better. It has to be a collaboration of efforts, and operations needs to do the right thing. They have to put effective equipment management practices in place. Otherwise, they’ll never gain ground.”

When Gordon joined the company, equipment was run by operations, he says. To change that, he realized the new structure had to be described so it was clear what it was going to look like and how it was going to impact operations in a positive way.

“In pulling asset management away from operations, we had to decide how operations would still be involved so they would have input,” Gordon says. “We accomplished that, and it has been in place now for seven years.”

The role of asset managers is to take care of the equipment, he says, to make sure it is maintained correctly, that it is safe, that it is the right type of equipment for the application, and that the acquisition is what’s right for the business.

When problems arise, it is common to blame areas that aren’t necessarily responsible for project performance. “Equipment seems to be blamed quite a lot,” says Gordon. “It is important that both equipment and operations be really honest with itself to make progress.”

If the blame game goes unchecked, “you never gain any ground and the relationship becomes adversarial,” Gordon says.

Traylor Bros. sends equipment superintendents to each site

Thad Pirtle, vice president and equipment manager at Traylor Bros., says building a good relationship boils down to simply treating operations as a customer.

“Many times, operational people aren’t treated that way,” he says. “Equipment looks at its little world, its little dynasty. That’s not the way it should be. Equipment should look at itself as a servicing group.”

The benefit is three-fold, he says: Everything runs smoother, equipment is maintained better, and each party knows where the other is coming from. “In general, team work,” Pirtle says.

Again, how the company is structured plays an important role. Given the fact that most Traylor Bros. projects are fairly large, Pirtle says, an equipment superintendent is assigned to a particular project. He works for that project team with moderate supervision from corporate equipment. When an equipment superintendent is on a job site, he works specifically for operations.

And Pirtle knows from his own career that if that equipment superintendent “grew up with the company,” that’s even better.

“It helps a bunch,” he says. “If someone is hired from the outside and comes in as an equipment superintendent, that is a different scenario.”

In addition to treating operations as a customer, another key element that cements the relationship is respect. Respect them for their position, Pirtle advises, and respect their point of view. Operations has a different perspective than equipment, he says.

“We look at the life cycle of equipment, for instance, as two to three years,” says Pirtle. “We look at what the project needs in terms of reliability—one of the biggest headaches between operations and equipment. Equipment people say, ‘You’re not taking care of the equipment.’ Operations people say, ‘It wasn’t running right anyway.’”

Breaking down the barriers between equipment and operations

Trust and accountability will break down that type of barrier, Gordon says.

“If equipment says operator abuse is the reason why equipment costs are high, then operations has to listen to equipment and take action,” he says. “The same is true for the equipment side’s performance. Trust and accountability are the key factors in a good relationship.”

Sullivan stresses communication. “If equipment talks to operations, for instance, explaining that a machine has to be worked on or taken away, you can reach an agreement. If either side gives the impression that it is doing things without talking to the other side, things can get a little dusty. If you don’t let little piddly things irritate you, things will work out.”

Pirtle agrees. He places such a high value on improving communication skills that 90-minute training sessions are conducted annually at various manufacturers’ facilities. Equipment and operations people are brought in for the sessions that cover how to handle controversy and how to communicate with project managers at different levels. One of the most important skills, says Pirtle, is for equipment superintendents to convey their point in a clear and precise manner.

The session on how to handle controversy, for example, stresses the importance of forthrightness and not holding anything back “just to protect your little dynasty,” Pirtle says. “You are there to support your customer—not that the customer is always 100 percent right.”

By the same token, operations has to have confidence in the equipment department. To build confidence and create trust, he says, equipment must spend a lot of time with operations—on their turf.

“Find out what they expect from you and whether or not that expectation is attainable,” he says. “If they expect a piece of equipment to run 100 percent of the time, that’s not reasonable. Equipment has to explain that 97 or 98 percent is reasonable because you have to have downtime to schedule repairs.”

In addition to the annual meeting at OEM facilities and spending time on operations turf, the equipment side includes operations people in all equipment functions, such as CONEXPO/CON-AGG events and OEM factory tours.

“Last year we had 55 people at Conexpo, including operations, engineers and general superintendents,” Pirtle says. “They are also involved in our equipment meetings.” That is important, he emphasizes, to let operations “see what it looks like” from the equipment side.

With across-the-board agreement that trust, communication and understanding are key elements that build strong relationships between equipment and operations, the question becomes, how is that done?

The easy way, but not the best way, Sullivan says, is by e-mail or telephone. Although those are the everyday tools, they are not the end-all, he says.

“Operations likes to talk to you,” he says. “They want to put their two cents worth in, and that two cents is very valuable. You need to go to them and talk to them in person and let them know they are part of the team and part of the solution to any issues that come up.”

He illustrates with a survey Sunland conducted asking what tires should be used on trailers. “That’s doesn’t sound very important until you consider we’re talking about 300 or 400 of them,” he says.

The poll went to “everyone we could think of” before a decision was made, he says. If the poll had not been taken and had someone just sent out an e-mail saying from now on we are going to use only X brand of tires company wide, “some people will do it without questioning it,” Sullivan says. “You’d learn quickly that the tire that works well in South Texas in 110-degree temperatures may not be the one you want in North Dakota in 30-below temperatures.”

Building trust is difficult and takes time, Pirtle says. It takes communication, and it takes reinforcement of trust when it starts to happen.

“Just do what you say you will do,” Pirtle says. “If you say you’ll have equipment out there that will run the length of the project with warranties, then do it. If it’s not done, make it right. Fulfill your promise.”

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