Measuring Utilization Saves Modern $750,000

Sept. 28, 2010

Scott Crowley
Scott Crowley,

Scott Crowley,Controller

Headquarters: Cambridge, Mass.

Specialty: Heavy construction and tunneling

Equipment Value: $600 million

Fleet Makeup: 2,081 total units, including 830 off-road machines and 1,251 licensed vehicles

Facilities: 3 shops, 49 service trucks

Support Staff: 35 total, including 12 master mechanics, 5 equipment supervisors

Market Range: 99 percent in North America

Jessica Colantino, Modern's IT manager, works with Crowley to develop simple reports that deliver accurate, fleetwide utilization updates weekly.
Crowley (left) and Scottie Noyes, equipment director, are covering growing work volume with fewer machines and less rental cost by moving machines into more productive jobs.

Adapting the maintenance module of Modern Continental's new computer system put the right tools in the hands of Scott Crowley and Scottie Noyes, controller and equipment director for Modern's equipment division, to boost fleet-wide utilization. The tools and weekly reports that compare machine hours to operator hours came at just the right time. Even though Modern Continental has 50 to 60 machines coming off of Boston's Big Dig and other completed jobs, fleet-wide utilization has continued to climb during the 18 months since developing the reports. Crowley estimates the company has saved more than $750,000 in outside rentals.

"Every week, Scottie and I meet to analyze which machines aren't getting the hours we expect," Crowley says. If prospects for increased utilization are dim, they can move units from coast to coast if necessary to take the place of busy rented machines on other projects. "Project managers who are only getting a few hours a week on one of our machines can always fill in with a short-term rental, and the company saves money overall."

Utilization tools are simple. The first is a record of hours of use, which the maintenance module of Modern's Computer Guidance software supplies. The exception report includes all the machines that show less than 40 hours of use two weeks in a row.

To narrow exceptions down to a manageable number, Modern Continental's top-notch information-technology group wrote a report using Business Objects that pulls the operator's billed time from the job accounting module and combines it with the hour-meter hours from the maintenance module. Crowley and Noyes investigate low-hour machines that show operators working full time.

"We have always tracked this information, but it was stored in three different systems," Crowley says. "This made it difficult for us to produce a report in a timely enough manner to make cost-effective decisions. Now, within an hour of when payroll is input, we have a utilization report we can use."

With equipment spread all over the country, the single information system has become crucial to smart equipment decisions. It is especially valuable because of the sheer volume of dispose-or-deploy decisions that must be made as machines leave the Big Dig.

"As machines become available, we have to decide whether we're going to use them or sell them," Crowley says. The new reporting system tells them if there are rented or less reliable machines on West Coast jobs getting enough hours to warrant shipping a better unit across the country.

With the used-equipment markets glutted, Modern can usually squeeze a great deal more value out of utilization than resale.

"We've been trying to stay away from the used equipment market in general, but we have done well selling some specialized machines," Crowley admits. "We profited from the sale of a cutter and two cranes that we bought specifically for slurry-wall work on the Big Dig.

"We've traded in some of the tired iron as well," he says. "Plus we refurbished the machines that were in decent shape, like the dozers and excavators, since this is equipment that we can use on any job."

Selling off valuable specialty machines, trading up for high-use core equipment, and refurbishing a few hard workers has kept Modern Continental's expenditures on replacement equipment falling over the past 18 months. Rental costs have dropped and repair costs are holding steady. High-utilization machines have been upgraded, and the shrinking fleet continues to support growing work volume.

"Utilization drives everything we do here," Crowley says. "If a machine's utilization is down, and we don't see an immediate need for it somewhere else, we're certainly not going to spend money repairing it and we're not going to save anything by keeping it."

Climbing utilization rates are making equipment operations significantly more cost effective. And detailed information has helped Crowley and Noyes identify some enticing deals they can offer to project managers.

"When they're paying $10,000 per month to rent a crane on a job and we can come in and supply that same crane for $8,000," says Crowley, "it's a win/win/win situation for the project, the company, and the equipment division."