A Master of Risk Management

Sept. 28, 2010


Thad Pirtle, CEM, won the 2006 Fleet Masters Award for private fleets.

A sign hangs over the desk of Thad Pirtle, CEM, vice president and equipment manager for Traylor Bros. that reads: "If you think education is expensive, try ignorance."

If one sentence could sum up the company's philosophy — particularly when it comes to risk management — those eight words do the job. A privately owned company, TBI builds multiyear, large, high-risk projects that are equipment- and engineering-intensive. Most of the time, those projects are joint ventures with other contractors.

"This type of project management requires special attention to the equipment-management program we set up as a corporation," says Pirtle. "It's like having a central company with up to 10 other companies reporting to the central company. This also complicates the equipment issues since equipment is constantly being bought and sold to the different joint ventures."

TBI's fleet, with an estimated replacement value of $150 million, is spread out across North America and includes a large crane and marine fleet with working units in the Pacific, Atlantic, the Gulf Coast and Mississippi River basin. TBI self-insures all equipment valued below $100,000, Pirtle says.

"If we have a loss, it becomes a direct job cost," he says. "If we happen to have a job in Galveston and they lose an excavator in the water or they burn up an excavator, wreck a pickup truck or whatever, that becomes a direct job cost, the same as buying an air filter or buying oil. It's the cost of doing business."

For instance, if a $75,000 excavator has $50,000 or $60,000 worth of damage, the company won't repair it. "It has to be replaced," Pirtle says. "The cost to the jobsite would be the value of the excavator's current condition prior to the accident. If the excavator is a $100,000 unit and the damage is $50,000, the job site absorbs the cost of the repairs." Such risks, he says, have to be built into the bid.

Since some of Traylor's equipment is valued up to $3 million, it is too expensive to self-insure everything. "When the value of equipment is over $100,000, we use normal insurance with high deductibles," Pirtle says. "Having said that, if we tear something up, we might not turn that into the insurance company. That keeps our premiums down. We look at the ratio of our premium cost versus the actual losses and measure them against each other."

Traylor Bros. started self-insuring more than 20 years ago because, Pirtle says, "with an insurance company, you're going to trade out your losses for future premiums. The premiums are basically a payment plan. It's an assessment of risks. We are in the business of managing risks in the type of work that we do. It's just a matter of how much risk you want to stomach. We feel we are capable of managing the risks as well as an insurance company."

This capability comes, in part, from intensive training and education from the top down, Pirtle says. "Everyone in the company goes through OSHA's 30-hour training, including all our equipment people," he says. "We also have all our project engineers, project managers, superintendents and equipment personnel complete the week-long NCOO crane operator certification program. They are required to take the written test after the five-day course, as well. We feel that by educating management in this fashion, it has a trickle-down affect. About 85 to 95 percent of our managers have been trained."

The education push began about two years ago, and 70 to 75 senior managers have been trained. When you include operators and foremen, the number, "is well over 100," Pirtle says.

Employee education and training builds morale and demonstrates company priority. "Our No. 1 goal in the company is safety," says Pirtle. "We want a safety-oriented culture that represents what we stand for."

This drive for improvement is not a light hidden under a bushel basket. The company markets its safety training and its goal of ensuring quality through such promotional material as brochures and correspondence with original equipment manufacturers.

One of Pirtle's most successful ideas along these lines is the company's Equipment Quality Program. Every vendor is aware of it and so are OEMs who are informed of the program via correspondence.

Pirtle hatched the idea some years ago in an effort to "dissolve" the attitude among employees to accept mediocre quality and, in effect, change the culture of the company. "Most people want to do a good job, but sometimes they need a vehicle to get them there," he says. "That's what the Equipment Quality Program does."

When a piece of equipment is purchased from a manufacturer, or when it is shipped from project to project, it now goes through an aggressive and thorough inspection.

"The superintendent who is shipping the equipment personally signs off on it," says Pirtle. "When it leaves for the jobsite, he calls to alert the other site that it is coming. Shortly after the equipment is received, he calls again to find out how it was received and whether or not it has any deficiencies and is mechanically able to do the job. If there is a deficiency, we note it on the transfer and then measure that deficiency ratio on an annual basis, on a project basis and on a site basis. This gives us a record and a benchmark to measure our deficiency ratio to see if it is going up or down."

Pirtle never demands more from his employees than he demands from himself. For instance, in his personal drive for improvement, Pirtle won AEMP's Technician of the Year in 1990. Last year, he was named AEMP's FleetMaster for private fleets. Earlier this year, AEMP named him as a trustee of its education foundation.

"Training and education are dear to me. Reaching these personal goals has been very fulfilling. In looking back," he says with genuine modesty, "I guess I have accomplished a few things."

He attributes every accomplishment to education. If he ever thinks the price of education is too high, he just takes a look at the sign over his desk.