moving to a maintenance
Copyright © 2016 by the Construction Financial Management Association (CFMA). All rights reserved. This article first appeared in CFMA Building Profits (a member-only benefit) and is reprinted with permission.
BY JENNIFER ANGRISANO
MOVING TO A MAINTENANCE Management Program
For other contractors, maintenance is a “black hole.” Reactive approaches and a lack of standardized processes and controls make it difficult to calculate actual costs or make informed decisions. With so much riding on maintenance and repairs and with the availability of advancing technology to assist in the process, companies might want to consider specialized maintenance management programs. This article will explore the benefits, key features, and potential pitfalls of such programs.
Why Move to a Maintenance Management Program? A maintenance management program can provide accurate, real-time, and historical data about assets and their costs.
In heavy construction, very little is accomplished without equipment. Keeping increasingly sophisticated assets on the job, maximizing their lifespan, and minimizing the cost of ownership are critical to profitability and can command a substantial amount of a company’s budget. Some companies with which I have worked were able to keep maintenance costs at about 5% of revenue, and I’ve also seen some spend 10% to 15% or more.
CFMA Building Profits January/February 2016
CFMs can use this information to make better decisions about everything from parts inventories, work order scheduling, and maintenance staffing to rental and replacement strategies. In addition, maintenance management programs help companies ensure they aren’t retaining more equipment, resources, and/or inventory than needed. Maintenance management software options have become more intuitive for field and office use. And, software within the equipment itself continues to advance. Telematics and geotracking, for example, can deliver maintenance benefits, but without a maintenance management program, it’s difficult for companies to maximize their full potential.
MAINTENANCE Ma na g ement Pr og r a m
Companies that possess this data but fail to process it efficiently and make it actionable can be left at a competitive disadvantage. Contractors with older fleets usually have the most to gain, as maintenance requirements and unexpected breakdowns naturally increase as equipment ages. Operating across a wider geographic area with multiple shops and parts inventories also increases opportunities for added efficiency.
Designing Your Program While maintenance management programs vary, each one should serve as a single, comprehensive source for asset management, including maintenance information and processes. A program should make it easy to manage repair requests and work orders, streamline and standardize processes, and provide real-time visibility on the status of any piece of equipment in the company.
Essential Features One essential component is the ability to establish and track user-defined preventive maintenance programs and to plan for labor, parts, and tools to optimize productivity and efficiency. Inventory control should also be part of the program, allowing the maintenance team to see what is available and where it is in order to manage the supply more cost effectively. Management reporting and asset history are also vital capabilities. Aggregating key performance indicators (KPIs) can automatically heighten management knowledge, generate alerts for time-critical decision-making, and allow more effective, data-driven analytics. Having complete historical data available allows for better life cycle cost management and takes the guesswork out of replacement strategies. It’s also important to ensure security. Proprietary maintenance and repair information must be kept confidential, with role-based permission levels for appropriate access to various functions and reports.
Optional Additions Beyond these necessary elements, the following additional options can enhance a maintenance management program:
• Purchasing integration • Warranty tracking • Mobile applications • Telematics and GPS
Preventive Maintenance: From Reactive Proactive
to
Moving more work from the unplanned or corrective categories to the preventive category is a powerful incentive for adopting a maintenance management program. The goal is straightforward: Detect and prevent failures before they occur by performing equipment maintenance at predetermined intervals. Heading off unplanned problems before they occur is the best way to maximize uptime and prevent interruptions in productivity. Additional advantages include:
• Completing maintenance work more efficiently and at a lower cost
• Maximizing maintenance staff efficiency • Planning work at advantageous times to avoid replacement equipment, including rentals
• Preventing repetitive problems and secondary damage that can often accompany unexpected failures
• Extending the lifespan and preserving the resale value of equipment Keeping a piece of equipment in peak operating condition through preventive maintenance also reduces risks to the operators, jobsite crews, and the general public. Establishing and sticking to a preventive maintenance regimen for a fleet with dozens or even hundreds of pieces of equipment is challenging. A maintenance management program centralizes complete information about each asset – including the work-order history and preventive maintenance plan. It can also alert and guide team members, making it easier for them to plan and execute preventive work on schedule.
How Do You Measure Up? There is no magic metric or one-size-fits-all answer to how much a construction company should spend on maintenance. These generally accepted benchmarks, however, provide a good indication of how much room a company has for improvement. Based on my experience, here are several metrics to consider:
Maintenance Costs as a Percentage of Revenue Total maintenance costs for heavy construction companies, including overhead, range from 5% to more than 15% of revenue.
January/February 2016 CFMA Building Profits
Preventive vs. Corrective Maintenance Companies with effective, proactive programs spend 50% or more of their overall maintenance hours on preventive work (as opposed to corrective work).
Emergency Breakdown Hours Unplanned breakdowns prevent productivity, cost more to correct, and often drive the added expense of replacement equipment. Through preventive maintenance, contractors should be able to keep maintenance hours devoted to emergency breakdowns below 10%.
Scheduled vs. Unscheduled Hours While less costly than emergencies, unscheduled maintenance and repairs are still a big threat to profitability. Using maintenance hours as the measurement, contractors should aim to schedule and plan 80% of their work in advance.
Overtime Hours Breakdowns and unplanned work drive up expensive overtime hours for the maintenance staff. Efficient contractors that emphasize preventive maintenance should be able to hold overtime to below 11% of overall maintenance hours.
Even though the potential for resistance from the maintenance team exists, employees typically want to work with the most effective tools available and contribute to profitability. Easy-to-use maintenance management programs, training, and an emphasis on the software’s effectiveness are all incentives that can ease the transition. Once a company implements a maintenance management program, it’s critical to follow through. Minor day-to-day challenges may tempt employees to fall back to old, familiar processes. The management team can prevent that by advocating for the new program and keeping the focus on the big-picture efficiency and profitability advantages. This includes software-specific training for program users as well as enterprise-wide education on how the program drives new and improved processes. In addition to ensuring that a maintenance management program is robust, intuitive, and easy to use, be sure to select a vendor with support resources that meet your company’s needs. Consider whether a vendor has a core architecture that can support software technology advancement and continuous development.
Labor & Materials
Conclusion
For contractors that are optimizing their teams’ efficiency, the labor portion of the total cost of maintenance should be below 75%.
With margin pressure intensifying in the heavy construction sector and equipment maintenance representing a significant expense, it’s only natural to look for opportunities to decrease downtime and costs.
Percentage of Replacement Value Comparing maintenance costs to the replacement value of the fleet is one of the most effective benchmarks, especially in weighing whether to retain or replace equipment. A figure above 5% might be cause for concern.
Maintenance management programs can help streamline processes, provide better access to more equipment-related data, and help companies move from a reactive to a proactive approach to maintenance. n
Potential Challenges A maintenance management program is only as good as the contractor’s ability to gain employee acceptance of the program, implement it, and maintain it. There are pitfalls that can threaten success, but most can be easily avoided. Trying to integrate multiple niche applications adds complexity and frustration that can limit effectiveness and acceptance, so consider the benefits of a more comprehensive program. Unifying the maintenance management program with the software elements used for estimating and bidding, planning, scheduling, and field tracking can deliver additional advantages.
CFMA Building Profits January/February 2016
JENNIFER ANGRISANO is Business Analyst at B2W Software in Portsmouth, NH. She has helped organizations improve maintenance practices in the heavy construction sector for more than 15 years. Before joining B2W Software, she was a total process management consultant. Previously, she led the conversion to a software-based program for a Heavy/Highway construction enterprise with a fleet of more than 300 pieces of equipment. Phone: 800-336-3808 E-Mail: [email protected] Website: www.b2wsoftware.com
BY JENNIFER ANGRISANO
MOVING TO A MAINTENANCE Management Program
For other contractors, maintenance is a “black hole.” Reactive approaches and a lack of standardized processes and controls make it difficult to calculate actual costs or make informed decisions. With so much riding on maintenance and repairs and with the availability of advancing technology to assist in the process, companies might want to consider specialized maintenance management programs. This article will explore the benefits, key features, and potential pitfalls of such programs.
Why Move to a Maintenance Management Program? A maintenance management program can provide accurate, real-time, and historical data about assets and their costs.
In heavy construction, very little is accomplished without equipment. Keeping increasingly sophisticated assets on the job, maximizing their lifespan, and minimizing the cost of ownership are critical to profitability and can command a substantial amount of a company’s budget. Some companies with which I have worked were able to keep maintenance costs at about 5% of revenue, and I’ve also seen some spend 10% to 15% or more.
CFMA Building Profits January/February 2016
CFMs can use this information to make better decisions about everything from parts inventories, work order scheduling, and maintenance staffing to rental and replacement strategies. In addition, maintenance management programs help companies ensure they aren’t retaining more equipment, resources, and/or inventory than needed. Maintenance management software options have become more intuitive for field and office use. And, software within the equipment itself continues to advance. Telematics and geotracking, for example, can deliver maintenance benefits, but without a maintenance management program, it’s difficult for companies to maximize their full potential.
MAINTENANCE Ma na g ement Pr og r a m
Companies that possess this data but fail to process it efficiently and make it actionable can be left at a competitive disadvantage. Contractors with older fleets usually have the most to gain, as maintenance requirements and unexpected breakdowns naturally increase as equipment ages. Operating across a wider geographic area with multiple shops and parts inventories also increases opportunities for added efficiency.
Designing Your Program While maintenance management programs vary, each one should serve as a single, comprehensive source for asset management, including maintenance information and processes. A program should make it easy to manage repair requests and work orders, streamline and standardize processes, and provide real-time visibility on the status of any piece of equipment in the company.
Essential Features One essential component is the ability to establish and track user-defined preventive maintenance programs and to plan for labor, parts, and tools to optimize productivity and efficiency. Inventory control should also be part of the program, allowing the maintenance team to see what is available and where it is in order to manage the supply more cost effectively. Management reporting and asset history are also vital capabilities. Aggregating key performance indicators (KPIs) can automatically heighten management knowledge, generate alerts for time-critical decision-making, and allow more effective, data-driven analytics. Having complete historical data available allows for better life cycle cost management and takes the guesswork out of replacement strategies. It’s also important to ensure security. Proprietary maintenance and repair information must be kept confidential, with role-based permission levels for appropriate access to various functions and reports.
Optional Additions Beyond these necessary elements, the following additional options can enhance a maintenance management program:
• Purchasing integration • Warranty tracking • Mobile applications • Telematics and GPS
Preventive Maintenance: From Reactive Proactive
to
Moving more work from the unplanned or corrective categories to the preventive category is a powerful incentive for adopting a maintenance management program. The goal is straightforward: Detect and prevent failures before they occur by performing equipment maintenance at predetermined intervals. Heading off unplanned problems before they occur is the best way to maximize uptime and prevent interruptions in productivity. Additional advantages include:
• Completing maintenance work more efficiently and at a lower cost
• Maximizing maintenance staff efficiency • Planning work at advantageous times to avoid replacement equipment, including rentals
• Preventing repetitive problems and secondary damage that can often accompany unexpected failures
• Extending the lifespan and preserving the resale value of equipment Keeping a piece of equipment in peak operating condition through preventive maintenance also reduces risks to the operators, jobsite crews, and the general public. Establishing and sticking to a preventive maintenance regimen for a fleet with dozens or even hundreds of pieces of equipment is challenging. A maintenance management program centralizes complete information about each asset – including the work-order history and preventive maintenance plan. It can also alert and guide team members, making it easier for them to plan and execute preventive work on schedule.
How Do You Measure Up? There is no magic metric or one-size-fits-all answer to how much a construction company should spend on maintenance. These generally accepted benchmarks, however, provide a good indication of how much room a company has for improvement. Based on my experience, here are several metrics to consider:
Maintenance Costs as a Percentage of Revenue Total maintenance costs for heavy construction companies, including overhead, range from 5% to more than 15% of revenue.
January/February 2016 CFMA Building Profits
Preventive vs. Corrective Maintenance Companies with effective, proactive programs spend 50% or more of their overall maintenance hours on preventive work (as opposed to corrective work).
Emergency Breakdown Hours Unplanned breakdowns prevent productivity, cost more to correct, and often drive the added expense of replacement equipment. Through preventive maintenance, contractors should be able to keep maintenance hours devoted to emergency breakdowns below 10%.
Scheduled vs. Unscheduled Hours While less costly than emergencies, unscheduled maintenance and repairs are still a big threat to profitability. Using maintenance hours as the measurement, contractors should aim to schedule and plan 80% of their work in advance.
Overtime Hours Breakdowns and unplanned work drive up expensive overtime hours for the maintenance staff. Efficient contractors that emphasize preventive maintenance should be able to hold overtime to below 11% of overall maintenance hours.
Even though the potential for resistance from the maintenance team exists, employees typically want to work with the most effective tools available and contribute to profitability. Easy-to-use maintenance management programs, training, and an emphasis on the software’s effectiveness are all incentives that can ease the transition. Once a company implements a maintenance management program, it’s critical to follow through. Minor day-to-day challenges may tempt employees to fall back to old, familiar processes. The management team can prevent that by advocating for the new program and keeping the focus on the big-picture efficiency and profitability advantages. This includes software-specific training for program users as well as enterprise-wide education on how the program drives new and improved processes. In addition to ensuring that a maintenance management program is robust, intuitive, and easy to use, be sure to select a vendor with support resources that meet your company’s needs. Consider whether a vendor has a core architecture that can support software technology advancement and continuous development.
Labor & Materials
Conclusion
For contractors that are optimizing their teams’ efficiency, the labor portion of the total cost of maintenance should be below 75%.
With margin pressure intensifying in the heavy construction sector and equipment maintenance representing a significant expense, it’s only natural to look for opportunities to decrease downtime and costs.
Percentage of Replacement Value Comparing maintenance costs to the replacement value of the fleet is one of the most effective benchmarks, especially in weighing whether to retain or replace equipment. A figure above 5% might be cause for concern.
Maintenance management programs can help streamline processes, provide better access to more equipment-related data, and help companies move from a reactive to a proactive approach to maintenance. n
Potential Challenges A maintenance management program is only as good as the contractor’s ability to gain employee acceptance of the program, implement it, and maintain it. There are pitfalls that can threaten success, but most can be easily avoided. Trying to integrate multiple niche applications adds complexity and frustration that can limit effectiveness and acceptance, so consider the benefits of a more comprehensive program. Unifying the maintenance management program with the software elements used for estimating and bidding, planning, scheduling, and field tracking can deliver additional advantages.
CFMA Building Profits January/February 2016
JENNIFER ANGRISANO is Business Analyst at B2W Software in Portsmouth, NH. She has helped organizations improve maintenance practices in the heavy construction sector for more than 15 years. Before joining B2W Software, she was a total process management consultant. Previously, she led the conversion to a software-based program for a Heavy/Highway construction enterprise with a fleet of more than 300 pieces of equipment. Phone: 800-336-3808 E-Mail: [email protected] Website: www.b2wsoftware.com
