Best Practices

Fleet Management

  • Properly managing equipment is crucial to maintain your return on investment
  • Replace equipment once maintenance costs exceed 30% of the machine's resale value

Always keep good records

Maintain a vehicle history file jacket for every machine and document all maintenance and repair work. Comprehensive records can help predict machine productivity and operational costs, such as working hours, fuel consumption, maintenance expenses, and more. When it comes time to replace your equipment, solid records can help you earn a higher resale or trade-in value for your used machines.

The 80-20 Rule

20% of machine problems account for 80% of maintenance costs. Identify these common or recurring problems, and take corrective action to resolve them before they deplete your operating budget and cause unnecessary and costly downtime.

Proactively maintain equipment

Proactive maintenance keeps operational costs stable and reduces downtime and associated repair expenses by identifying minor issues before they become major problems. By enrolling in a preventive maintenance contract, you can ensure routine maintenance is documented and conducted at suggested intervals.

Take advantage of machine monitoring tools

New telematics technology can accurately monitor equipment, collect data, and convert raw data into actionable information. Tracking programs are usually available online to determine problems with your equipment and to identify operators that need training by monitoring things like idle time.

Conduct routine fluid analysis

Routine fluid analysis is a proactive measure to avoid unnecessary downtime and costly repairs. By analyzing fluids and comparing contaminant levels to normal wear rates, you can identify potential problems with components before major failures.

Keep track of years of ownership

The average total cost of owning and operating equipment follows a parabolic slope. Total cost decreases during the early years of machine ownership as capital costs are spread over a longer period of time. However, operating costs increase during the same timeframe, eventually leading to an increase in average total cost. The point at which the sum of ownership costs and operating costs reaches its minimum is the ideal age for operating equipment efficiently. It is crucial to stabilize fleet average age around this point in order to keep total cost of ownership down.

Replace vs. rebuild

When deciding between rebuilding and replacing a piece of equipment, use this simple formula to compare costs:

Cost to rebuild (new equipment price x .5)/equipment life (estimated hours x .75) = cost per hour

For example, a new piece of equipment that is $140,000 with an estimated life of 10,000 hours would cost $14 per hour to operate. To compare, calculate the cost to rebuild.

($140,000)(.5)/(10.000)(.75) = $9.33 per hour

If the cost to rebuild is $70,000 for an estimated equipment life of 7,500 hours, at $9.33 per hour, it is more cost effective to rebuild than to replace.

Bacon Universal Co., Inc. Best Practices: Fleet Management