What Do You Do With an Aging Fleet and Limited Capital for Heavy Construction Equipment?
Tuesday, September 12, 2017
Posted by: AEMP
By Steve Fooy, CEM
Congratulations, you’ve got a new job! With this position you’ve inherited an aging fleet, a host of maintenance sins of the past, limited maintenance personnel and repair facility capabilities, and of course, a limited capital budget and an operational budget stressed due to the facilities’ past financial performance. Welcome to the Big Leagues.
This is a scenario many of us have had to work through during our fleet management careers. When facing a situation like this, my suggestion is to develop a strategy based on your location’s asset issues and provide the local maintenance leadership the ability to implement a plan that will meet your strategy.
To create that strategy, first prioritize your fleet assets. Not all assets are created equal. Identify the assets that are important to the success of the operations. Your limited capital and operating budgets should be utilized to make sure these assets are “operation ready.”
Define your assets in terms of how essential they are to operations and if there are alternatives for replacement if the asset fails. For example, I’d make assets with significant commercial, operational, or environmental impacts and very limited alternatives for replacement Category 1 assets. If Category 1 assets fail, your operations may screech to a halt. Category 2 assets would be those used in day to day operations which can impact operational capability but have some alternative means of executing business if the asset fails. Category 3 assets would have minimal or no impact on regular operations if the asset fails. Note that which assets fall into each category may change year to year, depending upon the demands from operations. Review your asset categories at least annually to be sure they line up with actual operational needs.
Next your strategy should include a back-up plan. What happens if your top asset is down? These assets are often difficult to repair or replace in a timely fashion. Develop a plan that can be implemented at a moment’s notice and by anyone in the maintenance department now before it becomes a problem.
Develop a repair matrix based upon the ability of the maintenance staff and facility’s capabilities. Is your maintenance staff working on issues that are difficult to complete based upon the number of technicians, tools required and limited space in the shop? Are they working on the assets that will provide operational success?
Once you have prioritized your fleet’s assets and developed your repair matrix to understand your shop’s capabilities, you’ll know the areas where you need outside support from vendors. Identify vendors who can provide the support you need, build relationships and make agreements with them (with terms and conditions on file) for a service program covering on-site work and an after-hours program. Don’t wait until an emergency has developed to start this process.
Your strategy’s success hinges upon clear and regular communication between your maintenance department and Operations. There should be no surprises with your maintenance team knowing the demands of the customers and operations understanding maintenance requirements. You need at least weekly discussions on asset requirements from both the operations and maintenance perspective.
A key element of communication between maintenance and operations is the status of your Category 1 Assets. Are they in service, capable of handling the required application for operations? Is any in-service or repair required to keep the machine operable for the required application? Have minor repairs been added to the next scheduled maintenance service? Is there a Safety Down issue where the asset is not available until inspected by maintenance and if not repaired then approved by management to return to service? Is the asset subject to a Work Order and not available due to repairs to be completed in the next 24 hours? Is the asset on a Hard Down order and not available due to a major report or safety issue keeping the asset unavailable for more than 24 hours? Would this information be important to operations?
Operations and maintenance should be working together. Operators must be trained to complete thorough pre-use inspections and inform maintenance of any issues they see. Equally important is the maintenance group’s response to promptly let operations know the items they identified have been reviewed and a repair plan developed.
Finally, you need to understand the total capital dollars available for your organization. There are never enough CAPX dollars, so again you must prioritize your spending on assets that have the greatest impact for your operations’ financial success. Look for ways to stretch your CAPX dollars. These might include refurbishing or rebuilding assets, leasing equipment or a lease buyout, rental purchase options, or purchasing used equipment. Consider expansion capital for new business. There could be some potential for excess expansion capital dollars used for replacing or improving your existing assets.
Remember an aging fleet that has not been maintained with a proper level of care did not happen overnight. Without an effective strategy in place your focus will jump from one fire to the next, causing frustration for Operations, Maintenance, and your customers. By developing a strategy that prioritizes your assets, you can begin to work with the maintenance team, your vendors, and Operations to implement a plan that over time will increase the productivity of your assets and improve the financial performance of your operations.