Equipment Replacement, How Long Can You Safely Keep Your Machines?

This is a good video overview of how one Equipment Manager uses information to make decisions and saves money. The video is about one hour long. Considering that it took him 45 years to learn this, maybe it is not too long. It will give you a good way to compare your processes to his, no matter if you have 5 machines or 874 like Bill DeRousse.

Bill will show you his numbers and explain why you need to calculate this for your fleet.
To see Video Click Here

The PowerPoint slides (which you will want) are available for free. Just send me your e-mail address by private message. (They are too large to attach and not yet published on the internet.)

DESCRIPTION:
Should a vehicle be replaced or repaired? Study an example of equipment costs (Cost Per Mile or Hour, Repair hours per mile/hour, Average age and Average usage) over the past four years and see what factors have affected costs.

PRESENTOR:

Bill DeRousse
City of Everett Washington and Everett Utilities

Mr. Bill DeRousse has been a Fleet Manager for 45 years with both private and public fleet operations. He is currently the Fleet Superintendent for the city of Everett and Everett Transit, Everett, Washington. He served for six years as the president of the Public Fleet Managers Association and now the information officer, serves as a committee chair with Seattle Chapter of NAFA. Serves on many committees within the state Of Washington as well on several national transit and vehicle committees. Bill is a public speaker in all areas of fleet management giving presentations throughout the United States annually.

For more info on the calculating Best Equipment Replacement points in time, Click Here or send me a Private Message. Please post comments about the video or subject matter.

Why Software Is Cheap!

Originally Posted by Beel, http://heavyequipmentforums.com/ Click here:

Does anyone know of a decent cost estimating program that doesn't cost a gazillon dollars?! I have surfed the net for weeks and have tried every garbage program out there. They are either too confusing or focused on residential/commercial building, and remodeling. Can't seem to find anything focused on heavy construction priced reasonably under $1000.

The only problem with $1,000. is that gives you about 8 hours of time to:
Respond to 100 prospects who might be a buyer
Train the Client (10 hrs minimum)
Develop a program with 6000 computer programmer hours
Develop the documentation for the program
Hire and Train the Support Technicians and Sales Staff
Pay for the office overhead
Develop software improvements
Make a small profit

You can do this if you sell more than 500.000 programs. However there are about 21,311 Heavy Construction businesses in the U.S. and you are not going to sell all of them.

So if you get 21,311 to give you 100 sales of $1,000., you will make $100,000 this year which will never pay your costs. You need to turn this around and figure what it costs you NOT to have a good estimating program. A good estimating program will make you hundreds of thousands of dollars. (I can say this because we do not sell estimating programs.) if you spend $12,000 to make $60,000 you just made $5.00 for ever $1.00 you spent this year! Next year is $2,000. for the same $60,000. And so on.

You can see why the $12,000 is a real deal!

Why you need to know how much fuel is used operating a machine

Fuel is one major part of operating a machine. We would never tell you it is not an important cost to track. However, it is only one part of many important parts that make up the true cost on owning and operating machinery and vehicles.

We see many excavating companies which have no good way to accurately track their fuel costs and use. These companies have not invested in fuel delivery and tracking systems or take advantage of fuel refueling services. When a company is small and has one machine and one job or project at a time, fuel delivery and tracking may be less of importance. As a company grows, fuel tracking needs to grow in importance.

One reason that fuel use is such an important cost, is that the volume in liters or gallons of fuel used has a direct effect on other costs. For example, the more fuel you use, The more you will spend on:

• Motor oil
• Hydraulic Oil
• Grease
• Other Liquids
• Service Labor
• Support Vehicle Costs
• Breakdown Parts
• Repair Labor
• Ground Engaging Tools
• Used Machine Value or Equity

One of the biggest problems we see is the machine owner who is not aware of the vast change in the job or project cost of fuel use with different types and places of machine use. It is possible for a machine to always burn the same amount of fuel per hour. However, it is highly unlikely. Many estimators try to use a flat rate per hour for all types of work with a machine. This can be done but it runs a huge risk of over-estimating or under-estimating project cost.

Getting to cost needs to be an estimator's number one (1) job. Winning estimates is definitely job number two.

If the machine owner has not provided the correct tools and management for accurately tracking the fuel that a machine uses, under different job conditions, it is not the estimators fault that he does not take the correct cost into account.

Here are some of the major facts that an estimator needs to know in order to correctly estimate job cost.

• Specific Project Work Items
• Soil or Material Geological Conditions
• Soil or Material Temperatures
• Soil or Cut Depth
• Machine Ownership Cost
• Machine Operating Cost

If you are guessing at the machine operating cost for fuel, you are on your way out of business. It always amazes us to see how often people believe that Operating cost is one number that does not change very often.

Your cost of a machine changes on almost every job and may change as often as once a week. So why are you waiting once a year to change your prices?

Dan Rooks

www.DecisiveCost.com