New Tool to Win More Bids or Tenders

For years many contractors have wanted to know how much their machines and trucks really cost to operate. Knowing cost means knowing how low you can safely drop a price. In the past, many costing methods were tried but these gave inaccurate results and proved to be unsatisfactory.

Now for the first time there is tool that will tell you in seconds, exactly what any machine will cost under any work type, geological application or fuel price. Best of all you use your own conditions, not someone else's.

This new simple to use tool is called DecisiveCost. The Dynamic Life Cycle, Owning and Operating Cost principles used are recommended by major manufacturers. Here are few of the machinery brands our clients are now costing: 1







If you would like to learn more about this remarkable tool or see a free no obligation demonstration, just go to www.DecisiveCost.com.

Dan Rooks
President
Decisive Systems, Inc.
941-225-1370 (Cell)
drooks@DecisiveCost.com


1. All Logos are Registered Trademarks of the respective manufacture. These do not represent any endorsement by the manufacturer of DecisiveCost products.

Is Fear Keeping You From Knowing the True Cost of Your Machinery?

Mark Twain the great American author once said; "I am an old man and have known a great many troubles, but most of them never happened."

In the thousands of people I have worked with in over 81 different countries, the one thing I often hear and see in many people is fear. Fear of the unknown. Fear of losing the business and success they have enjoyed. Fear of old age. Fear of poverty. Fear of sickness or loss of health. Fear of a recession. Fear of strangers (or slick sales reps) taking advantage of them. Fear of not being good enough. Fear of change. Fear of the loss of respect. Fear of the loss of social position. Fear of not knowing or being smart enough. This list goes on and on.

The one that gets me is the large number of employees and even owners of businesses who are actually afraid of knowing their true costs. If you look, you can see fear expressed in their language. People use many excuses for not costing their machinery. Sometimes fear is hidden. Sometimes fear is directly expressed. Here are but a few:

• "If I included ALL my costs, I would never get a job." (Fear of loss)
• "Cost doesn’t matter, only getting work does." (Fear of loss)
• "These other large contractors and equipment dealers certainly know what their cost is. If they can do it for that price, I can." (insecurity in your ability to calculate cost)
• "My accountant tells me what our machinery cost is." (see my last blog at http://decisivecost.blogspot.com/2008/01/why-your-accountant-may-be-putting-you.html )
• "I make my money out in the field, not in the office." (insecurity)
• "I am too busy to cost." (if you are too busy to know cost, you are too busy to be in business. (Often fear keeps us too busy)
• "I am not good with computers." (Fear of the unknown)
• "If I raised my price, I would not get any business." (Fear of loss)

So permit me to ask the impertinent question. What fears and insecurities are keeping you from knowing your cost?

Steven Bechtel the founder of Bechtel, the worldwide construction and engineering powerhouse once wrote that knowing cost was critical to his success. They considered their cost records to be so important that every night they locked their cost books up in the safe. Do you take knowing your real cost this important?

Running your business based on fears, insecurities and excuses for not knowing true cost are common. This major factor causes many to go out of business. You need to make up your mind that to be successful in the long term, you need to know your true cost.

We need to quit worrying about everyone else’s price. You need to know your own cost. It literally almost does not matter at what price someone else prices his or her services. The FIRST question you must answer is what is your cost? You must know exactly what is the least price for which you can put your equipment to work. Somebody will ALWAYS be willing to take a job for less than your cost! Quit worrying about it and do something that makes your services worth more.

One of the biggest mistakes many people make is assuming that your competitor knows his cost. I can guarantee you that there is only a one in a thousand chance that your competitor knows his machinery cost. I have worked with some of the biggest companies in the world. The big guys can be and often are, as much in the dark as to their true machine cost, as anyone. This happens for two reasons, first because the owners of the company are further away from points of cost, than in smaller companies. The second reason is that larger companies often are highly influenced by accounting practices that do not properly deal with machine cost. (See my last blog at http://decisivecost.blogspot.com/2008/01/why-your-accountant-may-be-putting-you.html

Many businesses are still struggling to know their cost for machinery. For example, can you tell me in 20 seconds or less the following questions?

• "How many hours each of your machines ran last week?
• "How many gallons of fuel did each of your machines consume over the last thee weeks?
• "What are the highest and lowest gallons (or liters) per hour consumed by each machine? What’s the average
• "How many dollars of wear and tear did last week work put on the undercarriage of your tracked equipment?
• "For the project that you are bidding or tendering today, how many dollars in machinery wear and tear, will it cost you, if you win the project? Exactly how was this calculated?
• "If fuel goes up or down seven cents, how did that change affect the cost of each of your machines and the cost of the project you are bidding or tendering today?
• "How much is the cost per hour of the tires on that wheel loader?
• "How does differing conditions of use affect the tire costs? (commonly this can change from on one machine from $6.00 per hour to $89.00)
• "If your hours of use of machine goes down by 250 hours in a year, by how much does your cost per hour change?

So permit me to ask the impertinent question again. What fears or insecurities are keeping you from knowing your cost? Why wouldn’t you want to know your exact cost? This is especially true if you could know your cost for any machine in 2 minutes or less.

Today we (the world) has software that acts as tools to extend your abilities to know things about your business that you never before knew. These software tools do not replace you, they are an extension of you. They works just as an excavator works to extend the work a man can do with a hand shovel.

Have you seen the science fiction writer’s dreams of an exoskeleton suit that a man puts on and it gives him incredible super human power and strength? It turns him in a kind of superman. Software gives you the ability to do things you could not do before, even if you could somehow extend the 24 hours in a day.

Good, well-designed software duplicates Best Practices. It brings into your company the processes that the smartest, most knowledgeable people are using today. It can leap frog your company into doing things your competitor is only dreaming about doing.

You may ask, "Isn’t software that is specially created for my industry expensive?" Well the answer is yes and no. It is more expensive than mass-market software like QuickBooks and Microsoft. These companies can divide their millions of dollars of development cost over millions and millions of businesses. You need software custom designed for your specific industry.
Every dollar you spend for software should make you ten dollars, in every year that you use and own it. If it does not, you bought the wrong software or you failed to properly implement and integrate it into your business processes. Today many companies (like my company), offer financing and lease-purchase of software. This spreads out your upfront cash cost. Do not let money hold you back.

Many of your machines will cost you over one million dollars during their lifetime for owning and operating cost. If you have 10, 25, 100 or more machines in your fleet, how much can you afford to spend to better manage, control this multi-million dollar cost? $250.?, $500.? $1,000.?

When you buy even a small machine for say $63,497, what difference does another $1,000.up or down, honestly make? If you could buy an option on a machine for $2000. that could make you $50,000., would you buy it? Think of software that helps you manage and control your investment as an option that you add after you purchase a machine for far, far less than $2,000 a machine.

Back to fear. The best way to deal with fear is to confront it in the daylight. Get it out in the open. Admit your fear and honest feelings. Ask yourself what is the worst thing that could happen. Dale Carnegie wrote a timeless and great book called How to Stop Worrying and Start Living (You can review it by clicking here: http://books.google.com/books#id=yCKmKv99NoIC&dq=Dale+Carnegie&hl=en&prev=http://www.google.com/search?hl=en&rls=GGLG,GGLG:2005-31,GGLG:en&q=Dale+carnegie&btnG=Search&sa=X&oi=print&ct=result&cd=1&cad=author-navigational )

Do not allow fear to control your life. Power through. There is wisdom in a multitude of counselors. Bring in an expert who knows your type of business and machinery to help you make more money.

I do not care how much you made or lost in the past, you can do better. It does not matter how you always have done it in the past. It makes no difference how your dad or grandfather did it before you. That was then and this is now. To survive you are going to have to change and your people, policies and processes have to change. Knowing your true cost is part of this change. Move forward knowing the best is yet to come.

Call me. I can help you to know your machine cost.


Dedicated to your success,

Dan Rooks

President

Decisive Systems, Inc.

"The Owning and Operating Cost People"

Phone 941-926-9260

drooks@decisivecost.comhttp://www.decisivecost.com/

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Want to comment on the issues raised here? Go to Comments at the end of this blog and add your comments no matter if you agree or disagree.

Why Your Accountant May be Putting You Out of Business

(and not even know it)

One of the questions I often ask business owners who have a fleet of machines or trucks is …..Who does your costing? I get many different answers to this question. One of the common answers is "My accountant".

Unfortunately for the client, this is a good indication that unfortunately he may be trouble and most likely does not even know it. We have found that if the owner or senior manager of a business is not involved in critical cost decisions, many problems will result.

Our world today is often run by what our accountants tell us. They have a position of great respect in many companies. We pay accountants a lot of money every year. After all, they understand all that financial stuff. They should know best, how to cost machines. Shouldn’t they?

In this newsletter I am going to pick on accountants. If you are an accountant or CFO, please do not be offended. Keep reading and maybe it will help your practice and your clients success.

Seldom will an accountant tell you why his calculation of machine cost numbers are in error! The truth is that he or she may have no clue that what he is telling you is or might be wrong. His training, tools and methods have served him well in the past. Why would they be wrong now with machine cost? He believes in his accounting system. He did the calculations. He knows they are mathematically correct.

The problem with machine cost is that being mathematically correct and being right are two different things. To be right with machine costing you have to be mathematically correct but also you have to use the correct METHOD to get to true cost. This is why we use Dynamic Life Cycle Costing as the only method to know true cost per hour. Most accountants derive cost based on historical accounting records. The problem with using historical cost is that it is seldom correct when it comes to calculating future machine cost. More about that later

Many accountants have attended cost accounting classes but, perhaps as many as 80-90% of accounting students will tell you that their least favorite class was cost accounting. I don’t blame them. Most of the cost accounting classes that I have seen are poor. They are highly questionable as to their applicability or usefulness to the real world. Worse yet, the accuracy of the finished product when applied to machinery cost is in some cases, just plain wrong.

I fully realize that what I am saying may cause some to strongly disagree. It may appear that I am against accountants. I am not. Good accounting is fundamental to business success. Some of my most valued advisors are accountants. If you are a CFO or accountant please bear with me and let me explain.

The problem with standard Historical accounting methods is that it is very poor at calculating true machine costs per hour. Oh yes, these numbers need to be tracked for historic cost and necessary in calculating cost for tax purposes. But tax cost and real cost are two entirely different things. The numbers may be absolutely mathematically correct. The only problem is that they are wrong if you intend to use them for budgeting, estimating, pricing, bidding or tender purposes. If you use the numbers from your accounting system for machine costing purposes, you are setting yourself up for disaster. Maybe not today, but sooner or later it will cost you a ton of money. Maybe even your company, your retirement program and perhaps your children’s future.

Hear are three of twenty reason why historic accounting is not good for forecasting cost.
Many machines are very complex. These complex machines do not have one lifetime. They have a whole group of component lifetimes that start at hour one and expire at different rates or time. The cost in every subsequent year of operation is going to be different than the last. Looking backwards at what happened to cost last year or even over the last three years will yield unsatisfactory machine cost numbers going forward. The older the machine is, the worse this variation becomes.

An easy way to understand this is to think about the car you drive. In the first few years you are in the "honeymoon period" of very few problems once any small glitches from the factory are fixed. In the next few years new problems like brakes battery and alternator may need to be fixed. Fast forward to the 5th to 8th year of ownership and we see all kinds of problems that we did not see in the early years. AC system, power windows, power steering pump, water pump, electronics etc. need attention.

Depreciation for tax purposes often has little to do with real world costs per hour. A machine that has an eight to ten year or more economic lifetime may be written off for tax purposes much faster. What you do for tax calculations often has little to do with reality. This is not illegal. It is smart business practice.

Your actual cost changes. Some examples of changing variables are; fuel cost changes, types of work done with a machine, number of hours of machine use and geological conditions of use. All of these drastically effect cost calculations. Yesterday's cost is not today's cost.

If your accountant is calculating your machine costs here are eight questions to ask him or her about their numbers.

Q1. When you came up with these cost numbers, did you get them based on the accounting books or did you go out to the shop and get the machines’ Owning and Operating Manuals?

If he says he looked in the accounting books, strongly consider throwing out the cost numbers.

Q2. How of much of each track machine’s cost per hour is for undercarriage cost (or final drives, or hydrostatic transmissions)?

If he can’t tell you, strongly consider throwing out the cost numbers.

Q3. How much of each wheeled machine or truck’s cost per hour is for tires cost?

If he can’t tell you, strongly consider throwing out the cost numbers.

Q4. How much of each machine’s cost per hour is for ground engaging tool cost?

If he can’t tell you, strongly consider throwing out the cost numbers.

Q5. Diesel Fuel is one of the biggest expense, when fuel cost change, how does Changing costs affect the cost per hour, mile or kilometer?

If he can’t tell you, strongly consider throwing out the cost numbers.

Q6. How much of this machine’s cost per hour is for future major costs like replacement or rebuilding the engine or changing a hydraulic pump?

If he can’t tell you, strongly consider throwing out the cost numbers.

Q7. How do varying job conditions change your cost per hour or mile?

If he can’t tell you, strongly consider throwing out the cost numbers.

Q8. How many hours or miles/Kilometers is this cost based. What happens if that number changes by this year by 10% or more, up or down?

If he can’t tell you, strongly consider throwing out the cost numbers.

Accurate calculation of your machine cost per hour is critical if you want to know your unit costs like; cost per ton or cubic yard or other units. Your businesses future depends on you knowing cost. Companies that know their cost, stay in business, Companies that don’t know their cost, go broke. This is true for new companies, it is true for companies that are 10, 20, 40, 80 or 100 years old. Your cost is dynamic and constantly changing.

So if you cannot count on your accountant for machine cost, on whom can you count? We have found that good costing of machine is a group effort. Maybe one person heads it up. But getting to true cost involves input from many people both within and outside of your company. Your accountant is as good as anyone to head this effort, providing that he or she has the time and the correct specialized tools. Good costing is like good estimating. It takes time and knowledge to be a good estimator of cost. In most cases it takes the efforts of a dedicated person, who is trained in machine costing. This could be an existing employee.

The correct tools are very important. This is no different than any other job. Seldom will a backhoe do what a hydraulic excavator can do and vice versa. Machine costing takes special tools like DecisiveCost. Spreadsheets can not deal with the required interactions necessary to get to true cost. This is a little like trying to keep company books and accounting with a spreadsheet. It would be a nightmare. (By the way, we have developed a test, if you think your spreadsheet is ok to use to cost machinery. Send me an e-mail and I will send you the spreadsheet test.)

Your machine cost is your cost. You cannot get accurate or dependable numbers out of some book or web site. You have to calculate cost per hour for yourself. There is just too much variation in cost per hour between machine owners. With DecisiveCost you can cost a truck or machine in two minutes or less, once you have set the system up. That book number is somebody’s cost but it is not your cost. After working with thousands of people in over 81 different countries, I can say with some authority that every company’s cost of a machine or truck is unique to that company and the type of work they are engaged in doing.

DecisiveCost is not an accounting system, or a maintenance management system it is a Dynamic Lifecycle Costing system. It is very unique. If you have questions about the accuracy of your current machine costing methods, call me or e-mail me. I can help you. Better yet, I will make you a lot of money and help assure the future success of your business.


Dedicated to your success,
Dan Rooks
President
Decisive Systems, Inc.
"The Owning and Operating Cost People"
In the U.S. Call 800-232-5767I
nternational 941-926-9260

drooks@decisivecost.comhttp://www.decisivecost.com/

Did someone forward this to you? Why not subscribe to the newsletter yourself? Just click on Info@DecisiveCost.com and include the word Subscribe in the Subject Line.

Want to comment on the issues raised here? Go to Comments at the end of this blog and add your comments no matter if you agree or disagree. Click here http://decisivecost.blogspot.com/

Best Practice on Education: How Does Your Company Compare

Best Practice on Education:

How Does Your Company Compare?

Many senior managers know they should be training their people, especially their key managers. Top performing contractors and businesses of all sizes have formal education programs. People in positions like; project manager, shop manager, senior estimator, superintendent, foreman and certainly top line executives, all need to stay on top of their game. If the only place or way for your people to get knowledge is from on-the-job experience, your company is paying a horrendous price. This puts you a long way from maximizing your company's potential to increase profits.

There is only one reason companies spend money to train their employees. That reason is that education makes companies money, period. The minimum Return on Investment (ROI) you should expect to get from a well designed class with a good presenter is ten dollars for every dollar you spend on education! Motorola, a long time leader in educating its managers and staff estimates their average payback per dollar spent is $44.00.

How do you recruit, keep and bring out the best in your key people? What have you done this year to re-motivate and energize your staff and in particular your managers? Our businesses have a way of sucking the life out of people. Long hours, continuous pressures and problems all create stress. You get tired of it all. How much more do you think this all affects your people? Well designed and led education programs will certainly motivate. But, even more, these programs will make permanent changes in people. A few of these changes are; acceptance of change, creativity, desire to be better, improve quality of work, acceptance of company policies and many, many more areas.

Jack Welch who successfully led General Electric to new highs, credited his management training program that they conducted in-house at Crotonville, NY, for much of his success. Welch used Crotonville not only as a place to educate GE employees, but as a medium to spread the changes in culture and thinking that have helped make GE what it is today. In Jack’s own words, he said "The GE of the future will be based on the cherished values that drive us today: mutual trust and the unending, insatiable, boundary-less thirst for the world's best ideas and best people."

Do you want the best people and ideas in your company? You need to take on responsibility for change. But how do you do this? It is really quite easy and you do not need to have a purse the size of G. E.’s, to do it. Number one, I would recommend that you stop being your company’s “expert”. (The one with all the answers, the one every one comes to get answers.) There is an interesting definition of an Expert. The story goes that an expert is a person who is more than 50 miles away from home with a briefcase!

This story draws from ancient writings about a man who roughly 2,000 years ago stated that “a man cannot be a prophet in his hometown”. In case you do not know who said this, it was said by no less than Jesus Christ himself. You can read his exact quote at Mark 6:4. I figure that if he could not do it, I probably will have trouble doing it. By being the “expert” in your company, you set yourself up for failure.

The best advice on education for your people that I can give you is to bring into your company experts in from outside to say what needs to be said. Your life will be a lot easier. When the expert leaves you just bring up and remind your people of what they learned from the expert.

How do you do this? Companies, just like your company, are planning to bring speakers, educators and experts into their company at this time of the year or early next year. Below are some resources that would greatly benefit you.

By the way if you think that because you send your people to a trade show and sign them up for classes, you are meeting the Best Practice Standards. Well, I am sorry to tell you that you are not there yet. The accepted standard for all management level people (including you), is a minimum of 45 hours a year of continuing education.

I am not criticizing you for sending people or going to trade shows. You should be doing this. I conduct trade show seminars. Here is a link to a video of a class I did at ConExpo (http://www.conexpoconagg.com/). The class was delivered to one of their largest audiences and highly successful. The title of the course is, “How much does that machine cost? Click here to see the video. http://machinecost.blogspot.com/

If you watch this video and you should, you only have 44 more hours to go this year.

If all of this does not apply to your company, please go: http://www.decisivecost.blogspot.com/ and comment on what your company is doing and how your company is actively involved in annual employee and management education. It may be an inspiration for others in our business

Many of you know a little about me from my previous contacts to you. But do you know that every year, I also conduct classes for companies interested in improving their management team? I have spoken to groups, organizations and businesses all over the world. I go wherever you need me to go. I have worked with groups of five people to five hundred. (I have found that doing a two-day class with 500 is interesting, but I’d suggest that if you can, limit it to 25 people for the best classes. If you have a larger group, I might suggest multiple classes.)

Here are some of my classes that may help you and your people to grow. Often these are classes are conducted in one or two-day formats and are modified to better fit your company and its goals.

• Achieving Excellence in Project Management
• Best Practices in Construction Supervision
• Best Practices in Construction Productivity
• Best Practices in Construction Quality Management
• Best Practices in Heavy Equipment Costing

To get more information on any of these classes or bringing these courses for your company or association, just call or e-mail me.

Fifteen things you can do today about the cost of fuel

Fifteen things you can do today about the cost of fuel
Or
Are you running your business like fuel still costs $0.60 cents a gallon?

1. Track the consumption of fuel per machine or truck. Every gallon used should be should be accounted for, by machine, job or project. You would not normally say to an employee; “Here is $90.00 in cash. Spend it and by way, you do not have to report back to me what you spent it on. So why is fuel any different?

2. All fuel storage tanks must be metered and the meter is calibrated. The data you will be getting is critical business information. You do not want to be running you business on bad information

3. Record the hour meter or Odometer information with every fueling. Without this information you will not be able to created critical calculations that will affect your company’s profitability.

4. Balance the “Cash Drawer”, with every storage tank fill. Every day, every bank teller balances his/her cash drawer all over the world. Your fuel tank has money in fuel coming in and going out. This needs to be accounted for and balanced. If you are out of balance, you will not keep your job very long at the bank.

5. Require fueling records to be turned in to the office. They should be turned in at least as often as time cards are turned in.

6. Calculate fuel burn in gallons or liters per hour for machinery with every fill. For trucks you will want to add in additions to hours, mileage or kilometers. Generally, for light trucks we don’t track hours)

7. Track and document work package level fuel consumption. You will be surprised and how this number changes from work item to work item or project to project. (If you are not breaking out work packages in your estimating detail, you are not estimating, your guessing.)

8. Replace broken hour meters and odometers, immediately. How can you track oil changes and services if you are “flying blind”?

9. Account for all hours on all machines. If you don’t have a problem with off-hours or off-job use of you machines, I don’t’ either. But, I do have a problem if you don’t know for sure how many hours and what those hours actually cost you.

10. Calculate your cost per hour for fuel per work item. Fuel is your largest machine operating cost item. If you don’t know how much consumption a work item take and what fuel cost, you cannot do this calculation. How do you know if your estimating is correct?

11. Don’t use average fuel consumption data. Averages are for people who don’t have a clue what their fuel really cost them. You need to know; the highest consumption level, the lowest and at what consumption rate this work package was estimated. Only real world measurements give you the first two of these.

12. Consider buying a hedge position in the Heating Oil market. Many fuel and heating oil supplier can help you with this.

13. Investigate and consider Idle Reduction Technology. This small device shuts down diesel engines when in an idle mode for a certain time. It does not allow the engine to cool to below a set point so that restarting is always easy. (You can contact us for more information.)

14. Investigate state-of-the-art fuel tracking and dispensing systems. These systems will help solve accuracy and recording issues. Make sure they will meet all of your recording requirements before investing! (You can contact us for more information.)

15. Use a customized database program (like DecisiveCost) to track and calculate all this information. Paper forms just get filed away. You need actionable business information! Spreadsheets are a nightmare to update, proof and do not begin to produce meaningful reports that a custom solution produces.

Do Something Today! “Lead, follow or get out of the way” as someone said.

Dedicated to your success,

Dan Rooks
President
Decisive Systems, Inc. "The Owning and Operating Cost People"In the U.S.
Call 800-232-5767 International 941-926-9260
drooks@decisivecost.com http://www.decisivecost.com/

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Want to comment on the issues raised here? Go to Comments (below) and add your comments no matter if you agree or disagree.

Does $100.00 a Barrel for Oil Mean $4.00 a Gallon for Diesel (in the U.S.)

Does $100.00 a Barrel for Oil Mean $4.00 a Gallon
for Diesel (in the U.S.) is Right Around the Corner?

Are You Letting “Business Conditions” Run Your Business?

When fuel went to $1.87 for off-road fuel in the U.S. market, I thought the machine owners would come un-glued. When it went to $2.50 I was sure they would change their business practices. I was wrong on both occasions.

Many are doing the same thing at three dollars a gallon that they did at $1.20. This is a big mistake that is costing machine owners billions of dollars world-wide.

A smart few have gotten mad as heck and done something about this!

You have to be sick of being the tail not the head. Sick of sucking up anything and everything dished out to you. You have to get mad and say “I am not taking it anymore!” As long as you think you don’t have any choice or say in the matter, I assure you…you will not have any choice! I love what Henry Ford once said to his engineers. “If you think you can, you can. If you think you can’t,” you can’t. Do you desire a change? How badly do you want it?

When you get mad enough to start to ask questions like “How should I, or can I modify my business system to protect myself and profits from changing fuel costs? What changes do I need to make today? Who could best help me to look at my business differently? I know how I have done it all these years …but who could give me a different prospective?"

Now you are really starting to bring in fresh ideas.

You have to believe that someone out there in the world might know something that you don’t know. One of the smartest businessmen I know said to me, “Dan, when I go into a board room, if every person around the table is not smarter than me, I have got the wrong guys at that table”. You have to believe that it might be possible to do things differently and make more money in this business, and have less risk, than you currently have today.

Last, you have to be willing to take action. Just saying “I am not going to take it any more” with no action, will avail little. It is like the little boy saying about the bully, who has been bothering him a school…“I am not going to take it anymore”. So what are you willing to do or going to do to change situation?

According the heating oil futures market experts whom I have been listing to on CNN CNBC, MSNBC and Fox Business, the prognosis is YES, fuel prices are going up. One said $4.00 by Christmas! I don’t know the future any better than you. But I do know that you have to stop being passive about the cost of diesel fuel and machine cost in general.

It is going to take:

• Desire
• Belief
• Action

It takes more than just these three things for success. However, without these three, we don’t have chance. We are doomed to be the tail and just let the “river of life” carry us where it wants to go.

If you have even a shred of any of these three things and you are willing to change your business systems, processes and procedures, call me. We may be able to work together to come up with a plan that will protect the fine business that you have been blessed with and bring new Best Practices to your company.

Oh, by the way, even if you don’t believe you can do anything about the high cost of diesel fuel and gasoline, Click on this link www.DecisiveCost.blogspot.com and click on the link Fifteen things you can do today about the cost of fuel. If you have even a shred of any of these three things and you are willing to change your business systems, processes and procedures, call me. We may be able to work together to come up with a plan that will protect the fine business that you have been blessed with and bring new Best Practices to your company.

Oh, by the way, even if you don’t believe you can do anything about the high cost of diesel fuel and gasoline, click on the link on the right, Fifteen things you can do today about the cost of fuel.

Dedicated to your success,

Dan Rooks

President

Decisive Systems, Inc. "The Owning and Operating Cost People"In the U.S.

Call 800-232-5767International 941-926-9260

drooks@decisivecost.com http://www.decisivecost.com/

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Is Your "Inner" Asset Manager In Hibernation

Is Your "Inner" Asset Manager In Hibernation or

Your “Opportunity Antenna” Switched Off?

A friend of mine recently told me a terrific story about a meeting he had with another equipment owner. Not terrific in that this guy's business is worse off than he knows. However, this is a sensational example of why most equipment owners and managers are not bothering to pick up on huge opportunities lying at their feet. Opportunities that with the tiniest bit of initiative, would result in monumental leaps in net income.

First, the story…

“My good friend is a young entrepreneur who had opened his own contracting business. This young man had started the business several years ago with the dream of owning a profitable business where he could ‘call the shots’ and operate it the way a contractor is supposed to be operated. But, fast forward several years and this contractor is still struggling to pay the rent.”

He was frustrated and shared his misery with my friend. “I don’t get it. I offer a much better, more personalized service for my clients. Just try to get the kind of personalized attention I give, at one of those other contractors! I’m really starting to hate this business.”

My friend said, “You know, I know I should raise my rates. But there is always someone out there who is willing to take the work for less. I cannot change my prices.”

Yes, this is a true story and I’m sure you can already see what’s happening here. Yet it begs the question, are YOU overlooking niche markets and opportunities that, right now, are lying at your feet just begging to be realized?

I would ask this equipment owner several questions if I could.

When are you going to stop allowing your competitors to tell you what you have to charge? They don’t know your business or expenses. I doubt they know their own costs. So...., how long are you going to let them tell you what you have to charge?

When are you going to stop allowing your clients to tell you what you have to charge? They don’t know your business or expenses. They think you are making a 50% profit margin! So clearly show a client WHY you charge, what you charge. You need to take a detailed computer print-out of your exact machine or truck cost and demonstrate why you charge what you charge. Your competitor is not going to do this. Many clients want reliable service with machines that don’t break down. They want to know that you are not going to come back and ask for more money due to poor estimation of costs or un-substantiated change order requests.

When are going to realize that you will never win every bid or tender? If you are going to loose business – loose on all the bids or tenders on which you cannot make money. Many contractors loose 3 out of 4 bids. Let me show you how you can actually raise that number and make MORE money.

When are you going to start to accurately cost your machines and trucks? You know labor and material costs for the bid or tender you submit. If diesel fuel just went up $0 .12 cents a gallon, how did you immediately change what you have to charge on each machine starting TODAY? We can show you how to do this.

One of the most important lessons I learned was about the importance of mindset and belief systems. Ask anyone why they are not achieving a goal or result that they want – can be anything. Money. Weight loss. Time off. Pick one.

Instantly, they’ll tell you their story…

“Well, I can’t do costing right now because I want to have a life -- and if we do costing, I’ll end up getting more clients and have to work 70-80 hours a week…and I just don’t want to do that.”
Here’s another popular one: “I’m just too busy to do cost my equipment and track its fuel and utilization.” The truth? They have themselves convinced that they HATE paperwork, they’re not good at it, and therefore they make sure they are “too busy” to spend any time on it.

It’s an excuse.

Machine and truck costing does not get done by people with nothing else to do. It’s forced into the schedule. You have to know your cost. Unless you are making a 50% mark-up on work, you better know your machine cost, exactly. Besides, machine costing is not just about data and software, it’s about strategy work. It’s about finding the answer to the question, “How can I double my revenue while reducing the number of hours I work in the business?”

Our goal is to implement a system that once in place, you can know the cost, utilization and fuel consumption for any machine, or truck, under any operating condition or project work task. This system, will tell you exactly what your cost is in 2 minutes or less!

But no one ever seeks answers to THAT riddle because they have themselves completely convinced that it’s not possible. Second reason: they stay “too busy” in their daily habits of doing the work instead of taking time to look up from the hole they’re digging to make sure they’re digging in the right spot.

Challenge someone on this and they will get down right nasty defending their belief. “What do YOU know? You don’t have to deal with the same clients/situation/family/employee issues that I have to deal with! Easy for you to say because you have the advantage of being in a different city/business/client base/family…”

Are you getting the picture? Could YOUR inner Asset Manager be hibernating? Could you be overlooking HUGE opportunities to gain more freedom, money, and easy success?

What’s YOUR story?

Now, a more important question…

Are you courageous enough to quiet your ego and start findings ways to make more money, attract a better quality of client, command outrageous fees, all while taking more time off?

If yes – and you can handle the heat – call me at 941-926-9260 ext.104. If I am on the phone or tied up, I will return your call. Be sure to leave me your cell phone number in case its more than five minutes until I can return the call.

Dedicated to your success,

Dan Rooks
President
Decisive Systems, Inc. "The Owning and Operating Cost People"

In the U.S. Call 800-232-5767
International 941-926-9260
drooks@decisivecost.com
http://www.decisivecost.com/

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Want to comment on the issues raised here? Go to Comments (below) and add your comments no matter if you agree or disagree.

You are not a "Joe’s Backhoe Service"

You are not a "Joe’s Backhoe Service" – So why are
you Managing Your Equipment the Same Way?

I was flipping through a copy of ENR and several other trade magazines the other day and was, yet again, disappointed by the unbelievable lack of information on how smart equipment owners are managing their fleets more effectively. I think it is this incredible void of good examples that makes this industry rife with equipment management methods that just plain suck.

Not one mention of machine Cost per Hour or costing methods. Not one headline. Not one specific, meaningful benefit of knowing and tracking cost. No case studies or testimonials.

What was there? Cute and clever ads asking you to buy a new machine or something. What about all the machines you already have? All that space wasted with meaningless fluff, and vague generalities – absolutely NO meaningful Machine and Truck Asset Management techniques to help make the machine owner money.

I’ve often wondered if more of the machine owners will ever wake up and actually hold each machine accountable for a measurable amount of work and profit instead of pumping millions of dollars into a black hole of terrible fleet & heavy equipment management practices.

Listen – as a business owner, you can’t afford to make dumb mistakes like this and the ones listed below. If you spend $1 today, you need $2 back tomorrow. Your fleet & equipment asset management practices have to be held accountable just as an estimator would be—if the estimator doesn’t produce, he or she get fired, plain and simple. After all, how long would you keep an estimator on staff who wasn’t producing winning bids or an estimator that was not bringing in profitable jobs? Would it be worth their salary and your time and effort to know that they are "at least getting your name out there?" Absolutely not – and your fleet management efforts and practices should be held to the same level of accountability.

The bad fleet and equipment asset management practices I am talking about are like these, to name just a few:

• Setting your price for a machine based on someone else’s price.
• Not knowing what each machine or truck in your fleet really costs you.
• Charging the same price for any and all type of work on a machine.
• Charging the same no matter which machine you use or bring to the job.
• Incorrect machine or truck costing based on fixed costs in place of Dynamic, ever changing costs.
• Incorrect machine or truck costing based on what your accounting system says it costs you. Accounting systems were never designed for costing machinery and trucks. Your Accounting system costs vs. real, true Dynamic Lifecycle Cost per Hour are entirely different!
• Incorrect machine or truck costing based on spreadsheets with partial costing information.
• Wrong Costing based on what some book says is your "Cost".
• Setting a price once a year (or maybe every three years) for a machine.
• Not tracking machine utilization rates and operating hours at least weekly.
• Not tracking fuel used and burn rates in gallons or liters for each machine by projects and work package.
• No Shop Rate established for In-house service. Comparing the cost you pay a mechanic of say $18.11 an hour to a dealer’s service rate of 75.00 hour and assuming this means you can do it cheaper.
• Using equipment management practices that worked when your company bought a gallon of diesel for $0.59 and a D-5 Dozer sold for $22,000.

Very small companies like our fictional "Joe’s Backhoe Service" with one or two pieces of heavy equipment might be able get away with not knowing their equipment cost, fuel and utilization information. But your company has grown larger. You have to run your company using the Best Management Practices available today to give you a hope and prayer chance of making money.
One of the problems you have today is that you may be showing a profit but loosing your shirt due to incorrect machine and truck costing and rates. I can help you with this, only once you understand why this statement is true.

When it comes to equipment management, you need to not only get the attention of your entire staff of senior managers, project managers, shop manager, estimators, superintendents and machine operators. You need to build trust and confidence and get them to respond so that they are moving in the direction of this change in business practices. That’s what I teach in the articles I write on this page, in the various software tools I sell, in the live events I conduct around the U.S. and in personal one-on-one engagements in your office.

Your equipment needs to generate a profit. If you don’t know your true cost (not accounting cost) and actual, accurate utilization, you cannot determine profit. Lowering cost and improving profits is the by-product of the type of equipment management methods I teach.
Some of our clients have started their business after working for a larger company. Unfortunately, many of the clients who come to me have to unlearn everything they’ve been taught to do by these big companies. They’ve been „sold" that you don’t need to know cost, only to learn what the competitions is charging. Being big is different than being good. They think that they have to meet all competitors’ price to get work. I will show you why this is NOT TRUE. As an example of this, recently I worked with a commercial contracting company doing $330,000,000 dollars a year and they never bid one job.

And if you want to unlearn the bad habits you’ve acquired in Equipment and Truck Asset Management and learn exactly what you need to do to generate a boost in new clients, sales, and profits, then get your butt and call me.

I will fly out to your company. Sit down with you and the senior managers of you company. Review your present equipment management policies and procedures. First I need to see the way you do it now. Next I will offer you a plan that is customized to your business that will get your company up to date. I will do all of this for $500.00 (Continental U.S. only) plus travel expense. If you don’t like our plan. That’s it. I go away and you go back to the way you are doing it now. No further expense or obligations.

Want references? Ok, I can give you a bunch. But come on, were talking about $500.00 and some valuable information that you can make up your own mind about. Do you really care if some guy in Bayonne, New Jersey or some place other place liked what I did for him. This is about you and your company and what I can do for you.

Right now, many days over the next 60 days are SOLD OUT (we are very close to 100% booked in December), and the days before and after December are going to sell out too.
You might guess that I cannot afford to fly around the country for $500.00 per day forever. This offer is for right now! I cannot promise you I can do this at this cost again. Once it’s gone, it’s gone. Do NOT miss this opportunity or you will be very sorry you did. The need to manage your equipment and trucks, and win more bids will never go away – so why would you let anything stand in your way of calling me.

One other thing you need to know. I cannot extend this offer to everyone that wants it. If we feel you will not benefit enough from this one-day engagement, I would rather tell you up front. So we have a few qualifications to receive this special offer. Call me and we will discuss if it makes sense for me to come you. If by chance you don’t qualify today, I will still try to help you by phone. So you have nothing to loose, Call me now, If I am tied up on the phone or out of the office, just leave a message with your cell phone on my personal extension 941-926-9260, Ext. 104. I will return your call.

Dedicated to your success,

Dan Rooks

President

Decisive Systems, Inc.

"The Owning and Operating Cost People"

In the U.S. Call 800-232-5767 International

941-926-9260

drooks@decisivecost.com

http://www.decisivecost.com/