8/3/2019 Six Ways to Increase Construction-Equipment Productivity_tcm45-356756

1/3

Productivity, or rather the lackof it, is the foremost prob-lem confronting many con-struction firms. Contractors

commonly measure their productiv-ity by taking their output (measuredin dollars or units) and dividing it bythe number of labor hours requiredto achieve the output. But productiv-

ity is the efficiency by which materi-als are placed by labor and equip-ment. By focusing only on laborhours and ignoring equipmenthours, you do not get a true measureof your total productivity.

Labor Productivity vs.Equipment Productivity

So why do contractors pay more

attention to labor productivity thanto equipment productivity? Thatmisguided attention likely stemsf rom the fact that constru c t i o nf i rms often view workers as anhourly cost. Howe ve r, many typesof large construction equipmentsuch as cra n e s, exc a va t o r s, con-crete pumps and paversalso have

an hourly cost.I have conducted studies indicat-

ing, on ave ra g e, that workers arepro d u ctive about 50% of an eight-hour work d a y. By pro d u c t i ve, Imean doing necessary and va l u e -added project work such as ere c t-ing concrete forms or placing andfinishing concret e. During the res tof the eight-hour day, workers are

engaged in nonpro d u c t i ve activi-ties such as waiting for materi a l s,

waiting for instructions from su-p e rv i s o r s, redoing unacceptable

work or looking for tools. Althoughthis percentage of nonpro d u c t i velabor hours certainly should be aconcern to construction firms, letscompare it to the average percent-

age of nonpro d u c t i ve hours forconstruction equipment.

According to leading equipmentmanufacturers, contractors can ex-pect to get 800 to 900 productivehours from a typical piece of equip-ment in a given year. Assuming a2,080-hour work year (52 weeks, witha 40-hour workweek) and 800 hoursof productive equipment time, con-

Six Ways to Increa se

Construction-EquipmentProductivity

BY JAMES J. ADRIAN

Some tips for getting the most out ofyour equipment investment

8/3/2019 Six Ways to Increase Construction-Equipment Productivity_tcm45-356756

2/3

1

2

3

4

struction equipment is nonproduc-tive 62% of the time, which is signifi-cantly higher than the 50% nonpro-ductive time for workers.

Contractors can take steps to im-p rove both labor and equipmentp rod ucti v i t y. But since equipmentd o e s nt have an attitude, where a soccasionally a worker might,

equipment often is easier to man-age. Following are six ways you canincrease productivity by improvingequipment management.

Keep Track of Productive, Stand-by and Nonproductive Time

Like a laborer, a piece of equip-ment at a jobsite is either working ornot working. To improve equipmentpro duct i vit y, you must keep dailyrecords of how equipment time isbeing used. Record the percentage of

time each major piece of equipmentis in one of the following states: Pro d u c t i ve (perf o rming neces-

sary work)

Standby (able to do work, but nowork is available)

No n p ro d u c t i ve (not capable ofdoing the work, broken, or doingunnecessary or low-value tasks)By comparing these percentages,

you can determine how effective lysupervisors are using equipment atdifferent jobsites.

The table above, for example,shows a concrete pumps work per-centages for two different jobs. Byc o m p a ring the data, a contra c t o rcan see that the standby and non-prod uct ive times for the pump areg reater on Job 1 than on Job 2. Byi n vestigating the causes of thesedifferences, the contractor can takesteps to increase productivity.

For equipment-intensive jobs,the ratio of prod u c t ive to nonpro-ductive equipment time can be one

of the best measures of supervisorp e rf o rm a n c e. Some contra c t o r suse equipment productivity resultsas a determining factor for super-visor bonuses and profit sharing.

Consider the Hourly Cost OfOwning or Renting Equipment

To effectively manage labor and

equipment, you must know whatthey cost. Most construction super-visors know work e r s wage ra t e s,but they may not know the hourlyrates for major equipment such asa concrete pump or a crane.

Equipment is expensive. Ex a m-ple hourly rental rates for seve ra ltypes of construction equipmentare shown in the table on page 894.To encourage construction person-nel to view equipment as money,not just a machine, try posting or

painting the hourly cost of renti n gor owning equipment right on theequipment itself, visible to all. Fol-l owing are other ways you can

make employees more aware ofequipment costs: Sh ow employees the hourly

equipment costs used in the es-t i m a t e, and share inform a t i o nabout actual equipment costs vs.the budgeted amounts.

Make equipment part of thehourly cost of a work cre w, soe m p l oyees can see the impacton the bottom line.

Post the hourly costs of expen-si ve equipment near the jobsitet railer or entrance to stress to

w o rkers that idle equipment i swasted money.

Monitor Variable vs. Fixed Costs

Equipment costs are either fixed(a function of time only) or variable(a function of equipment use andactivity). Fixed costs include fi-

nancing, interest, pro p e rty tax (ifapplicable) and replacement. Vari-able costs include depre c i a t i o n ,maintenance, repair and operatingexpenses.

Its important that you keep care-ful records of these costs in case ofc o n t ract disputes. Two situationsmay initiate disputes about equip-

ment costs: added work and pro-ject delays. When a contractor hasto perform more work because of achange ord e r, the project ow n e rmay take the position that as longas the project took the sameamount of time as specified in thecontract, the contractor is not enti-tled to additional hourly costs forowned equipment. When a projectdelay re q u i res the contractor toh a ve the equipment on the joblonger than anticipated, the project

owner may take the position thatunless the contractor can show thatanother project was waiting on theequipment, the contractor is notentitled to additional compensa-tion.

Co n t ractors who keep care f u lre c ords of fixed and va riable costscan justify requesting compensa-tion for additional variable costs in-curred when they have added workbut not added time. Similarly, whena project is delayed but no work is

added, they can make a strong casefor requesting compensation forfixed costs.

Manage EquipmentMaintenance and Repair

Not only is construction equip-ment expensive to purchase (of-ten costing more than $100,000for a large piece of equipment), itse x p e n s i ve to maintain and re p a i r.In fact, the ave rage hourly cost ofmaintenance and repair can ex-ceed the purchase cost bro k e nd own into an hourly depre c i a t i o ncost. One equipment manufactur-er breaks down the typical hourlyownership cost of a $100,000piece of equipment as shown onpage 89 4.

Though equipment mainte-nance and repair costs are expen-sive, even greater are the addition-

Work States of a Concrete Pump Job 1 Job 2

Productive 42% 62%

Standby 30% 16%

Nonproductive 28% 22%

8/3/2019 Six Ways to Increase Construction-Equipment Productivity_tcm45-356756

3/3

56

al costs you can incur due to lack ofp roper equipment maintenanceand re p a i r. Some of these costs(both direct and indirect) includethose associated with: Idle project re s o u rces (part i c u-

larly labor) and project delayscaused by equipment downtime

Less-than-optimal equipmentperformance

A construction accident that re-sults because of equipmentbreakdown

Major repairs resulting from thefailure to maintain equipment ormake minor repairsTo minimize nonpro d u c t i ve

equipment time and repair costs,implement a pre ve n t i ve mainte-nance pro g ram by setting up aschedule for regular maintenanceand re p a i r. Such a pro g ram canhelp you avoid equipment failuresand the nonpro d u c t i ve labor and

equipment costs these failure scause.

Schedule EquipmentEfficiently

You should prepare schedules forequipment just as carefully as youp re p a re schedules for labor. Theo b j e c t i ve is to preplan the use of

equipment to attain maximump ro d u c t i v i t y. For example, if aschedule calls for the use of a craneor concrete pump only two out ofevery five workdays, a contractorat bestcan expect 40% productiv-ity with the equipment. By re s e-quencing the schedule so that theequipment can be put on moreprojects and is in use three days in-stead of two, the contractor canraise the potential for productivityto 60%.

To help in efficient equipmentscheduling, some contractors useinventory systems that track wherea piece of equipment has been,

w h e re it is and where its goingnext. Such a system may be as sim-ple as a regularly updated chart ona blackboard or as complex as acomputer software pro g ram thatt racks each piece of equipment afirm owns. Not knowing the where-

abouts of a piece of equipmentwhen its needed can result in hun-dreds, if not thousands, of dollars inidle equipment and labor costs.

Select the Right Equipment ForThe Job

One of the major causes of lowp roductivity is not using the ri g h t

equipment for the job. Contractorscan seldom afford the latest andg reatest piece of equipment; in-stead, they often rely on the equip-ment they have to do the job, evenif its not the most pro d u c t i ve orcost-effective option.

Even if your finances curt a i lnew-equipment purchases, its still

in your best interest to do anequipment cost analysis for eve ryp roject. Sometimes this analysis

will show that its more cost-effec-t i ve to rent a more pro d u c t i vepiece of equipment for a task, evenif you own equipment that can dothe job but at a higher hourly orunit cost.

Its also important for contra c-tors to regularly attend industryt rade show s, such as the World ofCo n c re t e. Knowing about the lat-

est construction equipment andtechnology can help you deter-mine the best equipment for ap roject. Using outdated, inappro-p riate or ineffective equipment todo a task can lead to low pro d u c-t i v i t y, high costs, time delays andan increase in accidents. Yo umust consider all these factors

when selecting the right equip-ment for a job.

James J. Adrian is a professor ofcivil engineering and constru c t i o n

at Bradley University, Peoria, Ill.,

and president of Adrian Interna t i on-al, a firm providing management

consulting services to the construc-

tion industry.

Depreciation (purchase cost salvage component) = $ 8.00

Maintenance cost = $ 7.00

Repair cost = $ 8.00

Other cost components (such as financing,insurance and operating costs) = $23.00

Total hourly cost = $46.00

Type of Equipment Rate

Paver $180

Concrete mixer $125

Concrete boom pump $105

Conveyor (46-foot) $ 30

Backhoe $110

HOURLY EQUIPMENT-RENTAL RATES*

* Does not include hourly operating costs.

To learn additional ways to im-prove construction-equipment pro-ductivityincluding how to devel-o p a n a c co un t i ng pro c e s s f or

owned equipmentattend AdriansWor ld of Con crete 98 se min a rHow to Se lect, Ma in tai n a nd In-cre a se t he Pro d uc t ivi ty of Equi p-m en t (1 9-40). Fo r m ore in f o rm a-t ion, s ee th e Wor ld of Concretebrochure in this issue or call 800-837- 08 70 . You can a l s o v isit t heWo r l d o f Concrete Web s i t e(www.wocexpos.com/usa.htm).

PUBLICATION #C970891, Copyr ight 1997, The Aberdeen Group, All r ights reserved