Close up of multiple tire tracks in dirt

Fleet Management

Tips for Creating a Fleet Management Strategy

Teo men in construction gear working on a construction site next to John Deere construction equipment

You built your construction company on the back of that excavator. But while your business may be growing stronger, that excavator may be nearing the end of its useful life. How do you know for sure? And should you repair, rebuild, or replace it?

A solid fleet management strategy will help you plan and manage these capital expenditures by identifying candidates for replacement and proving your decision with hard facts and figures. Creating a tool called a “churn chart” is an efficient way to monitor the health of your fleet.

Here’s an example of a simple equipment churn chart.

Green

60% - 80% of Trigger Point
Yellow

80% - 120% of Trigger Point
Black

More than 120% of Trigger Point

CHURN CHART

(A) Unit #(B) Make(C) Model(D) Trigger Point (Hours Worked)(E) Burn Rate (Hours/ Year)(F) Hours now(G) Expected Hours Year 1(H) Expected Hours Year 2(I) Expected Hours Year 3(J) Expected Hours Year 4(K) Expected Hours Year 5

HT6-21

AA

32 ton ADT

12,000

1,500

13,000

14,500
16,000
17,500
19,000
20,500

HT6-26

AA

32 ton ADT

18,000

1,500

18,789

20,289
21,789
23,289
24,789
26,289

HT6-32

BB

37 ton ADT

14,000

2,000

10,300

12,300
14,300
16,300
18,300
20,300

HT6-33

BB

37 ton ADT

14,000

2,000

10,650

12,650
14,650
16,650
18,650
20,650

HT6-35

BB

37 ton ADT

14,000

2,000

6,500

8,500
10,500
12,500
14,500
16,500

HT6-37

CC

37 ton ADT

14,000

1,500

4,367

5,867

7,367

8,867
10,367
11,867

HT6-40

CC

37 ton ADT

14,000

1,500

2,589

4,089

5,589

7,089

8,589
10,089

This chart evaluates the productivity of a machine based on a trigger point — or the number of hours you expect the unit to work before it is likely to become a candidate for replacement. This number can be set using your own knowledge and experience or calculated with guidance from the equipment dealer. The colors green, orange, and black make it easy to see where each machine is in its lifecycle.

The unit, make, and model of each machine are listed in columns A, B, and C. Column D shows the machine’s trigger point or the number of hours in its useful life.

Column E is the burn rate — this is the number of hours your machine is likely to work in one year. You can calculate this based on past years’ data for each machine, while also taking projections of any new business into account. Column F shows the current hours of each machine, and columns G through K add the annual burn rate to this to project the expected machine hours over the next five years.

Follow the color coding to plan for and budget equipment replacement costs.

Doing the math, you will see whether the numbers in columns G through K should be:

• Green ‐ If the expected hours worked fall between 60 and 80 percent of the trigger point, these are young machines that are good candidates for repairs when needed.

• Orange ‐ If the expected hours worked fall between 80 and 120 percent of the trigger point, these machines may be potential candidates for a rebuild.

• Black ‐ If the expected hours worked are greater than 120 percent of the trigger point, these machines are candidates for replacement, especially if their utilization is high.

THE NEXT STEP IS THE REPAIR/REBUILD/REPLACE DECISION.

The choice most contractors make is to do whatever will save the most money now without compromising safety or quality of the work — usually a rebuild or repair is a more economical solution.

A good rule of thumb is to replace the machine when the cost of repair exceeds more than 50 percent of the cost of the replacement machine. Be sure to include parts and labor to accurately calculate the repair cost. If that particular machine is not utilized often enough to justify replacement, consider renting what you need and building the cost into your bid.

GET HELP WITH FLEET MANAGEMENT.

Problems cost money, and a well-maintained machine will last longer. If you’re looking to start a new preventative maintenance plan, consider looking into extended warranties and protection plans from John Deere.

If you’re ready to cut costs and improve productivity, contact your John Deere dealer about a planned maintenance agreement.

To get proactive maintenance recommendations, consider upgrading your equipment with JDLink™ — technology that helps you to identify potential problems early, so you can keep your operation up and running.