Integrate Preventative Maintenance with Accounting and Project Management
The trick is to use your computer as an important member of your preventative-maintenance team. Every owner or manager of a utility contracting firm knows that proper scheduling of preventive maintenance means greater profits. Servicing your backhoes, trenchers and other equipment at the proper time means never having to replace them ahead of schedule Plus, it's better to keep the equipment on the job, making money, rather than in the shop for maintenance before it's due.
But there's also an indirect source of profit in performing preventive maintenance: you can increase the efficiency of your accounting and project management staffs; and you can have an automatic "double check" on the equipment-usage hours that your field staff is reporting. The benefits can show up on the company's bottom line, as surely as changing oil or filters or lubing zerks at just the right time.
Not only will today's profits be affected but so will tomorrow's: you'll be able to set more accurate equipment-cost rates for future bids.
The trick is to use your computer as an important member of your preventive-maintenance team. For utility contractors, that means using a software package for preventive maintenance that's integrated within the company's accounting and project management system.
An integrated preventive maintenance (PM) software package enables accounting, project and maintenance managers to share the same information easily for their specific needs, without duplicating efforts. Maintenance personnel, for example, can use preventive -m maintenance information that is already being accumulated through the accounting and equipment-costing systems.
The benefits to that integrated approach include increased efficiency and productivity of personnel, a decrease in errors (since only one-time entry of data is required) and-importantly-an automatic "cross-check" between the equipment-usage hours reported by field and maintenance personnel.
The net result of an integrated approach: improved analysis of equipment rates and accurate equipment-hour reporting, which, in turn, often leads to lower equipment rates. Of course, that results in consistently lower bids that are potentially more successful. (Maintaining an efficient schedule for equipment maintenance is a given.)
Increasing Efficiency
There's no reason for a utility contractor to enter the same data multiple times for several purposes (i.e., accounting, project and preventive maintenance management) when it's more efficient simply to enter it once. The equipment that's already set up in the integrated software package's equipment-costing system can also be scheduled for preventive-maintenance tasks at the touch of a computer key.
That can be extremely helpful if the equipment you're setting up (like approximately one-third of the equipment currently in the field) doesn't have an hour meter. The usage hours already are being reported by the field staff for equipment-costing purposes, so why not also use them for preventive maintenance (i.e., to determine when the next oil change, transmission check, engine haul, etc. is required)?
An integrated PM package also allows you to assess the required parts for each PM task-the same ones included on your inventory control system. The parts required not only will be listed but will tell you whether you have all the parts in stock or whether you need to order more before the work is performed.
Accurate Costs & Rates
An integrated preventive main" maintenance program enables the contractor to reconcile equipment use information from two sources (field personnel and maintenance managers) that should be identical or close to it. Periodic readings from equipment meters, taken en by the maintenance department, can be matched against the hours reported from employee time cards, via the field staff, and a report can be run regularly to compare any differences.
By ensuring the accuracy of information from multiple sources, equipment costs are spread correctly across multiple jobs, which means that each job bears its fair share of equipment cost, and no job is significantly overcharged. Importantly, it also affects the future sure: with that double-check system, you're able to ensure that equipment-cost rates are accurate.
Basic math: equipment rate equals equipment costs/hours used. Thus, if the hours recorded are less than the actual usage, your equipment rates will be inappropriately high. That will lead you to submit higher-than-necessary bids for future jobs.
Equipment Doesn't Talk
Remember this: unlike employees, equipment doesn't talk. If you ever err on an employee's paycheck to his disadvantage, you'll hear about it immediately. If, for example, only 30 hours is reported to the accounting staff (and billed to a specific job), but the employee actually worked 40, the employee's subsequent visit to the accounting office is a built in check on the system.
But if a project manager underreports the actual usage of a backhoe (for whatever reason) there's no such built-in check, since equipment doesn't get a paycheck. If field personnel aren't using the exact equipment-operating information from employee time cards, chances are no one else will really know about it.
Capital Planning
Accurate tracking of equipment operating hours also is essential for your capital planning and budgeting-not to mention day-to-day operations. If equipment usage is underreported, equipment could wear out long before it's scheduled to.
Of course, when an excavator goes down unexpectedly, it wreaks havoc on your operations; instead of helping you make money on a job, a worn-out excavator idles your crew and requires your valuable time to replace it ASAP. And, if you haven't budgeted for it, emergency replacement of an expensive piece of equipment also puts a severe, unexpected drain on capital.
True story: a utility contractor in the Puget Sound area was convinced that the field was underreporting equipment hours, but couldn't prove it. But with the preventive maintenance system, the company can now implement tracking from the meters of the company's equipment, which yields the added benefit of an automatic check of equipment hours reported weekly on time cards. Equipment-hour reporting is now higher on similar jobs, proving (in the owner's mind, anyway) that hours previously were underreported or misapplied.
Another true story: a key manager at a large contracting firm was able to keep much of the preventive maintenance schedule information in his head; by looking at an equipment-cost report (cost by hour used), he could tell when maintenance was required for each piece of equipment. But, when he retired, his accumulated decades of knowledge and experience retired with him. And, thus, one of his "replacements" was a preventive management software system integrated into his existing accounting and project management package.
Who Needs It?
Virtually any utility contractor could benefit from having good PM tracking integrated within his accounting and project management software package; the size of the company is irrelevant. The wise utility contractor will evaluate accounting and project management software packages at least partially on whether they also offer an integrated preventive maintenance function.
If you're the owner, manager or controller of a utility contracting firm, and are responsible for watching the company's overall bottom line, always remember that intelligent use of the computer is one of the best roads to increased profits in every facet of your operation, including preventive maintenance. And, for most utility contractors, perhaps the wisest path when it comes to software is an integrated package that increases your staff's productivity and efficiency, while ensuring that equipment usage is always accurately recorded. The benefits will show up both today and tomorrow. UCM
John Chaney, CPA/MBA, is cofounder of Dexter & Chaney, which develops Forefront accounting and project management software for utility and other contractors. Dexter & Chaney is located at 3200 NE 126th St., Seattle, Wash. 98126-4617; 800876-1400 or 206-364-1400; fax: 206-367-9613.
Reprinted with the permission of Utility Construction & Maintenance. Mar./Apr. 1995, Practical Communications, Inc
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