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Highway Contractor: The X Factor
Posted By Brooke Wisdom On January 1, 2010 @ 6:00 am In Featured Articles,Highway Contractor,In the Magazine | No Comments
Extreme maintenance practices can help you extend equipment life spans — but be aware you are managing risk.
In today’s economy, we’re all trying to stretch things as far possible. Whether it’s stretching time between oil changes in your car or holding off on buying that new pair of work boots you know you need, we’re pushing the limits.
The construction industry is no exception. Its economic downturn has prompted many contractors to run equipment for more hours than normal. Capital for new machines is scarce so equipment is being kept longer and worked harder. Knowing that the equipment has to last, managers carefully watch oil samples for wear particle signals that mean component failure is approaching. And some equipment managers are even replacing small components, such as water pumps and alternators, before they fail.
“We’re probably adding 20 percent more to the life of our equipment than we would in normal economic times,” says Rex Davis, a vice president at RMCI Inc., Albuquerque, N.M. “Sooner or later we have to make some decisions (about trading in equipment). It doesn’t do any good to have new equipment if you don’t have work for it. Hopefully the economic tide will turn soon.”
Davis replaces small components such as turbochargers and water pumps before failure. “A turbocharger normally runs 5,000 to 7,000 hours, and once you get past that you start looking at it,” Davis says. “We do go by historical failure records on small components. A contractor’s history is a better representation of what the equipment will do than someone else’s suggested failure times.”
Equipment managers need to make a plan for running equipment longer than usual. You watch wear indicators such as oil sample analysis. Outside companies will do vibration analyses that can pinpoint problems or incipient failures. “The plan will call for additional observations of known maintenance items — and some tests for wear indicators you normally would not suspect,” Davis says.
Finding the ‘sweet spot’
Dan Connelly, vice president of equipment services for Oldcastle Materials Inc. in Atlanta, notes that demand for his company’s construction services is down, so equipment is being kept longer. However, he points out, the equipment is not working its usual number of hours. “Operating hours, not calendar days, is the important factor in determining our replacement cycles,” Connelly says. With about 40,000 pieces of rolling stock and eight divisions, Oldcastle is one of the nation’s largest construction contractors.
Connelly says Oldcastle strives to replace most equipment at the “sweet spot” — the optimum point in a machine’s financial life just before its repair costs balloon and major components need replacements. Oldcastle determines its own sweet spot for each category of equipment, based upon historical records and analysis of owning and operating costs.
However, in some categories of equipment, such as 7-cubic-yard wheel loaders, Oldcastle considers going for a second life by replacing major components. Forty-ton and larger rigid-frame haul trucks would also be considered for major component replacements. The company owns about 500 dozers and 800 excavators, but “typically we don’t rebuild them,” Connelly says.
How about replacing small components before failure? Yes, says Connelly. “We certainly attempt to replace components such as starters, alternators, and water pumps before failure,” he says. “We advocate condition-based maintenance.”
The level of service that Oldcastle procures from equipment dealers depends on the relationship of each division with its local equipment dealers, Connelly says. Each division has multiple shops that do preventive maintenance and some repairs.
Oldcastle uses Viewpoint management software, which has an equipment module. That module identifies each piece of equipment by a unique number. Revenues, as well as operating hours and all costs, including oil changes, parts and repairs, are tracked for each piece of equipment. “We take data that is housed in Viewpoint to determine the optimum equipment life cycles,” Connelly says. “We look at each piece of equipment multiple times each year.”
The Washington Division of URS Corp. keeps equipment based on site-specific applications, says Bob Merritt, director of maintenance at the Boise, Idaho-based firm. The Washington Division owns 2,000 plus pieces of equipment that work at construction sites, quarries and mines around the world.
“We keep equipment on long-term projects based on application and production,” Merritt says. “Whereas most contractors try to get rid of machines before the first major rebuild, we may hold it longer and go through one or two rebuilds on many pieces. The number of hours is driven by the class of equipment.”
Take 50- to 70-ton excavators, for example. Washington has some that range from 14,000 hours up to around 25,000 hours on longer-term projects. Front shovels and mining excavators run longer — up to 60,000 hours.
How about dozers? “Typically we try to get rid of the less-than-300 horsepower class at about 10,000 to 12,000 hours; the 300- to 500-hp class in 20,000 hours and the above-500-hp class in 50,000 hours,” Merritt says. “Even at those hours, that’s longer than most people run them.”
Washington Division will do a major rebuild at 12,000 to 14,000 hours on a construction dozer. That means the complete power train gets rebuilt components — engine, transmission, torque converter and final drives.
Why keep equipment longer? “If it adds value we do it,” Merritt says. “In the last few years, until the downturn, it’s been difficult to get the equipment we needed. The low availability of new and used equipment made the price go up. Now with the change of the economy, lots of equipment in the smaller to medium-sized classes is currently available.”
Capital for new equipment is very limited and profit margins are tighter than ever at American Infrastructure, says Mike Monnot, vice president of equipment for the Worcester, Pa.,-based construction company. The firm owns about 700 pieces of rolling stock and 350 on-road trucks. “So unfortunately, yes, we’re keeping equipment longer than we would like to,” Monnot says.
To run typical construction equipment beyond 10,000 hours is to gamble that you won’t have a catastrophic component failure, Monnot says. If you do get the major component failure, you have to repair it, because you can’t sell it in a failed condition. Then the other components still have the potential for failure. And the equipment’s technology becomes obsolete.
“So if a company makes a decision to keep the equipment longer, the only option that you really have is to do planned, predictive maintenance and schedule components to be changed out at intervals,” Monnot says.
“Through scheduled maintenance we’ve gotten as many as four life cycles, or 24,000-plus hours, out of large wheel loaders,” Monnot says. The wheel loaders work for a subsidiary called Independent Construction Materials, which runs asphalt plants. Monnot recommends getting expected component lives from the manufacturers, then watching all indicators of wear — oil samples, vibration analysis, wear measurements and the like. “You come as close to that end of life as you can,” he says.
In better economic times, Monnot likes to keep a newer fleet. “Typically I prefer to cycle equipment out at the end of its first life in construction, and in mining, maybe the second life,” Monnot says. “Beyond that, I would rotate it out and exchange it for new machines.”
K-Five Construction Corp. is not keeping equipment any longer than usual because of the economic downturn, says Dave Gorski, shop administrator for the Lemont, Ill.-based paving contractor. He says last year wasn’t a bad year, but there doesn’t look to be much work for the current year.
“We have a 20 to 25-year replacement plan that calls for replacing everything sooner or later, and it’s tied to an annual capital budget,” Gorski says. “We own more than 600 pieces of on- and off-road equipment. Our replacement plan is done by years, so our replacements are pretty predictable and we aim to keep our capital spending on an even keel. But we do tweak the plan here and there based on factors like the volume of work we have or what the EPA is doing to us in terms of emission requirements.”
Dale Warner, fleet director for Fort Myer Construction in Washington, D.C., has been using fuel-based preventive maintenance intervals since 1980. Recently hired at Fort Myer to reduce equipment owning and operating costs, Warner is implementing severity-based intervals — based on fuel usage — for the firm’s 600-plus machine fleet.
“Fuel use is the only way I know to judge the severity of an application, to tell how hard the machine is working,” Warner says. Previously, Warner used severity-based intervals at C.J. Miller LLC, a general contractor in Hampstead, Md., and at C.J. Langenfelder & Son Inc., formerly of Baltimore and now defunct.
At Fort Myer, Warner will start by changing engine oil at a fuel usage interval equal to 75 gallons times the number of quarts of oil in the crankcase. So if an engine holds 40 quarts of oil, multiply that by 75 and you get 3,000 gallons of fuel. When the engine has burned 3,000 gallons of fuel, it’s time to change oil.
“The hourly intervals will vary widely,” Warner says. “When I was at Miller, we averaged about 560 hours per oil change. Some we changed in 300 hours, some were 700 or higher. We did one at 800 hours.”
Oil analysis is a necessary part of extended oil change intervals, Warner says, warning that you have to watch wear metal particle counts versus their limits.
If you want to use fuel-based intervals, Warner recommends starting at 70 gallons times the quarts of crankcase oil. Watch the oil samples, then inch it up to 75 gallons, then 80 gallons, and 90 next. “A major manufacturer said 70, but I’ve been successful at using 90 gallons as the multiplier as new technology has developed,” he says.
Warner’s results are impressive. One year Miller did a total of 1,445 oil changes. The next year, by using fuel-based intervals, oil changes dropped by 40 percent. The savings in dollars: more than $400,000, figuring $760 per oil change. v
Author’s note: All of the equipment managers quoted in this story belong to the Association of Equipment Management Professionals. For more information about AEMP, go to www.aemp.org.
Dale Warner plans to install a completely automated fuel reporting system at Fort Myer using a Fuelmaster reporting system at its pump island and its fuel trucks.
Both will have an electronic chip in the dispensing nozzle. When fueling takes place, the nozzle will receive equipment information — unit number, equipment hours and miles — through a transmitter in a ring installed at the fuel tank neck. When the fuel truck gets within 900 feet of a central data receiver, all fuel/equipment information will automatically transmit and upload into the contractor’s equipment management system.
With the help of on-board electronics, the Fuelmaster system will report time spent idling, miles, hours, fault codes, type of fuel used and time and date of fueling. Warner hopes to help reduce idling time dramatically. “If our fleet averages a half-hour of idle time for a year, that’s $300,000,” he says. “If we can cut that idle time to 15 minutes per day, that’s a savings of $150,000.
The system identifies who is idling, Warner points out, and the information is then given to senior management so appropriate action may be taken.
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