Optimizing Fleet Performance With the Heavy Equipment Comparator

Key Performance Indicators (KPIs) are more than the numbers and metrics you report out weekly and monthly — they enable you to understand the performance and health of your operation so that you can make critical adjustments and achieve your strategic objectives. Knowing and measuring the right KPIs will help you achieve results faster and sustain them.

We allow our fleets to run without any real indications of their performance or costs. And if we do have a few line items for fleet costs, they are generally large buckets of labor, materials, and overhead with little granularity to define real costs and performance.

After thirty years as a fleet and equipment consultant, I have had the opportunity to work with hundreds of fleet operations across 31 countries. One common issue I have observed is the lack of KPIs or any form of metrics to measure fleet management and maintenance activities.

This is despite equipment usually being the second largest asset a company has as an enterprise. We are often looking at budgets of millions, yet our panel of gauges are lacking.

Leading & Lagging

This project required us to develop indicators or metrics that could be converted to KPIs that not only show activity but the results or net outcomes of that activity.

If you want to be able to manage costs and activities, you need granularity and detail. Therefore, we had to pick a balance that would allow management to “get down into the weeds.”

We were also searching for the right blend of 70% leading and 30% lagging.

Lagging indicators are typically output-oriented measuring results. These are often easy to measure but hard to improve or influence. On the other hand, leading indicators are typically input oriented, hard to measure, and easier to influence. They change before lagging ones do and usually result in lagging indicator actions. A good way to think of the balance between the two is cause and effect.

The Society of Maintenance and Reliability (SMRP), which provides the standards for all other industries for equipment maintenance and management recommends that any maintenance operation should track 20-25 leading and lagging KPIs to provide enough granularity.

Caryl Coronis, CFO of NBG Constructors and member of CFMA, later joined the leadership group to help drive the efforts. The team worked for two and a half years formulating various metrics to develop the right blend of KPIs. We had discussed using the SMRP KPIs, but everyone agreed the ones used for manufacturing would not apply as well to heavy construction and mining. We decided to start with a blank slate and move toward consensus using the Delphi Technique. The Delphi Technique is an excellent tool to get a panel of experts to condense a large list of opinions down into a smaller list that has been agreed upon by consensus. The good news is it works; the bad news is it is extremely time consuming.

Exhibit 1 shows the traditional input-output model with the input categories of Capital, Labor, and Materials (CLM) shown as an input. The processes are maintenance activities that are essential to produce the optimal results. Finally, outputs are measured as lagging indicators or results.

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About the Author

Preston Ingalls

For over 48 years, Preston Ingalls, President/CEO of TBR Strategies has led maintenance and reliability improvement efforts

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