Asset Utilization Ratios For Construction

What is fixed nugget utilization? When it comes to managing construction logistics, ensuring your fleet assets are fully utilized is a nifty place to start. Many construction companies assume that because their dump trucks are out on the road for a portion of the day that they are making the most out of those assets. However, in this article, we will explore how that mentality may be costing your construction visitor in the long run.

Learning how to improve fleet asset utilization is just 1 component of a successful logistics functioning. If you are interested in learning about other levers, like dispatch management, you lot can pull to increase dump truck efficiency, cheque out the residuum of this series.

For now, let'southward focus on maximizing your profits. This includes understanding equipment ratios, being able to react more chop-chop to fully leverage your assets, and investigating means that technology can assist your team stay organized - while making the most of your fixed assets.

Increase asset utilization to Maximize Your Profits

Regardless of how many dump trucks your construction company owns, increasing nugget utilization is a cornerstone of a successful logistics operation. It is non enough to have your trucks out on the road for a portion of the day. In fact, every hr your trucks are non on the route, at an acceptable rate, is an hour that nugget depreciates without any revenue.

About structure professionals would readily agree with the statement above, only what does it actually mean for your business concern and how can you measure information technology?

Permit'southward take a step back and define asset utilization. So we can take a closer look at what asset utilization ratios measure. Finally, we tin explore how you can start to appraise your current asset utilization and even meliorate your asset utilization ratios.

Definition & Formula:

Nugget Utilization Ratio: Asset utilization ratio calculates the full revenue earned for every dollar of assets a visitor owns.

Asset Utilization Formula: Asset Utilization = Revenue / Boilerplate Total Assets

What does this mean? Well, if a company has an asset utilization ratio of 44%, that company earned $.44 for each dollar of assets held by the company. When yous focus on increasing asset utilization, you lot are committing to an effort to be more efficient with each dollar of assets your visitor owns. By using this formula, you tin can compare your company'south efficiency over fourth dimension.

What are Equipment Ratios and How Do They Impact Asset Utilization?

Now, allow's explore how to assess the utilization of assets for your construction company. Nosotros like thinking nigh it in this framework of equipment ratios:

Deployment: The time a dump truck or piece of equipment is on-site and expected to work, equally a pct of the total ownership period.

Availability: The time a dump truck or piece of equipment is on-site and able to piece of work every bit a percentage of the time a automobile is on-site

Utilization: The time a dump truck or piece of equipment is actually working on-site expressed as a percentage of the time the auto is on-site and able to work.

View Infographic

Deployment has typically been represented past weeks per year. Taking the number of weeks per year as an asset is deployed and multiplying by x xl (hours per calendar week) helps decide the total number of hours information technology takes to recover the fixed costs of owning that slice of equipment. Ask yourself...how many hours does a dump truck need to piece of work before it has paid for itself?

The time that you lot own an asset simply it is not deployed is wasted time. Substantially, y'all are paying for that equipment and yous aren't making any money off it when information technology isn't being used.

Just knowing this information doesn't change anything. Cognition can help forcefulness your organization to recall about whether it should be selling any pieces of equipment - but information technology does little to improve asset utilization.

We challenge y'all to take a more detailed view of deployment. Strop in on how many hours per week that piece of equipment is deployed. Think proactively about whether or not your company is in the position to either increase the number of projects it takes on to fully leverage owned assets - or - whether you should look for opportunities to subcontract your dump trucks out when project schedules are calorie-free. Remember, you own the asset 24/7, which means that if y'all aren't currently looking at opportunities like night-time work you lot are missing out on 12 potential deployment hours!

This level of granularity is often difficult to ascertain without outside help. Logistics platforms are now able to help structure companies by providing the information needed to track this information. Furthermore, since some trucking logistics platforms, like TRUX, offer all-in-one solutions, you can also subcontract your trucks directly through the platform.

Availability is the time that machines are deployed on-site and expected to work. Nevertheless, there are two instances where availability is impacted. The first asset utilization example occurs when trucks are on the chore and a mechanical breakdown happens. The impacts of this are hands felt and understood by the entire team - mechanical breakdowns put construction projects and timelines at risk. Measuring this type of occurrence tin can assist you identify whether your preventative maintenance plan needs improvement or whether your fleet is aging out of effective and reliable work. The second type of instance is when the machine is able to work but is off shift and not required to work. In this scenario, your system may do good from subcontracting that vehicle out.

Utilization is the corporeality of fourth dimension machines are actually working on-site. It is important to notation that there can notwithstanding exist wasted time with machines that autumn into this category. The type of waste product that occurs at this level is frustrating because it ways that the machine has been deployed, is on-site, is able to work - and isn't working. This could be the fourth dimension that a dump truck spends waiting in line at a chore site or quarry. It could also be the time that they await while the jobsite crews get gear up for them.

It is in this area of waste that logistics platforms really evidence their value. Because yous can program, schedule, and dispatch more efficiently, yous see efficiency gains at the jobsite resulting in less construction equipment utilization waste.

React More Quickly to The Needs of Your Organization

Now that nosotros have a better agreement of what asset utilization is and the equipment ratios you can leverage to track asset utilization, it is time to think about what to do with your asset utilization ratio analysis. Monitoring this is a neat first stride only taking action is necessary to amend your asset utilization and efficiency.

The easiest manner to brainstorm to bear on overall asset utilization is to first with the wasted time that occurs with machines that are working on-site but are underutilized. What changes can your organization make to ensure that dump trucks that are on-site or en route are performing to their total capacity?

Information technology starts with improve scheduling and is reinforced by better communication. For example, what would happen to jobsite efficiency if dispatchers were able to stagger dump truck arrival times past 15 minutes? That one pocket-size change could mean that you go hours of utilization back - simply because dump trucks won't be waiting in line to drop off or pick upwardly material.

With 5 trucks running for a total twenty-four hour period's worth of work, that could mean you get an additional hour of usable time per truck per day.

Better communication between the jobsite and dispatch reinforces these changes. If things are progressing slower or more quickly on a jobsite than anticipated, jobsite contacts can relay that information back to acceleration. With the appropriate tools in place, acceleration can adjust trucking book to the jobsite to accommodate - reducing the wasted time fifty-fifty further.

At present that you have addressed the easiest problem to solve. Let's have a closer await at a more complex challenge. What if the avails you ain aren't appropriately matched to the number of projects you have taken on?

If you accept more projects and need to increase trucking volume, is it all-time to purchase an boosted stock-still asset or would it be ideal to sub the piece of work out to a hired truck? In many cases, the flexibility that hiring trucks for a shorter menstruum of time is beneficial. You lot can turn to a broker, independent possessor-operators, or a fleet of trucks. Only that takes time and we are trying to make you more efficient - not inefficient.

Alternatively, you may have a slower month where the trucks you ain aren't needed for your own projects. What about subcontracting them out to ensure they are still earning for yous - even if you lot don't have a heavy project schedule at the moment? This tin be platonic for many construction companies but information technology does require additional legwork and scheduling to attain.

Logistics platforms help companies find the trucks they demand, when they need them, and allow contractors to find boosted work for their trucks when their own projection schedule is lite. Non to mention the built-in tools to aid track trucks and optimize scheduling and dispatch.

Use A Logistics Platform to Improve Nugget Utilization

You may exist able to find a uncomplicated asset utilization ratio calculator online simply that volition only exist as good as the inputs you are able to provide. Unproblematic calculators may assistance you become a improve baseline agreement of where your asset utilization falls today but information technology volition non provide you the tools you need to make meaningful changes to nugget utilization over fourth dimension.

Leveraging a logistics platform, similar TRUX, is a great way to ensure your team has the tools they need to exist successful at improving asset utilization. Poor utilization costs construction companies money. Logistics platforms help ensure that your fleet of trucks stays deployed and active. They as well provide your team with the practical tools needed to implement changes over fourth dimension. If y'all need assist creating your plan, download our Gratis guide and see large changes in the next iii months.

Understanding equipment ratios, existence able to react more quickly to fully leverage your assets, and using engineering to assist your team tin can help you make the virtually of your fixed assets. If you are interested in learning more about how logistics platforms are helping construction companies create better fleet asset utilization, schedule a call with one of our logistics specialists today.

Schedule a Call