A Desk Book for Practitioners
This is not a text book. It is a desk book that is full of ideas, examples and inspiration. It should be on your desk not on a forgotten book shelf. It needs to be used and must become dirty, dog eared and full of personal notes.
Do not start at the beginning and read right through the book. Start with a chapter or section that looks interesting and explore from there. Browse and think; don’t look for answers. Look for methods, ideas and inspiration. Enjoy the challenge of learning and act when you see opportunity to improve.
There are no shortcuts to change. You need to understand what you do, think creatively about the future and take action. I hope this book helps.
What do the Reviewers Say
"This is the most comprehensive and modern equipment management guide to date. I think every equipment manager, large or small fleets, should have this book on their shelf. It is also a perfect equipment guide for owners and operations people; the more they know about equipment the easier it is for equipment managers to get their job done."
Thad Pirtle
Vice President and Equipment Manager
Traylor Bros., Inc. Evansville, IN
"For years I have looked forward to reading Mike’s articles in Construction Equipment Magazine. His unique grasp of both real world management and academic experience has allways provided insight into various fleet management issues. At last, he offers his fans a comprehensive work that most certainly will become the standard for the equipment management professional."
Dick Brannigan
Immediate Past President
Association of Equipment Management Professionals
John R. Jurgensen Co. Cincinnati OH
Main Topics
ORGANIZATION
Chapters 1, 2 and 3 emphasize the fact that equipment and equipment management is not an end in itself. Fleets are owned, managed and put to work in order to produce a completed product. Construction companies build roads and bridges, quarries produce aggregates, mining companies extract metals and minerals. Equipment managers are part of the production team and work within the organization to optimize the use of equipment as a corporate asset and make production more efficient.
ECONOMICS
Chapters 4, 5 and 6 lead to a basic understanding of equipment economics and the hourly owning and operating cost calculation. A very simple format for calculating the hourly owning and operating cost is given in section 4.3 and used as an index for subsequent sections that provide insights into the risks and uncertainties involved in estimating each component of the cost calculation. The section requires some knowledge of spreadsheet tools to analyze data and perform simple calculations.
MANAGEMENT
Chapters 7 through 12 address a number of management issues critical to achieving an optimum fleet age, selecting appropriate strategies for the maintain, repair, rebuild, replace decision, extending component life and understanding the financial and accounting aspects of fleet management. It emphasizes the fact that there are no right solutions, only intelligent decisions and is structured to provide insights into the many complex performance and measurement challenges faced by equipment managers.
Table of Contents
ORGANIZATION
How do we organize our business so that we achieve maximum value from our equipment assets.
- 1. Equipment Management.
- 1-1 Equipment Management Functions
- 1-2 Functions, Roles and Responsibilities
- 2. Responsibility Centers and Organizational Structure.
- 2-1 The Pros and Cons of Centralization
- 2-2 Decentralize Decisions, Centralize Standards
- 2-3 How to Make Internal Rates Work
- 2-4 The Flow of Internal Costs and Charges
- 2-5 Making Responsibility Centers Work
- 3. Making Organizations Work.
- 3-1 Understand and Eliminate Accidents
- 3-2 Integrating Equipment Management in the Company
- 3-3 Three Goals for World Class
- 3-3 It truly is a Partnership
- 3-4 The Shop is more than a Workshop
ECONOMICS
How do we estimate owning and operating costs and manage the risks involved.
- 4. The Rate Calculation
- 4-1 Owning and Operating Costs
- 4-2 The Rate Calculation
- 4-3 Sensitivity Analysis on the Rate Calculation
- 4-4 Actual Costs and the Rate Calculation
- 4-5 Maintain a Focus on Cost Per Unit
- 5. Understanding and Estimating Owning Costs
- 5-1 Estimating Residual Market Value
- 5-2 The Residual Value Grid
- 5-3 Interest and the Cost of Capital
- 5-4 De-mystifying Depreciation
- 5-5 Alternatives to Straight Line Depreciation
- 6. Understanding and Estimating Operating Costs
- 6-1 Understanding and Classifying Operating Costs
- 6-2 The Cost of Repair Parts and Labor
- 6-3 Component Replacement Costs
- 6-4 Undercarriage Costs – Managing Large Expenditures
MANAGEMENT
How do we strike a balance and optimize the decisions we take in many complex areas.
- 7. Economic Life, Fleet Average Age and Capital Expenditure
- 7-1 Economic Life
- 7-2 Fleet Replacement Planning
- 7-3 Buy What You Burn
- 7-4 Maintain Capacity in Stock
- 7-5 Fleet Age Balance
- 7-6 The Replacement Decision
- 7-7 Dangers of Delaying Replacement
- 8. Strategic Maintenance Issues
- 8-1 Maintain, Repair, Rebuild
- 8-2 Inspection and Prevention
- 8-3 Condition Assessment and Mechanical Maintenance
- 8-4 Oil Analysis
- 8-5 Maintenance and Component Life
- 8-6 The Rebuild Decision
- 9. Performance Measures
- 9-1 The Challenge of Benchmarking
- 9-2 Deployment, Availability and Utilization
- 9-3 Data and Performance Metrics.
- 9-4 Measuring and Managing Utilization
- 9-5 Measuring Age Cost and Reliability
- 10. Cash, Cash Flow and Discounted Cash Flow Analysis
- 10-1 Cash is King
- 10-2 Discounted Cash Flow
- 10-3 Rate of Return
- 10-4 A Cash Flow Based Rate Calculation
- 11. Balance Sheets, Cash Flow, Financing and Leasing
- 11-1 Equipment Transactions and the Balance Sheet.
- 11-2 Balance Sheet Ratios.
- 11-3. Equipment Decisions and Taxable Income.
- 11-4. The Lease Decision.
- 11-5. Inflation, Working in a World of Growing Costs.
- 12. Budgets and Budgeting
- 12-1 The Budget Control Cycle
- 12-2 Producing Actionable Cost Information
- 12-3 The Equipment Cost Report
- 12-4 Fixed and Variable Costs in Fleet Management
- 12-5 Reallocating Budget Variances
- 12-6 Actions Speak Louder Than Budgets
