How Smart Is Your Equipment Software?

Nov. 1, 2000
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Keeping track of equipment costs and doing the associated accounting work are jobs almost ideally suited for assistance from the computer. Equipment fleets comprise dozens, hundreds, or even thousands of pieces of machinery, and each piece generates costs ranging from fuel to depreciation. Enter a computer with the latest equipment management software.

“Software can do an awful lot for you, but you’ve got to be disciplined enough to use it,” says Bill Stewart, vice president of Stewart Brothers Inc., an Atlanta, GA-based light grading and asphalt paving contractor. Stewart uses software from Fleet Distribution Inc. of Atlanta to organize and control costs on his 80-machine fleet. “We’ve been using that software since the early ’80s,” notes Stewart. “It’s evolved since then, and it’s doing a great job. We rely heavily on it for the preventive maintenance module. It alerts us to equipment that needs service. You define a specific service interval for your machines, and it will update and schedule preventive maintenance based upon time or usage.” A preventative maintenance (PM) form writer allows the user to create detailed PM forms.

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“You carry out the maintenance and input that information-parts, labor, filters, oil, and so forth-and it will automatically update the PM file,” explains Stewart. “It will roll over the information and show you the hours or weeks until the next PM is due. We’d have a hard time functioning without it.”

As do a number of programs, the Fleet Distribution software helps with planning work to be done. Contained in the Repair Section of the software is a work planner. If, say, a truck is being brought in for a brake job, the planner will tell you the truck also needs some additional PM work. And the system contains a “service request” capability. When service work is being planned for certain machines, the mechanic can run a list of service requests for those machines and perform the work all at once.

Integrated Software

In the world of accounting and equipment software, it is important to distinguish between software focused on equipment maintenance and software that captures the owning and operating costs of equipment as well as all other project costs and accounts receivable. The former is sometimes called work-order software. At certain intervals of time or usage, it prints out maintenance work orders for mechanics to fulfill. Costs for parts and labor are well documented.

The second kind of software is often called job-costing software, and its goal is to perform complete project accounting services. Many job-costing packages have strong equipment cost control modules. Such software may include a flagging system for notifying the user when equipment maintenance is due.

Typically job-costing software charges a contractor’s job for equipment expenses, and the shop, or equipment department, is “paid” an internal rental rate for the hours and weeks the equipment is used. Most contractors aim to break even on equipment costs. That means the equipment costs charged to the project equal the internal rental rate that shows up as “revenue” for the equipment department. By providing good historical records of equipment costs, most equipment software can help find out what good internal rental rates are for a given contractor working in a given part of the country. In addition to providing accurate information about job profitability, such historical equipment records can be used to estimate costs for bid preparation.

Virtually all software providers strive constantly to upgrade and improve their systems. For example, CCG Systems Inc. in Norfolk, VA, offers an equipment maintenance package called FASTER. As with many similar systems, data collection is done in real time: hours on the machine and fuel used are typically entered into the system daily, or when the equipment is fueled. Mechanics enter parts and labor used as maintenance is performed, explains Lisa Millar, CCG’s director of marketing.

“We have codes that you can use to group the equipment into categories, such as by manufacturers,” she continues. “That way you can look at repair trends of different manufacturers and compare them. And we track warranties so that when you go to work on a machine, you know whether it’s under warranty or not.”

Millar says CCG offers a vehicle replacement module as well. “It takes the maintenance dollars, the existing life of the vehicle, the miles or hours, and a condition factor and puts them all into a formula. That way the program advises managers on vehicles that need to be replaced.”

Web Hosting

Computerized Fleet Analysis (CFA) Addison, IL, is a provider of equipment maintenance software that plans to make its software available on the World Wide Web. “It’s called Web hosting,” explains CFA President Mike Ohlinger. “All the user’s equipment data will reside on CFA’s host Web server. Users will log onto the Web, go to their software, and run the system based upon the speed and capabilities of CFA’s host server – not the user’s local area network.

“Most of the time a user’s maintenance department gets all the used, hand-me-down PCs,” comments Ohlinger. “Because the company’s information technology department is not responsible for a lot of maintenance functions, it takes maintenance for granted. This way, users will have no initial outlay because they won’t buy the software – they’ll rent it and pay a monthly usage fee. Assuming they can access the Internet, they can log on, and run the program, and we’ll keep the software up to date. In addition, running the software will be faster than most local area networks, which get slower when you have more users running PCs on them. And if you’re in a Web environment, you won’t have to be as concerned about having all the latest bells and whistles on your PC. The speed of the system is dependent on the host server.”

CFA plans to have the software up and running on the Web by this fall.

Job-Costing Software

“We can’t tell you whether Michelin tires are better than goodyear tires,” says Ken Lykins, president of Deneb Inc., a provider of job-costing software. “This is not a fleet maintenance program. Our program is for cost of ownership and the cost of maintenance.” Deneb, which has 500-plus contractors as users, has offices in both Dayton, OH, and Fountain Hills, AZ. Deneb software has 16 modules that are all integrated to work with each other: equipment, small-tools control, estimating, time and materials, purchase orders, inventory, accounts receivable, item billings, accounts payable, and more.

One Deneb user is Woodward Excavating Company, an Ohio-based contractor that uses the program to track costs on 300 pieces of equipment, including about 80 pieces of heavy machinery. Founded in 1962 by Jay Woodward, the company places construction, mainly sewer and water lines, worth about $5 million annually. The company also does earthmoving for commercial site preparation.

If job-costing software has a strong equipment control module, it can be very useful. Woodward says Deneb’s equipment module is a good one. “I’m looking at records in the computer for a Link-Belt 5800 excavator,” says Clay Woodward, the company’s secretary. “It tells me the last hour meter reading was 930 hours and how many more hours it has to go to an oil change.

“I really like the way we can track the histories on equipment,” Woodward remarks. “The program shows fuel costs, labor costs, repair costs, and all costs that we need to come up with an overall cost per hour. We use the software to arrive at an hourly rental rate, and our equipment is charged to the jobs at that rate. Deneb makes it easier to get an accurate internal rental rate. We can see if we have too many dollars in costs for a given machine-that it’s time to sell a certain machine. And one other plus is when we sell machines and possible buyers see all those records we have, they’re impressed with all the data. They can see that there is no time period where a scheduled maintenance went past the time interval we had set. That’s helped a lot with selling used equipment.”

Another provider that offers job-costing software with an equipment control module is Sirius Software Inc. in Dayton, OH. The Sirius Equipment Control module is designed to help control the profitability of each piece of equipment. Billings for internal rental or usage are posted to the job and compared against the costs incurred for service, fuel, overhead, and depreciation to arrive at the profit per equipment item. “Each piece of equipment becomes its own little profit center,” notes Byron Terrill, national accounts manager for Sirius.

Through actual hour or mileage meter readings and service dates, maintenance intervals are controlled and the equipment is flagged for service. Labor costs for maintenance can be posted directly from the Payroll section of the software to each piece of equipment in Equipment Control. Sirius Equipment Control can run as a stand-alone module with Sirius Menu and Office Manager or can be interfaced with other Sirius job-costing software, such as Job Cost, Payroll, Accounts Receivable, or Inventory.

“I have had great success with the software,” observes Sirius user Greg Miller, secretary of Oakes Land & Excavating Company in Massillon, OH. “It’s met every need I ever had for it.” Oakes is an underground and sitework contractor that runs about 40 pieces of earthmoving equipment and 15-20 trucks. Last year the company placed about $4.5 million of construction.

“I like the way the Sirius software works when we do payroll,” states Miller. “We do manual time sheets for payroll, but I can track equipment numbers through payroll. When the laborers write down their hours worked, they also write down the equipment they used and the time worked. Then when we put that in the system, it updates the equipment module as to how many hours each piece of equipment worked and on what job. In the same aspect I can pull up a job on the system and tell how many hours I’ve used any piece of equipment–that can be done by category of equipment or by each piece. You just have to know your equipment numbers; I keep a list at my desk all the time.”

Larger Contractors

“We have several-dozen construction company users,” points out Tom Levandoski, vice president of marketing for Profitool Inc., a Denver, CO – based company that sells job-costing software with a strong equipment control module. “Our contractors all tend to be larger ones – in the $30-million-and-up range.”

Levandoski says Profitool now has a feature that helps to prevent project managers from hoarding equipment on the job. “In the classic equipment management scenario, equipment usage is kept track of on a timecard only. The job staff turns in a timecard, that information gets entered into a computer, and the job is charged for the hours on the timecard. But a machine that only works 20 hours a week might be held on that job the whole week. With our software feature, the piece of equipment is charged to the job based on the fact that it’s located there. The internal rental rate is charged to the job for the full time regardless of whether the equipment manager is turning in timecards for it. Or if the timecards come in without the equipment usage fully distributed on the timecards, the job still has this balance of money charged to it based on the full internal rental rate.”

According to Profitool user Mark Sybert, an engineer at Zachry Construction Corporation in San Antonio, TX, “The program makes up the difference and automatically charges the job to get hours up to 40 per week.”

Chris Hallum at DeSilva Gates Construction Corporation in Dublin, CA, notes another strength of Profitool: “You can account for revenues separately and expenses separately and tell where you’re making or losing money on a piece of equipment. We’re able to print out a profit-and-loss statement for each piece of equipment and for equipment by categories. Profitool allows the user to report fuel, oil, and grease and depreciation and repairs and maintenance separately for each piece of equipment.

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“Fuel costs are high right now, and we input the cost of fuel into the system,” explains Hallum. “We can track how many gallons per hour the equipment consumes. We get information on hours and fuel usage every day.”

Similar to many equipment software programs, Profitool allows users to schedule PM on the system and flag the user in advance of when the scheduled PM interval expires. “We rely on that feature of the software to tell us when maintenance is due,” notes Hallum.

In summary, software for tracking equipment costs and maintenance has improved greatly in recent years. And more contractors than ever are using equipment software – with excellent results.