World Class Equipment Management. CONEXPO 2014 Las Vegas. Presented by: Jim Schug Principal FMI Corporation FMI Corporation 0
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1 World Class Equipment Management Presented by: Jim Schug Principal FMI Corporation CONEXPO 2014 Las Vegas 2014 FMI Corporation 0
2 Who is FMI? FMI services span every phase of the construction firm s lifecycle - Get Out Ownership Transition Seller Representation Management Buyout / Valuation - Get In - Strategic Planning Buyer Representation Acquisition Integration - Get Work - BD Assessment Market Perception Studies Presentation skills to include: 60 years dedicated to the construction industry 84% of the ENR 400 Largest Contractors 60% of the ENR Top 600 Specialty Contractor 97% of the ENR Top 100 CM Firms - Do Work- Productivity Improvement Project Partnering Risk Management - Develop People - Leadership Development Management Succession Executive Coaching / Peer Groups 40% of the ENR Top 500 Design Firms 2014 FMI Corporation 1
3 WHAT does World-Class mean to you? 2014 FMI Corporation 2
4 CEO To continue stockpiling cool equipment To be able to purchase whatever he wants at CONEXPO The more equipment we have, the better we are! 2014 FMI Corporation 3
5 CFO Clarity in rental rates Keep away from the COO No hidden costs or surprise big expenses A shop that runs with no overhead A five year budget to repair, rebuild and replace that remains flat and never increases A software program that does all of this for him 2014 FMI Corporation 4
6 COO EVERYTHING. NOW! Mechanics to work from 2 am 4 am on equipment repairs Productivity Operators don t ever damage equipment! 2014 FMI Corporation 5
7 Field Everything they request and coordinate for the project Everything they don t request and forget to coordinate Their project served first For you to know exactly what they mean when they text you Get it here now! 2014 FMI Corporation 6
8 Estimators Flexible equipment rates on bid day to allow us to win work Can I have my stapler back? 2014 FMI Corporation 7
9 Charted Job Requirements Equipment Manager Career Path 2014 FMI Corporation 8
10 Equipment Manager Documentation and Compliance Budget Fleet Sizing Purchasing Field Management Vendors Internal Customers Technicians Equipment Company vs. Construction Company Lifecycle Management Vendor Management Employee Management 2014 FMI Corporation 9
11 If we try to be all things to all people FMI Corporation 10
12 Every Company is Different! Strategy Structure Systems 2014 FMI Corporation 11
13 You Are Perfectly Designed for the Results You Are Getting! 2014 FMI Corporation 12
14 What is Your Mission? Provide the equipment, knowledge and resources to allow the company to accomplish its goal (Vague) MUST be a company- level asset Greatest single impact on equipment-based business 2014 FMI Corporation 13
15 Fix it when it goes down vs. Peak Maintenance User ownership Efficiency Operator Buy-In Root causes identified Proactive maintenance Condition monitoring Predictive Maintenance Pre-set intervals Preventive Maintenance Reactive Inefficiency Corrective Maintenance 2014 FMI Corporation 14
16 Objective Evaluations Must get objective view of your performance because the group above is conflicting in guidance 2014 FMI Corporation 15
17 Evaluations Fleet Masters (AEMP) Baldrige Quality/Excellence ISO 9001/ISO Green Fleet Cost benchmarking Scorecard CEM certification 2014 FMI Corporation 16
18 Scorecard Example Strategy Customer Service Execution Risk Management Organizational Health Strategic Planning Business Planning Internal Strategy Communication Awareness Approach Image Processes Working Capital Management Schedule Management Quality Management Financial Condition Financial Capacity Continuity Coverage Lifecycle costs Fleet Balancing Culture Talent Management Management Depth and Quality Compensation Recruiting 2014 FMI Corporation 17
19 Why is Measurement and Feedback Important? Everyone has the need to light up the scoreboard If your players don t know the score of the game, how can they be expected to win? You can t manage what you don t measure Good feedback improves the quality of information being put into the system 2014 FMI Corporation 18
20 Key Performance Indicators and Common Measurements Downtime Utilization Parts on order PM/ Service hit rate Oil analysis program Abuse Neglect Repeat repair analysis/flags Abuse analysis Hours per reactive vs proactive by equipment and type Parts inventory cost % downtime due to parts Small tools costs Fleet average age by type Life to date repair costs Sweet spot analysis Accident management Customer satisfaction Fleet costs Miles per gallon/hour Vehicles/technician Scheduled/unscheduled repairs Inventory Turns 2014 FMI Corporation 19
21 Measurements Actual Effort 10% Proactive Reactive 20% Emergent 70% 10% Goal Effort 30% 60% 2014 FMI Corporation 20
22 Measurements Material Cost Material Cost Under or Overrun Under or Overrun Equipment Cost Under or Overrun 12 17% 59 83% 24 34% 47 66% Underrun Overrun Underrun Overrun 2014 FMI Corporation 21 21
23 Shop Field Communication Planned Calls to the Shop YTD % Planned YTD % of Planned Calls 2014 FMI Corporation 22 22
24 Structure 2014 FMI Corporation 23
25 Focus on Reducing Waste Continuous Process Improvement Just-in-Time (JIT) Six Sigma Eight Wastes Lean 2014 FMI Corporation 25
26 Lean 5 S Concepts Apply Sort Sustain Set in Order Standardize Shine 2014 FMI Corporation 26
27 Maintaining the Proper Balance is Key Process- Focused People- Focused 2014 FMI Corporation 27
28 What Processes or Systems do You Have? Do they work? Estimator/PM Supplies Plans & Specs to Field Mgr. & Notifies Everyone of the Pre-Job Planning Meeting Time Field Mgr. Reviews Plans Are they effective? Can they be improved? Estimator/PM Conducts Pre-Job Planning Meeting & Develops Follow- Up Action Plan as Issues Arise Estimator/PM Distributes Copy of Follow-Up Action Plan to All Meeting Participants Operations Mgr. Reviews All Open Action Plan Items with PM at Weekly PM Meeting Project Team Continues to Meet Until All Action Items are Resolved 2014 FMI Corporation 28
29 Common Equipment Management Processes Rent, Own vs Lease Analysis Budgeting Vendor agreements Inventory Management Preventative Maintenance Repair, Replace, Rebuild Small tool management Daily inspection Yard Management 5 S Vehicle down procedure Fuel Process Vehicle Dispatch/tracking Work order Equipment utilization tracing 2014 FMI Corporation 29
30 Becoming World-Class: Operational Excellence Model Identify Waste Driven by customer value Develop action Plans and follow through Lead, train and motivate Work smarter not harder Operational Excellence Vision and purpose aligned Structure, Systems And Processes Increase percentage of Proactive time Engaged employees Scoreboard and controls 2014 FMI Corporation 30
31 Personal Action Plan What actions are you going to take as a result of this program? By when? What resources or help will you need? 2014 FMI Corporation 31
32 Additional Resources AEMP AEM John Dolce Preston Ingalls Dr. Mike Vorster Career Equipment Fleet Manager, CEMP Gold From Iron, Professional Asset Managers Turn Fleets Into Powerful Profit Centers by Stan Orr, President & CSO 2014 FMI Corporation 32
33 Thank you Jim Schug Principal Jim is a principal and engagement manager with FMI, management consultants and investment bankers for the engineering and construction industry. With more than a decade of experience as an Army Officer, Jim led operations in complex and challenging environments. Some of his roles included strategic planning, training across large organizations and command with honors. He refined these skills working for a national builder, repeatedly leading his teams to successfully integrate operations, sales and customer service. Today, Jim is passionate about developing customized strategy and best-in-class operations with his clients. He applies practical experience with an in depth understanding of leading lasting behavioral change in dynamic environments. Jim earned a bachelor s degree in quantitative economics from the United States Military Academy at West Point and a master of science in engineering management from the University of Missouri. Jim has completed post-graduate work with Cornell University in Achieving Competitive Advantage and is Certified in Lean Six Sigma. He has served in leadership positions on various local and national non-profit industry associations and is frequently invited to speak at industry events. James C. Schug FMI Corporation 308 South Boulevard Tampa, FL Tel: Fax: jschug@fminet.com Website: FMI Corporation 33
34 About FMI Knowledge Expertise Relationships Visit us at FMI is the largest provider of management consulting, investment banking and research to the engineering and construction industry. We work in all segments of the industry providing clients with value-added business solutions, including: Strategy Development Market Research and Business Development Leadership and Talent Development Project and Process Improvement Mergers, Acquisitions and Financial Consulting Founded by Dr. Emol A. Fails in 1953, FMI has professionals in offices across the U.S. FMI delivers innovative, customized solutions to contractors; construction materials producers; manufacturers and suppliers of building materials and equipment; owners and developers; engineers and architects; utilities; and construction industry trade associations. FMI is an advisor you can count on to build and maintain a successful business, from your leadership to your site managers FMI Corporation 34
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