When Gil Gilbert looks at his pipeline construction fleet, he sees dollar signs.
While fleet maintenance is typically viewed as a cost center, Gilbert says today’s technologies can change all that — and turn it into a profit margin machine.
Gilbert is the director of fleet management for the pipeline division of Henkels & McCoy, which is headquartered in Houston. Because of his implementation of technology, the contractor, which ranked No. 6 on the 2019 ENR Top 600 Specialty Contractors List, won the 2016 Fleet Masters Award from the Association of Equipment Management Professionals. The awards recognize the industry’s top fleet management teams.
Henkels & McCoy’s pipeline division handles major pipeline spreads, ranging anywhere from 50 to 200 miles, throughout the U.S.
Gilbert says the division’s fleet, valued well over $100 million, includes about 800 owned assets and fluctuates up to 2,200 pieces of on- and off-road equipment with rentals during the height of busy season. Based out of the division’s Birdsboro, Pennsylvania maintenance facility, he supervises a full-time fleet staff, which includes logistics and rental coordinators, a supervisor of fleet maintenance, service technicians, and equipment yard and warehouse staff.
Drawing from his nearly 30 years in fleet management, Gilbert has found success by using innovative ways to adapt technology throughout his fleet operations.
Here are his five tips to leverage these tools and their data for more efficient fleet maintenance in order to increase profit potential for the overall pipeline construction organization.
1. Go Paperless with QR Codes
In 2015, Gilbert began adding QR codes throughout his fleet.
“Every time a new piece of equipment comes through and it gets prepped for service, we put these QR codes all around,” he says.
The codes provide instant access to important information, such as inspection points, service hours, load-securement instructions, and pre- and post-trip logs. Some codes link to safety videos or videos designed to help technicians troubleshoot maintenance issues.
“Whether it’s a dozer or excavator operator or somebody that’s driving a truck, if he wants to know what the true hours of service are, how to maintain his logbooks, or work through his ELD, he can scan the code on there and get a quick video that shows him everything he needs to know on doing that,” Gilbert says. “It’s virtually paperless.”
The QR codes put valuable resources right at the fingertips of the individuals that need them most, at the exact time and place that they are needed, such as linking field mechanics to service forms and drivers to upload pictures to track equipment damage. Gilbert says they even have QR codes on their fleet’s engines.
“It instantly takes them to an electronic version of that manual and troubleshooting guide,” he says.
Though it is a simple technology, Gilbert says QR codes are a powerful tool that allows the fleet maintenance staff to get to work more quickly.
“They’re not digging around for a service book or calling somebody,” he says. “It’s right there in front of them.”
Gilbert believes the future of fleet maintenance will include widespread adoption of QR codes on equipment.
2. Increase Margins with Telematics
Gilbert says the biggest opportunities for profit potential in fleet management are with increasingly advanced uses of telematics.
“In my mind, a company that does not embrace the information of telematics is really in the last century,” he says.
Henkels & McCoy began implementing telematics solutions in 2013 to track fleet maintenance and equipment movement, as well as monitor compliance and production. They also use it for diagnostics’ capabilities.
Gilbert says it’s easy for the team to buy in when profitability is on the line. For Henkels & McCoy, the more profitable the jobs are, the bigger bonuses the project superintendents get.
“They now see that it directly reflects their income if they utilize the tools that we provide for them,” he says.
It speaks to how critical — and influential — the role of the equipment fleet department is within the construction organization.
“We are the margin makers,” Gilbert says. “If you listen and follow the technology we’re offering, we can actually increase your margins.”
He notes that most construction companies work off a 10-12% profit margin.
“That profit margin means that for every dollar they spend, they’re getting 10 or 12 cents back,” Gilbert says. “For every dollar I save them, it’s a 96% margin that they’re going to make on every dollar by using our technology.”
3. Use Data to Determine Operational Cost Per Hour
Once fleet management technology is in place, Gilbert says that’s when the creativity really comes into play in finding alternative solutions that produce savings.
For starters, Gilbert favors monitoring gallons of fuel burned, even for on-road equipment, over tracking mileage.
“That’s truly the measurement of how much that engine has worked,” he says.
And since fuel can come with such a hefty expense, Gilbert says instead of letting operators stay comfortable in idling equipment when they’re not working, he recommends providing cooling trailers or mobile lunch rooms.
“It’s much cheaper, and it doesn’t put the wear and tear on the machines,” he says.
It’s also important to keep a close eye on operator use of the equipment, because that can directly affect fleet maintenance and repairs. Through telematics, Gilbert’s fleet management team tracks the performance of each operator, based on a PIN number entered into the equipment keypad.
“You can actually watch individual operators and how they treat the equipment and what their production is,” Gilbert says. “Then you can really pinpoint, does he not know how to operate the machine? Is he struggling with this?”
Then, you can determine if an operator needs further training and what the true operational cost per hour is.
4. Measure the Value of Technician Efficiency
Gilbert says that it’s important to not overlook the role that your fleet maintenance staff plays in the cost of doing business.
“An untrained service technician can cost you 10 times more than any training tool you can buy because of mistakes and the amount of time it takes them to do something,” Gilbert says.
He says fleet management teams need to invest in their technicians to make sure they have been through a comprehensive, OEM-style training program and that they are outfitted with the proper tools. He also says those responsible for ordering parts need to be better educated on available parts-ordering systems to make them more efficient.
Gilbert uses a method called technician efficiency to make sure his team is influencing profit margins in a positive way.
“I actually measure the amount of hours I pay a technician,” he says. “So if I’m paying a technician eight hours, I track that technician’s time to a project or to a task.”
For example, technicians that are productive six hours of the day means they are 72% efficient. The recommended productivity rate is 85%.
Gilbert is constantly trying to find ways to improve his team’s output, encouraging team members to use the technology and tools available. Take something as routine as a call to order parts, for example.
“Being on the phone ordering parts can go from a five-minute conversation to a 45-minute conversation,” he says.
He’s not trying to discourage relationships with suppliers, but that the time for lengthy calls would not be during peak production when the service shops are busy with repairs.
“I’m just continuing to push those that are within the fleet management team to use online tools whenever they’re available,” he says.
5. Tap into Experience of Younger Generations
In multi-generational construction workforces, the adoption of technology to reduce fleet maintenance costs and the willingness to embrace it can vary.
“It’s very difficult for an old school baby boomer to embrace this technology and to identify with it,” Gilbert says.
To better manage that, Gilbert says it helps to pair up team members from different generations, such as a Gen X-er with a millennial who intuitively understands technology, for a reverse mentorship of sorts.
“At first they think this is a young punk kid who doesn’t have any experience,” he says. “And then they start seeing that young punk kid get the information they need so quickly and instantaneously.”
Then, the less tech-savvy employee typically wants to know what he can do differently.
“It becomes a really cool transition to see that relationship developed between that generation gap, where you see some real magic happen,” he says. “It kind of debunks the old cliche, you can’t teach an old dog new tricks. Sometimes those old dogs are looking for a way to be competitive in the market.”
As much as Gilbert has learned from applying technology to fleet maintenance, what excites him is that he thinks there’s a whole lot more success to be had.
“Technology, as advanced as it is, it’s still going to get better,” Gilbert says. “We’re going to see in the next five years stuff that I haven’t even thought of. And I think it’s important that everybody is open minded to that.”
Karen Scally is a journalist who has covered the construction industry for over a decade and a current contributor to Gearflow.com, which is an online marketplace for construction parts, tools, and equipment. This article was adapted from its original version on the Gearflow.com blog.