Heavy Highway Contractor

Good morning,

Thanks to all who participated in last week's webinar.  During the session, we asked the attendees to choose which of the 9 metric categories they viewed as the most challenging for which to gather the data.  The top category (as most challenging) was Labor Efficiency.  Even if you do not have a work order system, here are some tips and suggestions on how you can gather data to respond to at least the 4 bolded metrics out of the 7 metrics listed below:

• Maintenance Labor Overtime Percentage [A]
• Percent Rework Hours
• Percent of Man Hours Charged to Work Orders [C]
• Wrench Time as a Percent of Man Hours
• Training Hours per Shop Employee / Mechanic [B]]
• Labor Factor - Repair & Maintenance Hours to Equipment Hours [D]
• Emergency Work Hours as a Percent of Total

1. For your most recent fiscal year, identify the individual mechanics who perform repairs in your company.  Hopefully, you can use a payroll classification, trade or job role title to run a report.
2. Run a payroll report which includes total hours worked for mechanics by pay code (regular time, overtime, training [if available], PTO, etc).
3. Divide OT hours / total hours worked = Maintenance Labor OT % [A]
4. If your payroll report has training hours, divide training hours / full-time equivalent mechanics = training hours / mechanic [B].  As an alternative, you can ask you shop manager / fleet coordinator, what training was conducted for the shop team during the year / what type of tracking is available.  If you can estimate the training hours with at least an 80% confidence level, then take estimated training hours / full-time equivalent mechanics = training hours / mechanic [B].  So that's two down and two to go!
5. If your ERP or fleet system captures hours charged to work orders or repairs, take those hours / total hours worked = Percent of Man Hours Charged to Work Orders {i.e. recovered hours} [C]. In the alternative, if you don't have hours charged, but are able to determine unrecovered hours, you could take total hours worked - PTO - training - other 'indirect tasks' {hours assigned to another cost center or allocation other than repairing equipment} = total recovered hours {i.e. Hours charged to Work Orders}.  Divide this number by total hours and the result is a reasonable estimate of % MH charged to Work Orders.
6. Finally, take the hours determined in the numerator for C and divide by total equipment hours worked (i.e. Equipment hours worked represent the working hours (per equipment meters of hours charged to jobs or equipment) for all heavy assets included in the survey data.)  The result is Labor Factor [D].

And...with that you've completed four of the seven labor efficiency metrics!  

If you do have a work order system, you may want to consider using Preston's tips below and going further:

1. Percent Rework:  if you have any coding for work on work orders (usually a drop-down menu that shows what type of repair-exclude PMs), set up a search parameter to look for a repeat of the work type WITHIN 30 days on the same equipment. In other words, we are looking for a repetitive repair that occurred within 30 days. 
2. Wrench time:  because wrench time is usually a separate effort to measure, here are some link…https://limblecmms.com/blog/wrench-time/  and https://www.upkeep.com/blog/measure-wrench-time
3. Emergency work:  in most ERP maintenance modules or CMMS programs, there is a designator for Emergency Maintenance (EM). This is generally work that must be performed within 24-48 hours to prevent a schedule interruption (schedule buster). It is considered Urgent or Emergency based on the sense of urgency to get it done. In the absence of actual recording it, you can ask mechanics and production supervisors, "How much maintenance work is considered emergency based on the job must be performed within 24-48 hours to prevent a schedule interruption."   Then average all of them to get an approximate emergency rate. It isn't exact but it will come close.

To view detailed definitions, excel workbook or access the survey, please go to:  Heavy Equipment Comparator

Thanks, --Rich

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Richard King CCIFP, CPA
CFO
Schlouch Incorporated
Blandon PA
(610) 926-7070
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