Understanding the Soft Benefits of Replacing Older Equipment

Sure, there’s truth to the adage “If it ain’t broke, don’t fix it.” And construction business owners and managers—already besieged with numerous, high-dollar purchases on a daily basis—are some of the first to rely on that mindset as adequate reasoning for holding onto aging office hardware, outdated project management software, or the wheel loader that’s broken down three times in 3 months, but still runs.

We get it. It’s simply not a plausible (or profitable) business strategy to go out and replace every single piece of construction equipment—large or small—that’s more than a couple years old. However, there is an argument for evaluating the health and longevity of your jobsite fleet, and upgrading to newer, more efficient equipment when the investment in maintenance no longer makes sense. And, aside from the obvious advantages of having a newer fleet, there are also a number of often-overlooked “soft” benefits of replacing the older equipment that is simply no longer serving your jobsite teams.

Here to delve into those benefits is Jim Griffin, chief operating officer and chief technology officer at Fleet Advantage, a technology platform that uses machine learning to provide a view of total cost of ownership for transportation assets. Griffin has worked in transportation technology and solutions for over 25 years and has experience implementing new software development and deployment processes in a variety of environments.

At Fleet Advantage, Griffin and his team are tasked with guiding the company’s customers on managing the proper life cycle for fleet assets. Read on for insight from Griffin on the changing perspective on equipment longevity and a few things to consider for your own construction fleet.

CBO: Is it time fleet managers & business owners reframe their perspective surrounding new equipment purchases?

JG: Yes, most definitely. Historically, when improved components that enabled longer-lasting assets first hit the construction market, there was a lot of excitement in the transportation industry. The “I don’t have to buy a new truck because my current truck can run for another 300,000 miles” idea is a legacy philosophy and no longer holds true today.

It was accepted as valid 10 to 15 years ago because we didn’t know any better. With the onset of data visibility and big data analytics, what we have learned is that, while the asset may functionally be capable of running those additional miles, financially it is very costly to keep that asset on the road. We refer to this as “functional versus economic obsolescence.”

CBO: Is the industry’s view of a new fleet’s potential benefits too narrow? If so, why?

JG: Yes. There are so many additional benefits to be realized by managing the proper asset—including increased life cycle and significant cost savings. For example, the safety technology continues to make significant advances year over year. The older your assets are, the further behind you are falling on safety standards.

CBO: What is a soft benefit of replacing older equipment?

JG: There are several soft benefits that fleet managers can realize when replacing older equipment. When we think of replacing an older truck, we often think of the fuel economy gains we will see from a more efficient unit or, perhaps, lower costs in maintenance and repairs. However, some of the other soft benefits include:

• Driver and repair technician retention
• Higher customer satisfaction (more reliable deliveries)
• Reduced equipment repair issues
• Safety improvements
• More efficient operations and improvements in productivity
• More efficient fleets, which lead to a better ability to spend when needed
• Reduced emissions

CBO: What are the top soft benefits that fleet managers may not necessarily consider?

JG: I think fleet managers fail to understand the actual need for the reduction of operational costs realized by the soft benefits above. For example, when a driver is proud of the asset and equipment they are operating, it enhances their perspective of their work, which can carry over to customer satisfaction when they are interacting with your customers.

Additionally, by operating newer assets with more advanced safety technologies, accidents are reduced. Some fleets report a reduction of rear-end collisions (the most frequent type of accident) by as much as 76%.

CBO: Are there any new-to-the-market technologies that are especially beneficial to consider investing in this year?

JG: Most of the equipment technologies we are seeing today are centered around safety, such as collision avoidance, lane departure and adaptive cruise control. There are so many benefits to video monitoring. One of the first benefits is that you have factual evidence of any alleged events, which has proven to significantly reduce liability and fault in litigated accident cases.

Now, with video fleets, fleet managers are able prove the drivers are not necessarily at fault in certain situations and are able to protect their companies and/or drivers from liability in the event of an unfortunate accident.

CBO: What is your top advice for business owners who are planning to update their fleet in 2020?

JG: Rethink your historic viewpoint of how you are managing your asset life cycles. Find someone that understands how to use your data to guide you into making more intelligent asset acquisitions. If you are not utilizing the data that is available to you, you are making emotional decisions based on gut feelings, while your competitors are making better, data-driven decisions that are providing them a competitive cost advantage.