Glossary of Terms

Accident, Neglect and Abuse (ANA) Cost – Cost incurred related to damage caused by operators, third parties, theft or vandalism.

Availability – A component of planned utilization which measure the amount of time a machine was up and running and able to work [Planned Hours (P) – Down Time Hours (D)] as a percentage of the planned time [Planned Hours (P)].

Average External Hourly Shop / Field Rate - The average rate for your external contract labor which is charged to your equipment.  Do not include service truck or mileage charges.

Average Internal Hourly Shop/Field Rate – The company’s internal loaded or standard rates - this rate is based on the complete budget for the shop and equipment management and field positions charged to equipment. The costs included in calculating this rate should be consistent with the definition included in equipment maintenance and repair costs. The internal rate is calculated by establishing the total costs budgeted for your shop and field mechanics (numerator) divided by direct hours charged to equipment (denominator). The vehicle costs for the field mechanic are separated as the usual External Contractor charges a mileage rate in addition to the Standard Rate.

Capital expenditures – Represents the total cost capitalized during a period on the company’s balance sheet to acquire equipment.  Includes both fixed assets and right of use assets under ASC 842 Leases.

Down Time Hours (D) - Used in the determination of utilization. The machine is not working or producing because of an unplanned equipment breakage or failure or planned maintenance activities.

Down Events – Unplanned or unexpected events that impact production that either did or did not occur and this fact can easily and reliably be recorded in a work order or time card coding system.

Down Event Per 1,000 Hours – Metric that measures the effectiveness of the maintenance enterprise in reducing undesirable, unplanned and unexpected on shift breakdowns to the absolute minimum. It is a similar calculation to MTBF, using many of the same inputs, but is stated as a down incident rate vs. the hours between failures. The metric can be calculated at a unit, rate class or fleet level. When calculated at a unit level, the metric is usually calculated over the life to date of the machine.

Emergency work hours – Maintenance that is needed when an asset experiences an unexpected malfunction or change in condition that can cause considerable threat to health, safety and environment or significant production delays. The problem must be addressed as soon as possible (usually within 24-48 hours) hence the “emergency”.

Engine Idling Percentage – A measure of the time that an engine is running without performing a task. This statistic is derived from telematics or other electronic information using algorithms to determine engine idle percent which is communicated through the telematics platform being used. It is designed to show the relationship between the period the machine and/or its engine is “at idle” relative to the sum of the time the machine and/or its engine is “at idle” plus the time the machine and/or its engine is “not idle”. It is measured by dividing the total hours that the machine is reported “at idle” by telematics by the total meter hours reported by telematics. Care must be used when using this metric as results are produced by sensors and algorithms that are often proprietary and vary by supplier, manufacturer and, in some cases, by machine type.  The engine idle percentage is best used to compare assets that are performing similar tasks. By comparing similar assets that are performing similar tasks one can establish baselines and develop plans and procedures for improvement.

Equipment Cost Components – Categories or cost “buckets” used to establish the rates for equipment. The typical hierarchy includes ownership, repair and maintenance, and fuel cost types.

Equipment Damage Cost – The costs to repair/rebuild equipment or its components for Accidents, Neglect & Abuse. This cost should not include cost related to standard wear and tear or costs included in the composition of the equipment rate. This cost also excludes repairs for damage charged to a job, charged to a department  or not covered by insurance. 

Equipment Hours Worked – The number of hours worked by machines for a given period of time.

Equipment Repairs and Maintenance Costs - Includes (1) all equipment operating costs, including but not limited to, repair labor, service truck/welder cost, repair parts, tires, wear items, outside repairs, supplies and consumables;  (2)  repair labor, including labor, payroll taxes, burden (e.g. health insurance, vacation, PTO, life and disability, etc) and indirect/allocated shop overhead costs,  (3) includes all equipment repair and maintenance costs charged to equipment and jobs except Accident, Neglect and Abuse (ANA), and Excludes (1) fuel and ownership costs and (2) costs that are considered ANA (Accident, Neglect and Abuse) from equipment repair & maintenance costs:  damage caused by operators, third parties, theft or vandalism.

Equipment Repair & Maintenance Labor Cost (i.e. Repair Labor) - The cost of both internal and outside labor. Internal labor costs should include wages, payroll taxes, benefits, overhead [standard / fully burdened rate].  Outside labor should include the labor portion of outside repairs.   This cost includes all repair and maintenance labor, including but not limited to, internal shop, outside labor, construction field labor performing repairs.

Estimated Replacement Value – The amount an enterprise would need to spend to replace its construction equipment assets at the present time (i.e. like kind equipment replacement based upon its current age and condition).  ERV is not the cost to replace your fleet with new equipment.  This metric includes (1) owned fleet of equipment, (2) right-of-use financed assets (i.e. capitalized leased equipment), and (3) includes construction equipment only (off-road and on-road) and excludes fixed plant equipment or non-construction equipment.

Fleet Utilization (Dollars Based) – Measures the degree to which a group of machines working at a given location for a given time is able to generate the internal job charges that could be generated if all the machines within that group were to work at the desired or optimum level of utilization.  It is measured by dividing the total job charges actually generated by a group of machines working at a given location for a given period by the total job charges that could have been generated by that group of machines if they had worked at optimum utilization for the given period.

Free Cash Flow (FCF) – Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA). 

Fuel Costs – Represents the cost of fuel, additives and delivery cost as well as diesel exhaust fluid (DEF).

Inventory turns – Metric used to measure efficiency in situations where parts and consumables are kept in inventory for later use in repair and maintenance activities. It is calculated by dividing the value or cost of parts and consumables taken from inventory in a given period by the average value or cost of inventory held over the period. The metric is often expressed in “days” by dividing 365 days by the calculated number of inventories turns in the year. Many published authors warn against the use of this metric in isolation because it does not include any ability to measure the impact of stock outs from too high a value and, significantly, does not include any way of determining how much “dead stock” is included in inventory.

Labor Factor – The ratio of maintenance labor hours charged to an asset as compared to the asset’s hours for the same period.

Maintenance Backlog – A list of outstanding tasks that have been identified but not yet performed to repair or maintain equipment. These tasks remain on the list and open until they are completed. Backlogs are measured by the estimated time it would take to complete all tasks on the list. This value is most often calculated in man-weeks or work weeks for the number of mechanic work weeks.

Maintenance Schedule Compliance – Measures the percentage of work orders completed by the due dates over a period, often within one week. It is calculated by dividing the total number of work orders completed on-time within an allocated allowance by the total number of work orders scheduled for that period.

Maintenance Training Hours – The number of hours maintenance personnel spent in training (classroom, seminars, workshops, in-house classes). Training that develops maintenance personnel in their role or will benefit them in future roles. This does not include safety and compliance regulatory training.

Mean Time Between Failure (MTBF) – A reliability metric that measures the effectiveness of the maintenance enterprise in reducing undesirable, unplanned and unexpected on shift breakdowns to the absolute minimum. MTBF is the average time between system breakdowns and is defined by the number of hours reported or metered during a period divided by number of breakdowns.

Net Book Value of Fixed Assets – Represents the original cost of an asset less its accumulated depreciation in accordance with Generally Accepted Accounting Principles (GAAP).

Net Income Before Taxes – The company’s income before income taxes.

Net Working Capital – The difference between current assets and current liabilities.

Ownership Costs – Depreciation, lease payments for right of use assets under ASC 842, equipment rental expense (including taxes and fees), insurance, licenses, property taxes and interest.

Percentage of Planned Equipment Utilization - is measured by dividing the time machines is actually working (W) by the time machines are planned to work (P). This metric is frequently broken down into two components, utilization and availability.

Percentage of corrective maintenance activity from Preventive Maintenance (PM)/Predictive Maintenance (PdM) (%CP) – Corrective maintenance activity that arose from a PM or PdM activity or inspections. The assumption is that if proper PM and PdM is performed, issues or deficiencies should be surfaced that need to be corrected.

Planned Hours (P) – Used in the determination of utilization. The planned hours for a machine or group of machines for a particular time period. Generally, this would represent the budgeted hours in the annual hours budget or hours per year in the ownership and operating rate calculation. If hours are budgeted by project, the hours for that project for the year could be utilized.

Planned maintenance – Preventive maintenance (PM) or corrective maintenance that has been scheduled with labor and/or parts and labor. Planned maintenance is determining the type of work required to resolve an issue and how it must be done. Planned maintenance works to identify all the necessary labor, items and materials needed to solve the issue. This includes equipment inspections, ordering parts, gathering specialty tools, locating reference documents, and prioritizing projects. High planned maintenance percentages increase wrench time (productivity) and lowers reactive maintenance (breakdowns). 

Predictive Maintenance (PdM) – A technique that uses data analysis tools and techniques to detect anomalies in the operation and possible defects in equipment so they can be fixed before resulting in a failure. Changes in the condition are normally measured using technology or statistics. Predictive maintenance tends to include direct measurement of the item.

Preventative Maintenance (PM) – Represents all tasks that are routinely or repetitively scheduled with the intent of prolonging the life of an asset.

Preventative Maintenance (PM) Schedule Compliance – Measures the number of PM tasks completed, on time, within an allocated allowance as compared to the PM maintenance tasks scheduled.

Recordable Incident - Any work-related injury and illness that results in death, loss of consciousness, days away from work, restricted work activity, transfer to another job, or medical treatment beyond first aid.

Return on Net Assets (RONA) – A measure of financial performance which demonstrates how well a company is deploying its assets to generate earnings. It is measure by dividing Net Income Before Taxes by the sum of net working capital and net book value of fixed assets.

Rework – Any task that requires the same repair within a month or 176 metered hours that is not normally scheduled to be performed within the same period. In other words, rework is repetitive corrective (repair) work done on previously maintained equipment in a short time. It is also referred to as callbacks.

Service Level – The opposite of stockout. It is the percent of attempts for stocked items that are fulfilled without delay. They are measured by parts pick tickets attempted.

Shop Total Recordable Incident Rate (TRIR) - Examination of the number of total recordable incidents compared to the number of total hours worked by shop employees in a single year.

Stockouts – Parts in the inventory management system that should be on the storeroom shelf, but are unable to be located.

Throughput Costs – A strategic accounting technique used to manage and measure production costs. Throughput cost is determined by the following equation: Total Construction Revenues – Material Costs – Subcontract Costs

Total Construction Revenue - The value of all services recognized under construction contracts by a company in a period. 

Total Equipment Cost – The sum of ownership costs, repair and maintenance cost and fuel cost.

Total Recordable Incident Rate (TRIR) - The number of recordable incidents per 100 full-time workers during a one-year period.

Utilization – Measurement of the time a machine is working relative to the time it is on site, expected to work and able to work. The calculations involved in determining utilization are based on the operating status of a machine.

Working Hours (W) – Used in the determination of utilization. The time that a machine that is on-site, able to work and is being used to complete required work. 

Work order labor capture - Includes all maintenance labor hours captured against a work order versus assigned to a cost center or other allocation.

Wrench Time – The total time a technician spends diagnosing, adjusting, repairing, or servicing an asset (value-added). It does NOT include time spent traveling to and from the job, training, in meetings, breaks, paperwork, travel to parts room, cleaning work area, etc. (non-value added but needed) It is most often determined by a Work Sampling Study or Day in Life Of (DILO).