Section 9-2 of Construction Equipment Economics

1. SECTION 9-2
Deployment, Availability and Utilization
There is very little agreement on how to define deployment, availability and utilization. The terms themselves
are easy to understand but everyone uses them in a slightly different way to mean something slightly different.
As with most things, the devil is in the details.
Three simple definitions provide a starting point:
Deployment = The time a machine is on site and required to work
The total ownership period
Availability = The time a machine is required and able to work
The time a machine is on site and required to work
Utilization = The time a machine is actually used
The time a machine is required and able to work
Figure 9.2 presents the definitions graphically and highlights the following three periods of wasted time:
U – time not deployed or not able to be deployed to site,
D – on-shift downtime, when the machine is required to work but not able to work,
I – standby time, when the machine is on site and able to work but not required.
I Standby time
W Working time D On-shift downtime
Utilization
T- D
Required and able F Off-shift down time
to work
Availability
T Target deployment on site U Un-deployed “Off site”
Deployment
E Ownership period
Figure 9.2 U, time not deployed on site, D, on-shift downtime, and I, idle time, reduce the total
ownership period to a very much shorter period of effective working time.
Deployment, availability and utilization do, of course, combine to reduce the total ownership period to a very
much shorter effective working time. The product of all three measures – time the machine is actually used ÷
total ownership period – is of critical importance when equipment is financed or leased and when monthly
payments must be made regardless of whether or not the machine is on site, up and running or actually used to
produce work.
CHAPTER NINE: Performance Measures
149

2. Deployment
Few companies measure and manage the time a machine spends off site and in the yard or shop because
of major repairs or rebuilds, seasonal work restrictions or a lack of available work. This can be a significant
time period that must be measured and managed as machines cannot disappear from record keeping and
reporting systems simply because they are not assigned or deployed to site.
The deployment ratio measures the time, usually expressed in weeks or hours per week, that a machine
spends on site and is required to work as a percentage of the number of expected work weeks or hours in a
year.
Deployment = T÷E
Where
T = Time the machine is on site and required to work
E = Total ownership period
Acceptable values for deployment vary tremendously with machine type, length of construction season and
other factors that affect a machine’s ability to go to work. A deployment ratio of 25 percent – or 12.5 weeks
out of 50 – would seem reasonable for a paver in the Northeast while one could reasonably expect a
deployment of 100 percent – 50 weeks out of 50 – for an excavator in Arizona. Regardless, the ratio needs
to be known and measured to ensure that machines standing forlornly at the bottom of the yard are not out
of sight, off the reports and out of mind. The status and deployment ratio must be known for every machine
in the fleet even, or especially, those parked for strategic purposes.
The target deployment period, T, is a critical value. It is used to set the rate at which annual costs are
absorbed and, more than anything else, determines the economics of owning and operating the machine.
Values below the expected norm preclude fixed-cost recovery and seriously question the need for
continuing ownership.
Availability
Once the machine is deployed on site it can either be available to work or down and incapable of working
due to repairs, maintenance, fueling or any other mechanically based reason. Downtime comes in two
forms. First, downtime that occurs on shift and precludes the machine from working as required for the full
shift (D). Second, downtime that occurs off shift, absorbs cost, time and effort but does not preclude the
machine from achieving the targeted number of shifts or hours (F).
Downtime on shift is a wasted production opportunity whereas downtime off shift is frequently time wisely
scheduled and spent on planned or preventive maintenance actions with no negative impact on planned
operations.
Availability measures the degree to which a machine is able to support production and recover its own fixed
costs by achieving the target number of work hours.
Availability = (T - D) ÷ T
Where
T = The target number of hours the machine is required to
work
D = The number of hours the machine is required to work but
not able to work
CHAPTER NINE: Performance Measures
150

3. Utilization
Once the machine is available it can either be working (W) or on standby for operational reasons such as
work sequencing, waiting for instructions or weather. Standby time (I) is a wasted production opportunity
that is heavily influenced by job planning, sequencing and management.
Utilization measures the degree to which the machine is utilized and put to work when it is required to work
and able to work.
Utilization = W ÷ (T - D)
Where
W = The hours the machine works
T = Target hours the machine is required to work
D = Number of hours the machine is required to work but not
able to work
The following example illustrates the difference between on-shift and off-shift downtime and shows the
availability and utilization calculation.
Assume:
1. The job on which the machine works is set up to run a nine-hour shift from 7 a.m. to 5 p.m. with a
break from 12 to 1 p.m. (T = 9 hours);
2. The operator arrives on site on time but cannot start till 8 a.m. because no survey information was
available. (I = 1);
3. The fuel truck, by prior arrangement, fuels the machine and checks all fluid levels during the noon
break (this is downtime but it occurs off shift);
4. The machine is shut down at 3 p.m. for an overheating problem. A mechanic is called, he arrives
on site at 3:30 p.m. and works on the machine until 5:30 p.m. when it is fixed and ready to go for
the next day ( D = 2);
5. The mechanic who worked on the overheating problem takes the opportunity to perform a required
125-hour PM check after solving the overheating problem. He finishes this task at 7:30 p.m. (this
is downtime but it occurs off shift).
The machine was required to work for nine hours. It was able to work for the whole period except for the
two hours (from 3 p.m. to 5 p.m.) when it was down – or unable to work – during the shift. Therefore:
Availability = 9-2 = 77%
9
The machine worked for six hours (8 a.m. to 12 and from 1 p.m. to 3 p.m.) out of the available seven-hour
period. Therefore:
Utilization = 6 = 86%
9-2
CHAPTER NINE: Performance Measures
151

4. This confirms two important points:
1. Availability does not measure total downtime. It measures the degree to which the maintenance
personnel are able to support production by ensuring that equipment is up and running for as long
as possible during a defined production shift.
2. Availability can be, and often is, dramatically improved by performing all planned and preventive
maintenance actions off shift. High levels of availability are thus relatively easy to achieve if the
machine is required to work only a portion of the total hours in a day or week. They are impossible
to achieve if the machine is required to work extended periods of 18 to 20 hours per day.
The following example shows how deployment, availability and utilization combine to reduce the total ownership
period to a very much shorter effective working time and how acceptable levels of performance in each area can
easily combine to produce results that differ substantially from more simplistic theoretical calculations.
Assume that a company leases a paver at a cost of $40,000 per year and that it expects the machine will work
five eight-hour days per week for 50 weeks per year to give a rate of $20 per hour. However:
1. The machine is in transit, in the shop for repairs or adjustment or idle between jobs for five weeks
per year, to yield deployment of (50 – 5) ÷ 50 = 90%;
2. The machine is down on shift for minor repairs, maintenance, and inspection for one hour per day,
to yield availability of (8 – 1) ÷ 8 = 8%;
3. The machine is idle for two hours per day for start- and end-of-shift issues, waiting for trucks and
the like, for utilization of (7 – 2) ÷ 7 = 71%.
The above values – all very reasonable and understandable – combine to produce a result which shows that the
paver will work an average of five hours per day for 45 weeks or 1,125 hours per year for a rate of $35.55 per
hour. The difference is substantial.
Some comments on data and data collection are necessary:
• First, The target deployment period, (T), can be set administratively for the company, site or
machine. It is most often in terms of hours per day with a minimum number of hours per week or
month. This enables companies to track availability and utilization on a weekly or monthly basis.
Section 9-4 addresses this issue in detail;
• Second, Hours worked (W) and on-shift downtime that impacts production (D) are best recorded
by operations. They know when the machine was taken out of operation for mechanical reasons
and should record this together with hours worked when completing their normal daily job-cost
reporting;
• Third, Hours worked, standby time and on-shift downtime must total the target deployment period.
It is therefore not necessary to record standby time if the target hours are set (nine hours in the
example) and if hours worked and hours down (six hours and two hours respectively in the
example) are diligently recorded;
• Fourth, On-shift downtime that impacts production (two hours in the example) is very different from
maintenance down time and mechanical downtime (three hours and two and a half hours
respectively in the example). These numbers are best recorded by field mechanics as part of their
work order or time recording system and used to measure the mechanical performance of the
machine.
Deployment depends on availability of work, work sequencing, and yard operations.
Availability depends on efficiency in field maintenance and repair.
Utilization depends on job planning, coordination and job management.
Deployment, availability and utilization must be measured and managed separately.
CHAPTER NINE: Performance Measures
152