Heavy equipment management practices and problems in Thai highway contractors

Thanapun Prasertrungruang and B.H.W. Hadikusumo


Introduction

Highway construction business is a sector that relies primarily on high utilisation of machinery. Equipment is thus one of the key factors for improving contractor’s capability in performing their work more effectively and efficiently (Day and Benjamin, 1991). By utilising machinery, an extensive volume of work can be completed in a shorter period of time and within the project schedule. However, in managing construction equipment, contractors are invariably plagued with several difficulties such as huge capital investment in the acquisition phase, which usually constitutes a major financial burden. Procurement of major construction equipment not only costs as high as 36 per cent of the total construction project cost, but also causes a high delivery time uncertainty, which may disrupt the construction schedule (Yeo and Ning, 2006). In the operational phase, contractors are often faced with problems relating to high rate of equipment breakdown and accident resulting from unskilled operator abuse (Stewart, 2000; Edwards and Holt, 2002; Edwards and Nicholas, 2002). Poor training of equipment operators is often claimed as a major cause of equipment-related accidents (Gann and Senkar, 1998). In the maintenance phase, proper maintenance management of construction equipment is never over-emphasised since the cost and time that exceed the designated budget or schedule on projects are often resulted from poor machine maintenance practices. However, over-maintenance of equipment is undesirable as well (Vorster and De La Garza, 1990; Edwards et al., 1997). In the disposal phase, determining equipment economic life and timing for replacement is often problematic because such decision is influenced by various factors such as machine obsolescence and efficiency (Vorster, 2005).

Effective equipment management practices not only increase production time and equipment availability, but also maximise the company profit by reducing several costs such as those from costly downtime (Edwards et al., 1998a). However, researches in the field of equipment management practice, particularly in the construction context, have been rare (Edwards et al., 1998b). This research was conducted in order to investigate current practices and problems on equipment management as well as to identify practices that are capable of mitigating equipment management problems from Thai highway contractor’s perspectives. Since machine weight is one of the major indicators of equipment downtime and maintenance cost (Edwards et al., 2000a, b; Edwards et al., 2002), only five types of heavy construction equipment were selected in this study (refer to Table I). It is believed that a study on heavy equipment management practices would contribute great benefits for highway contractors in helping them manage heavy equipment successfully.

Contractor heavy equipment management practices
In this research, contractor heavy equipment practices have been categorised into four significant stages based on machine lifecycle, i.e. acquisition, operations, maintenance and disposal.

Equipment acquisition practice (EAP)

It is generally accepted that smart acquisition practices fuel company success. Contractors always have vested interest in ensuring that their invested equipment are properly used, maintained and managed (Mitchell, 1998). In practice, capital conservation is a major factor for most companies in deciding to buy, lease, or rent on an installment plan (Sutton, 2003). Most companies, regardless of size, tend to prefer a purchasing strategy than other alternatives (Stewart, 2002a). To fulfill short-term equipment demand, most contractors realise the importance of rental machine utilisation (Stewart, 2002b). In the case of high workload during a peak construction cycle, leasing approach, which may come as a package with maintenance services from dealers, may be deemed appropriate (Stewart, 2002c).

Equipment operational practice (EOP)

An equipment operator is the person in the construction organisation who has the most influence on equipment costs (Stewart, 2001). Quality output can be partly achieved through skilful operators working with machines that are in good operational condition, thus educating equipment operators is one of the most important policies and thus holds great cost-saving potential (Wireman, 1999). Better channels of training can be obtained from various sources such as dealers (Stewart, 1998) and external agencies (Edwards and Holt, 2002). Systematic record-keeping is another practice that can generate valuable management guidelines, particularly in equipment planning and maintenance strategy (Marquez and Herguedas, 2004). Contractors must continually evaluate machine records in order to determine what actions are needed.

Equipment maintenance practice (EMP)

Maintenance of equipment is essential to contractor’s profitability because it not only extends the useful life of the equipment but also controls the machine availability at a minimum cost. Nevertheless, equipment maintenance is the most neglected aspect. Successful maintenance management can be achieved through well-developed maintenance programs (Tavakoli et al., 1990; Shenoy and Bhadury, 1998). Maintenance programs can be classified into several forms based on their complexity such as corrective maintenance, preventive maintenance and predictive maintenance (Gopalakrishnan and Banerji, 1991). Maintenance should not be viewed as a cost, but as an investment that can be linked to the company’s future revenue growth (Sutton, 2001).

Equipment disposal practice (EDP)

The last stage of machine lifecycle is disposal stage, in which two major decisions concerning equipment have to be made, i.e. timing of replacement and equipment economic life expectancy (Douglas, 1975). There are various factors affecting the timing of replacement: machine efficiency, capital availability, investment costs, commencement of new projects, profits accrued from use, tax expense, depreciation, economic analysis, obsolescence costs, and downtime cost (Hinze and Ashton, 1979; Schexnayder and Hancher, 1981; Tavakoli et al., 1989).

Research method

Data collection
This research involves a questionnaire survey by mail to collect the necessary data on equipment management practices and problems of highway contractors in Thailand. According to the Department of Highways (DOHs) of Thailand, highway contractors can be categorised into five classes (i.e. extra first, first, second, third, and forth classes) based on construction experience and company resources (i.e. equipment, finance and workforce). For the sake of data analysis, it was decided to reclassify contractors into three groups (i.e. large, medium and small). Large contractor group represents the companies registered in the extra first class, medium contractor group includes those registered in the first and second classes and small contractor group comprises of companies registered in the third and forth classes.

At the first stage of the questionnaire development, a pilot test, using a semi-structured questionnaire, was conducted to test for the applicability of the tool. The selected samples for the pilot test comprise of equipment managers from ten different companies (i.e. four large, three medium, and three small contractors). Once the pilot test was completed, a valid questionnaire was then prepared and data collection was started. The questionnaire has been divided into three parts. The first part is an introductory section that includes questions related to the respondents and their company profile. In the second part, the respondents were asked to give a score on the frequency level for each of the 73 variables concerning equipment management practices (see Table I). Responses are on a four-point scale (never = 0, seldom = 1, often = 2 and always = 3). In the third part, the respondents were asked to specify the impact/significant level for each of the 20 equipment management problems that actually affect their companies on a five-point scale (not significant = 0, somewhat significant = 1, moderate significant = 2, significant = 3 and very significant = 4). Questionnaires were mailed to the respondents on a basis of random stratified sampling technique.

Conclusion

To some extent, heavy equipment management practices vary considerably among different highway contractor sizes. Large firm’s practices tend to be much different from those of the smaller firms, whereas medium and small contractors’ practices are more likely to be similar. Large contractor’s practices tend to be more successful in minimising equipment management problems. In order to diminish equipment problems, particularly downtime, the importance of performing preventive maintenance should be strictly emphasised. Adoption of professional services (e.g. maintenance and training) from external agencies such as dealers is also recommended if such tasks are not the company’s core competency. Moreover, equipment should be disposed of or replaced once it becomes inefficient or generates less productivity with high repair cost.

The foregoing practices could be considered effective because it significantly reduces major equipment management problems. Therefore, adaptation and implementation of such practices by contractors are strongly suggested. Nevertheless, this research focuses only on equipment management practices and problems of several types of large heavy machines for highway construction. Practices and problems relating to small machines or even equipment utilised in other industries are probably different from this study and thus could be the area for future research.
This paper was published in the journal “Engineering, Construction and Architectural Management Vol. 14 No. 3, 2007 pp. 228-241”. Full article is available upon request. Abstract is also posted.

Abstract

Purpose – This study is intended to investigate the current practices and problems in heavy equipment management as well as to identify practices capable of alleviating equipment management problems for highway contractors in Thailand.
Design/methodology/approach – Equipment management practices were identified and analysed by SPSS using a questionnaire survey. ANOVA test was used to reveal significant differences in equipment management practices among different contractor sizes. Relationships between equipment management practices and problems were also revealed.
Findings – The equipment management practices vary, to some extent, among different contractor sizes. While practices of medium and small contractors tend to be similar, practices of large contractors are different from those of smaller contractors. Large contractors often put more emphasis on outsourcing strategy for equipment management. Moreover, large contractors frequently dispose of or replace equipment as soon as the equipment becomes inefficient before incurring high repair costs. Conversely, smaller contractors tend to mainly emphasis on the company finance and the budget availability as they often rely on purchasing strategy, especially buying used machines. Overall, equipment practices of large contractors were found to be more successful than smaller contractors in minimising equipment management problems, including long downtime duration and cost.
Originality/value – This research is of value for better understanding practices and problems relating to heavy equipment management among different contractor sizes. The study also highlights practices that are capable of reducing problems relating to heavy equipment management for highway contractors.
Keywords Construction equipment, Construction industry, Thailand
Paper type Research paper