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Adopting telematics technologies can lead to major strides in project profitability— and help contractors climb out of the recession.

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To business leaders, aggressive moves may appear to be strategically counterintuitive during an economic downturn. However, firms that invest in new technologies will not only position themselves for explosive growth when macroeconomic conditions improve but will also lead the recovery by setting higher standards for productivity. In industries that utilize heavy equipment, such as construction, companies have the opportunity to acquire technologies and position themselves for growth and market dominance once the recession ends.

A popular topic of discussion during the global economic downturn has been how companies in all industries should behave. Experts say that business leaders should adopt the same contrarian approach as wise stock investors: Rather than delay capital spending, they should take advantage of a rare growth opportunity. The opportunity exists because most others have fallen victim to irrational fears and are conserving funds.

Ray O’Connor, president and chief executive officer of Topcon Positioning Systems, indicates that, for construction companies, cutting-edge technology will be their way out of the wilderness. “You have three choices: Give up and figure out what you are going to do in the future; do absolutely nothing and hunker down and try and ride it out; or position your company and yourself to increase your share of the diminishing market,” O’Connor says. “This means taking advantage of every opportunity the bad times provide and being in a position to dominate the market when the hard financial times end.”

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Contrarians such as O’Connor realize that, more than ever, companies embracing increased productivity through technology will drive the world’s economic recovery. The economic recession provides a rare window of opportunity for forward-thinking companies in the construction industry. In tough times, increasing productivity through the adoption of technological breakthroughs can mean the difference between success and failure. A factor that makes technology adoption easier is the relative affordability of the new technologies.

Telematics Defined
An example of recent technology-driven productivity advancement is the use of telematics on the job site. Telematics, loosely defined as the automated machine-to-machine and machine-to-man exchange of electronic information, comprise powerful technologies used to improve security, maintenance, utilization, job costing, and productivity.

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In recent years, asset management has become an emerging practice in operational efficiency among operators of heavy equipment. This discipline involves capturing and analyzing real-time or historical data for the purpose of optimizing machine utilization. Functions include locating individual machines in real time and ensuring that they are as productive as possible while in operation, as well as tracking individual machines or fleetwide operating data for preventive maintenance scheduling.

The construction industry has a reputation for the entrepreneurial spirit, one that is not necessarily consistent with methodical, tried-and-true business practices. But such forces as company growth and competition are forcing many contractors to depart from old habits, argues Sam Simons, director of business development for construction telematics provider OEM Data Delivery.

“As companies grow, they get more pieces of equipment and they’re asking more of their people to keep an eye on it,” he says. “Equipment is the lifeblood of their business, but most often, they’re writing down equipment-operation data on paper. The problem a lot of times with the paper method is, of course, that you can’t read the handwriting, they write the number down wrong, or they transpose numbers. Then, the data get entered once a week, but maybe the data-entry person can’t read it and calls the field and wastes more time trying to fix the data. Contractors are realizing that they’ve got excellent computer programs, but they still can’t make any decisions because of garbage data coming in—that’s one of the big reasons why telematics are becoming more popular and implemented.”

Fuel Costs Change Minds
One cost that has spiked in recent years and forced contractors to change their habits is that of fuel.

High fuel prices have forced contractors to scrutinize the way their equipment is operated, notes Gary Hallgren, chief executive officer at Remote Dynamics Inc. in Plano, TX, a provider of asset-management information tools. Hallgren cites studies indicating that contractors can reduce their fuel consumption by 10% to 15% simply by monitoring speeding and idling and eliminating unnecessary vehicle trips. Excessive idling time can translate to a low ratio of fuel consumption to actual productive work.

What leads to excessive engine idling? “One situation that we hear stories of is when people show up at the job site, and they intended to get out of their vehicle just to have a simple conversation, and they wind up having to go over to talk to Bob over here and the subcontractor over there, and they come back and it’s an hour later,” he says.

Remote Dynamics’ REDIview software solution uses a wireless mobile data unit mounted either in the cab or externally, in a waterproof enclosure mounted on a machine or truck. The device records engine status, location, and sensor inputs every minute and transmits these data via cellular or satellite networks to a secure data center. The REDIview software then analyzes the data and makes it available to a Web site and various operational reports in real time. These reports include Travel History (duration of travel, road types, average speed), Trips Report (each origin and destination over a period of time), Cost Analysis (crew costs, fuel prices, maintenance costs, and per-day or per-trip costs), and Exception (speeding, visiting prohibited sites, or excessive idling).

These reports allow the contractor to define vehicle groups by such criteria as type of vehicle, type of service, location, or driver experience. The data can be archived for access to historical records. It is also possible to export the data into accounting, dispatching, and logistics applications from the system via XML.

The system supports multiple types of wireless mobile data units. The type of unit deployed is determined by the customer’s business needs. One unit is designed for vehicles and equipment powered by diesel or gas engines, while another is for unpowered assets such as trailers. The latter runs on four AA lithium batteries and can give daily updates for two years without external power. Another device uses the OrbComm satellite network for data transmission and suits equipment located in remote areas where cellular communications are not available. These units are operable in more than 70 countries.

One application for Remote Dynamics’ REDIview tool is recording idling time on a truck or piece of construction equipment. The contractor’s home office can be alerted to these long idling events in real time via e-mail or text message. In addition, the contractor can use the data to generate reports on idling time on all of the company’s trucks and equipment. “When that number gets posted on the wall and the owner of the company starts taking that number seriously, then everybody in the company starts taking that number seriously,” says Hallgren. Management can use the data to provide incentives for operators and drivers to change their habits, such as a bonus for whoever idles the least in a given month, or pay raises based on the fuel savings for those who show improvement.

Simons points out that contractors have two requirements in order to optimize fuel use: They must track the cost of legitimate fuel consumption, and they must prevent unauthorized use. OEM Data Delivery’s Secure Fuel System provides analytics on the consumption of fuel and customized multilayer security for fuel dispensing via password or authorized ID. The system uses a wireless device that identifies each vehicle, its location, and the fuel dispensed to it. Following dispensing, the equipment hours, mileage, and gallons dispensed are captured automatically, and GPS coordinates are stamped into the record. The system installs on any fuel, lube, or pickup truck, or on fuel stations or remote bulk tanks, and it can work alone or in conjunction with another OEM Data Delivery system that tracks equipment service hours.

The Secure Fuel System uses a wireless Pump Tracker unit that can be mounted on a fuel truck or fuel island and counts how many gallons of fuel are dispensed. This unit, which is passcode-protected to prevent unauthorized fuel dispensing, collects pulses from a flowmeter located upstream of the fuel pump’s mechanical meter. A GoPOD Capture module, equipped with a radio and GPS antenna, can be used to collect fuel data from the Pump Tracker unit as well as service hours and location data from other wireless units via the drive-around method. The GoPOD Capture module can collect data at up to 300 line-of-sight feet away and 20 mph.

The data on every fuel transaction are sent to an OEM Data Delivery Web site. The data are compiled into customized e-mailed reports, which the contractor can use to analyze fuel consumption. One report, Gallons Per Hour, merges fuel consumption and equipment service hour data to reveal fuel consumption by piece of equipment and date range.

Similarly, Topcon Positioning Systems’s Tierra remote asset management system wirelessly communicates engine-operating data to a Web-based network for real-time monitoring, and historical data also can be analyzed using dedicated software. Fuel-consumption data are just one type that the system can collect. According to Topcon Positioning Systems, T.J. Lambrecht Construction—a large US excavating and grading contractor that operates about 500 construction machines and the Tierra system—reduced its fuel costs by thousands of dollars per year just by monitoring engine idling time throughout its fleet by telematics.

Collecting Data for Maintenance Scheduling
One of the most valuable applications for telematics is that of developing a preventive maintenance program based on equipment operating data. Telematics systems detect a machine’s engine operation and wirelessly communicate the data to a Web-based network for real-time monitoring; the data also can be compiled by software for periodic in-depth analysis. Total engine run time—or high-RPM operation—can be compiled and notifications set up at intervals defined by management to indicate that preventive maintenance should be performed, not just on the engine but on components and items such as hydraulic fluid. Machine servicing occurs at optimal intervals, making the most of the company’s equipment and labor assets.

Topcon Positioning Systems’ Tierra system allows managers to run reports on how many machines idled a certain percentage of time, for example. The Global Navigation Satellite System (GNSS) allows a fleet manager to check operating parameters like oil pressure or even obtain an in-cab view of the job site on a computer screen anywhere in the world.

Hallgren notes that the increased attention on fuel costs is opening the door to evaluation of operations in even greater breadth and depth. Recording actual operating time for a truck or construction equipment can indicate to the maintenance staff that service intervals are exceeding manufacturers’ recommendations, for example.

“All of the hourly usage data comes in, and you set up a preventative maintenance schedule based on either the miles driven by the truck, the hours used on equipment, or on a period of time,” says Hallgren. “It winds up being a full-fledged maintenance program that helps people get away from the white board in the back room, the Excel spreadsheet, or whatever they used to use.”

Simons argues that deep analysis of fuel consumption can allow fuel-based maintenance. “As they are capturing gallons per piece of equipment, many people believe that the true way to maintain the equipment is based on fuel gallons,” he says.

“A lot of companies service the equipment, change the oil and filters, and perform some preventive maintenance activities at 250 hours. If they can push that interval out to 500 hours, they’re saving good money without hurting the equipment. If you can change the interval, that’s a cost savings right to the bottom line. Let’s say a piece of equipment was idling for 200 of those 250 hours—if it’s idling, the fuel consumption would be less, so instead of doing maintenance at 250 hours, maybe you’d do it instead at 2,500 gallons, which would tell you the true utilization of equipment.”

The OEM Data Delivery ST-900 Service Tracker telematics device tracks equipment service hours. The unit is a radio and cellular hour meter that is read by the GoPOD, which may be mounted in a foreman’s pickup truck that collects operating data from construction equipment. The Service Tracker uses a vibration sensor that mounts on the engine to record service hours. According to Simons, the manufacturer instructs customers to calibrate their engines so that the system can differentiate engine idling from working time. The distinction also helps with recording emissions data, he adds. In addition to idling, the data can account for cumulative machine hours, equipment location, mileage, and other indications, such as PTO time.

The data upload into major back office systems and integrate with accounting software. The reports are generated nightly and delivered by e-mail and a password-protected Web platform. The manufacturer can help to create custom reports using the Service Tracker, like a safety report developed for a customer utilizing a proximity switch installed on a seat belt that alerts the device when the seat belt is locked.

A fleet operations management system known as Mobile Apps from another provider, Collective Data, allows operators to enter fleet operating data in real-time out on the job site. Operators can perform a maintenance request, open a work order, and create reports.

The provider offers an even more intelligent system that diagnoses equipment problems. Through a partnership with Zonar Systems, Collective Data offers a tag-and-scan system that allows a driver to inspect a vehicle’s components and report on its condition. If an element is found to be defective, the information is reported in the provider’s fleet software. The system informs fleet managers when a vehicle is not fit for duty, can create automatic maintenance requests, and can allow monitoring of the quality of inspections for regulatory compliance.

Completing the Logistical Equation
Keeping tabs on how equipment is operating gives managers part of a true logistical snapshot of the fleet at any given time. Pinpointing machine location in real time and archiving location data completes the logistical equation and can yield benefits in the areas of productivity maximization, customer service, loss prevention, and employee performance.

Collective Data partners with several providers to integrate GPS location and diagnostics data into its fleet operation management system. Managers can access meter data, fault codes, locations, and other data to give fleet managers a better grasp of how well their fleets are performing.

Equipment theft from the outside or by employees is of particular concern to contractors in recessionary times. Loss prevention is a major factor behind the development of a new battery-powered Kuva wireless asset tracking device for monitoring such high-value assets as vehicles, materials, and even personnel, using GPS/Global System for Mobile Communications (GSM) wireless technology. The device attaches to an asset and immediately provides location, time, date, and motion information, which it then transmits to a remote server by means of the GSM/GPRS (General Packet Radio Service) wireless network. Users can track each transmission with a Web-based mapping or satellite imagery application. Each device uses proprietary software that allows users to select reporting frequency. In addition to time intervals, the device can also be set to report based on specific events, such as movement, no movement, or simply when being polled.

Some telematics systems, such as Topcon Positioning Systems’s Tierra, not only utilize satellite location data to reveal equipment theft, the location of a lost machine, or unauthorized use to management, but they also can be used to establish geofences and alert management via a text message or e-mail when a machine is located outside of the boundary, helping management to minimize insurance costs.

Remote Dynamics’ Hallgren agrees that telematics systems are bringing enterprise solutions to the construction industry. Telematics can allow the contractor to locate employees, subcontractors, and powered and unpowered equipment—and convey that information to customers if necessary. “There are a lot of really interesting things going on in the industry where companies are able to do very sophisticated diagnostics and fault codes and a variety of detailed information, and we think that more of that is going to come over time,” he says of the future of telematics. “But we also see that a majority of our customers have a whole mixed fleet of different manufacturers’ equipment, some of which is extremely old and some of which is brand new. Our view is that this all needs to come together in one complete image—a business owner should be able to see the hours that his labor is working, together with the hours that the equipment is running, together with his billing. This is a complete business operating view that we think will change the way contractors will do business.”

A low-cost option for tracking job-site assets such as short-term rental equipment, subcontractors, attachments, and tools is OEM Data Delivery’s RFID Cube, a battery-powered, magnetized unit. The device mounts on construction equipment and uses active radio frequency identification to send out its position by radio or cellular signals. The device can work in conjunction with other units, such as the Radio Service Tracker, Cellular Service Tracker, Pump Tracker and GoPOD. Reports are generated nightly and delivered via e-mail and a secure Web-based platform.

Bottom-Line Impact
Tying together all of the fuel savings, maintenance, and logistical benefits creates a compelling business case for investing in telematics. The final step in utilizing powerful telematics technologies is that of incorporating the data it obtains into the sales process.

Topcon Positioning Systems cites several examples of using the data for a direct impact on the bottom line. Arguably the most useful function of analyzing machine productivity with telematics is providing an opportunity for more accurate project estimating—which sets rates that allow a recovery of equipment capital costs while maintaining overall project profit margins. Telematics have shown some customers that they sometimes buy or rent more machines than necessary for a given project. Real-time monitoring may reveal that one or more machines are not being used and are available for redeployment to another job site. Management can generate fleet-wide reports to reveal how many backhoes were operated for less than three hours the previous week, for example. One customer determined by telematics that it was renting two machines at a cost of $10,000 per month without operating the machines at all.

Hallgren agrees that the next logical step beyond improving operational efficiency is estimating work using data that indicate true labor, equipment and fuel costs. Using the data for job costing makes it easier for a contractor to operate profitably.

What Lies Ahead
Industry experts believe that telematics will see greater acceptance out of necessity and that its capabilities will broaden as acceptance increases.

“Three years ago, we ran across more people who were surprised that they could be doing these things,” says Hallgren. “Now, more and more people we’re talking to are far more experienced and understanding of what this concept is. Maybe they’ve tried it, maybe they haven’t; but we’re not really having to do the same amount of education that we had to a few years ago.” Hallgren adds that another potential driver of greater acceptance of telematics will be environmental regulations. Under an initiative to reduce particulate matter emissions and nitrogen oxides in California, he points out, the state’s Air Resources Board is increasingly requiring contractors to keep records of equipment operating data, including where the equipment was operated and when. He says there is a possibility that such regulations eventually could be enacted at the federal level.

OEM Data Delivery’s Simons argues that the industry still has much progress to make in regard to telematics adoption. “Equipment is contractors’ business—that is their backbone and their biggest expense is fuel,” he says. “It’s amazing how many construction and aggregate companies out there are still making decisions on paper, and they have no idea how much fuel is dispensed and into which piece equipment and they have no idea where their equipment is. They’re getting more proactive, but it’s amazing in this day and age that they manage their businesses without knowing their costs.”

Ron Toupal, chief executive officer and president of ePlanIt Inc., a construction information technology services company that provides next-generation software to the construction industry, takes the cost-determination argument a step further. “Today, the technology already exists to outfit the entire construction crew and equipment with wireless mobile devices that effectively instrument the entire construction team,” he says. “Once this occurs, real-time status, labor, equipment hours, and site production status can be monitored in real time, allowing owners and decision-makers to identify and correct production issues at the very moment they occur. Automated systems tied to the instrumented team can compare actual work to project budgets and alert program managers of a wide variety of issues such as having too many hourly workers billing to a task, or budget, schedules, or equipment cost overruns.

“In today’s world, most construction crews have a very limited understanding of project bids or budgets and generally will work an entire job not knowing whether they are overrunning budgets. This technology is being adopted slowly, due to limited awareness of the service, a generational aversion to technology by decision-makers, logistical support issues, and startup costs.”

Robert Edilson of Collective Data argues that harsh job-site environments will help drive adoption of telematics solutions. “Telematics solutions for job sites are becoming more important as they become more readily available and able to withstand being used in a field environment,” he says. “In terms of deploying fleet operations management software into the field, the use of ruggedized PCs is increasingly popular.”

Simons agrees, adding that construction appears to be following the lead of manufacturing, which is very receptive to new technologies out of necessity. “The sophistication in the construction world is requiring more wireless data on equipment,” he says. “It’s a tough, brutal, dirty, moist environment, so the need for this hardware to hold up is paramount. Five years down the road, you’re going to have more automated data collection systems. Right now, the tip of the iceberg is hour meters, fuel, and location. As contractors get those things under control, then we start looking at more pieces of data that help them manage their businesses and get better at refining their processes. Right now, people only want to track a piece of equipment that costs more than $15,000. As the technology gets less expensive, they’re going to be able to track everything: tools, people, equipment. An attachment doesn’t power anything, but using radio, RFID, and different technologies, you can start tracking the hours of activity for an attachment.”

Telematics device sophistication will make great strides in the coming years, argues Toupal. “In the future, I expect this technology to become smaller, cheaper and simpler to use, effectively overcoming the main obstacles to widespread industry adoption of this technology,” says Toupal. “In addition, future decision-makers will come from today’s video-game-playing youth, who will demand the use of money-saving technology.

“Today’s hourly workers who require a GPS-enabled mobile phone and service contract in order to capture audited work hours will be replaced with an employee badge that has the same functionality as an iPhone but will not require costly multiyear service contracts. This new construction badge would normally display a picture of the worker while attached to his belt, but would double as GPS-based timesheet entry and video safety training system. Construction superintendents might be instrumented with the same badge but would also carry an iPad-like device, allowing real-time monitoring and dispatch of a crew and materials while also displaying detailed construction plans and details.”

What else will drive adoption of telematics in coming years?

“The demand for drivers to increase utilization, safety, and productivity is increasing, especially as economic conditions are forcing companies to keep track of every penny being spent throughout a fleet,” says Edilson. “With software solutions, hardware devices, and online applications, an organization can lower costs and improve upon these traits.” One Collective Data customer has managed to increase utilization by using the provider’s Motor Pool module, which allows the contractor to check in and check out equipment, make a reservation, and assign the equipment to a specific job site.

Simons points out that telematics can improve the utilization of human capital, too, a development that will only increase adoption. “Contractors spend millions and even smaller companies spend tens or hundreds of thousands of dollars and they’re getting garbage from the field,” he says. “In these times, they’re expecting more from their people, so they’re providing them with the tools now so that their people can focus on real work. By using technology, you can take away administrative and clerk data. The data are more reliable, you save their time, and, in the long run, everybody’s more productive.”

With many staffs getting reduced, “now you have managers going around reading hour meters and typing hours and fuel gallons dispensed into the computer system, which is crazy,” Simons continues. “In the long run, it hurts the company really badly, because these guys should be making decisions and moving the company forward, and they’ve got to focus on these mundane tasks—it’s a poor use of their time. That’s catching up to contractors now; they realize that they’ve got to automate.”  GX_bug_web

TRACKING A CONTRACTOR’S MOST IMPORTANT ASSETS
When Apple Inc. released the iPhone a few years ago, some were skeptical about the new device’s usefulness as a business tool. A new iPhone application for the construction industry is all business, though.ePlanIt Inc.’s OnTask Web-based timekeeping and project/task management service is not new. A new twist on the service, though, is an iPhone application that allows supervisors to track workers’ hours and monitor multiple crews and projects.The mobile application also creates daily logs with attached photographs and voice notes, tracks units delivered and percent complete, and displays project and timesheet reports. OnTask is integrated with the provider’s GPS Labor Tracking Services that automatically clock individual workers on and off of job sites using GPS-enabled phones and predefined geofences.

The contractor provides workers with GPS- and walkie-talkieenabled phones. When a worker enters a job site, his phone prompts him to select what task or scope he will be working on and sends the data to a project database. Using reporting software, the contractor compares the time worked with percentage complete for any task and keeps tabs on potential cost overruns. The application also integrates with ePlanIt’s mobile video towers so that users can view and control live job-site cameras directly from their phones.

According to Wes Hoffman, ePlanIt’s vice president of marketing, inaccurate payroll is a contractor’s biggest unnecessary expense, and the fact that most excess hours are billed as overtime simply magnifies the problem. “Also, many contractors are unaware of their exact percentage complete on a project or specific task until they are over budget and behind schedule,” he says. By directly correlating a worker’s hours to a billable task, supervisors or owners are able to easily determine if they are ahead or behind schedule and within their budget, Hoffman adds.

A GPS labor-tracking system can both eliminate the overreporting of hours and ensure that workers do not get shortchanged on the hours they actually work, Hoffman points out. They can review their hours on a daily basis, either with their phones or by logging onto the company’s OnTask Web site.

Hoffman acknowledges that concerns about “Big Brother” monitoring with such a system naturally arise and some employees may take a negative view of it, but once the system is adopted, contractors see an increase in productivity and a decrease in payroll expenses, he reports.

SHOPPING FOR A WIRELESS PROVIDER
By Tony NicolettiA quick Internet search for “construction equipment monitoring” or “equipment monitoring system” turns up dozens of results, so how do you select the right one for you? Here are some important factors to consider:
• Provider background and support— Scary but true. Consider that the ICUEE tradeshow in 2007 had 12 vendors selling this technology and ICUEE 2009 had only three. Now more than ever, make sure your provider has been in this business for years and has the capacity to support you through the product’s life. Are the product and company proven, or are you one of the initial guinea pigs? Are you buying from the OEM, dealer, reseller, or another channel?

Always be sure to identify where technical support and/or training will come from and if there is an additional charge for those functions.

• Hidden costs— The transponder unit will run between $400 and $1,200 USD, and quantity discounts are often available. The monthly communication should be between $10 and $40 per unit per month. Some manufacturers will levy an activation fee, annual maintenance fee, multiple user fee, or software license fee, so be sure to ask about these at the start.

• Long-term contract— Most providers require an airtime contract extending from anywhere between one to five years, similar to a mobile phone agreement. There are a few “no contract” manufacturers who bill month to month, giving you the option to stop service at any time.

• Automated delivery of reports— Most of the savings detailed in this article result from evaluation of activity reports. Does this mean you need to log on and run these reports daily, weekly, or monthly—or can you automate this process? A few systems empower you to set up delivery intervals and designate the person to receive it, as well as the time. On Monday morning, the shop superintendent will get the upcoming service report in his e-mail inbox.

• Fleet coverage— Even if you don’t plan to track your trucks and equipment initially, does the provider offer an integrated system for both? You may start with your equipment and find truck tracking to be a logical step. Will the same vendor provide both systems, or will you be using one vendor for equipment tracking and another for your on-road assets?

Tony Nicoletti is the director of sales for DPL America.

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