[rbriggs]

Ok, you guys have me thinking.
I was doing the math today. I have my guys come into the shop at 7:30am. They are SUPPOSED to spend 30 mins. doing truck and equipment checks, gathering their schedules and marketing materials and planning their routes and day. The intent is that they are on the road by 8am to their jobs.
Anyhow, I've been doing some research and have seen the following:
Most of the guys come in at 7:30am, get their schedules. They sit around and shoot the ____. Then get outon the trucks (skipping truck checks all together most days) and head out. Out to their jobs? Nope......guess again. Out to Dunkin Donuts for coffee.
Now, I've been watching this for a while and most days see the truck crews pulling out of Dunkin Donuts at 8:15 am.
So.......what am I saying? Well, approx. 30 of 45 minutes is inefficiency. That being said, I sat down and did the math.
If the math is correct, it looks like this:
30 minutes per day per truck (2 employees per truck)=60 minutes per truck.
60 minutes per truck per day x 5 trucks each day=300 minutes (or 5 hours per day).
5 hours per day x 5 days per week = 25 hours of inefficiency per week.
25 hours x 52 weeks = 1300 hours per year of inefficiency.
1300 hours x $12 (average salary of employees) = $15, 600.
SOOOOOOOOOOO...............this morning B.S. session is costing me some big $$.
I'm starting to look at mending this situation ASAP.

[Bill Schwab]

Rich:

In your situation, you are so similar to how a garbage hauling company operates that you could adopt a few things.

First, company policy, no personal stopping between start time and lunch. Lunch takes place between 11:00 and 2:00. No stopping after 2:00.

You book 8 hours work per day. If they get the work done early, they go home with the same pay. This will make you look harder at loading your routes more efficiently. Write the new policy and have each employee sign it. Then adopt a disciplinary code if they go beyond the parameters of what they should be doing.

In your situation, GPS units on the trucks would also help, as you have a routing issue. You don't have time to go out chasing idiots who should be doing their job. If the tracking device does not jive with a time card, guess what? You call them on it. If you do it tactfully enough, eventually everyone will understand that you are entitled to make a buck just like they do. And, as your routes fill up. you will be able to get down to a science how much time they should be taking so you can cross reference it when you need to.

It's what we did at Mindless Management and several other haulers I worked for in the summers years back.

[Fine Edge]

Hey, Dunkin Donuts has some good coffee!!
Really, i know exactly what you're saying. Have them get their coffee at home, stop before they get to work or buy them a maker for the shop.
That's a bunch of money that doesn't need to be wasted.
Have you checked on them at lunch? Maybe that $15,600 figure just got bigger.

[rbriggs]

Thanks for the info Bill.
I do not have a problem with them stopping to grab a cup of coffee (on the go of course) while enroute to their jobs. Howevver, the point I was trying to make is that I'm going to continue my investigating and see what I can come up with. Then sit down and do the math. I think I'm going to choke on my own saliva at that point.
Yes, Fine Edge, I'm willing to bet that the figure did get bigger!!!
I've considered GPS for over a year now. I"ll have to re-consider it now. We'll see what happens.
I do recall reading an article (I believe it involved Rick Carver) about getting his crews out the door by a certain time. Pretty interesting reading.

[RHayden]

We added GPS to all of our vehicles at the beginning of this year, including my own G&A vehicle. The information we have derived from the data thus far collected has been well worth the investment. If you have several vehicles on the road daily, then you should seriously cosider giving GPS tracking a hard look.

[rbriggs]

Rick,
Just what infoare you collecting, and how are you using it?

[Dale Wiley]

Rich:

I am going to add to your consternation here a bit.

This is the lost efficiency that you have been able to quantify yourself with your own eyeballs. I submit from my personal experience that figure should have a multiplier of 1.25.

Now here comes the real kicker.

$ 12.00 per hour ain't all its costing you dude. That's a straight labor cost that they are away. You have an overhead burden on that labor cost that has to be recovered some where RIGHT ??

Where are you recovering it ?? From net profits on other work that's where.

From some of our previous conversations, I now that our operating costs are similar. I have an average labor cost of $ 15.50 per hour, and an overhead cost of $ 20.20 per man hour. That gives me a cost of $ 35.70 per MAN HOUR.

Adjusting for the wage difference , I think you have an actual operating rate per man hour of $ 27.50.

Based upon your calculations of 1300 hours of inefficiency, I add my factor of 1.25 to it and we have 1625 hours x
$ 27.50, and it is actually costing you $ 44,687.50 per year.

I have sat blocks away from landscape operations, watching in binoculars in 6 different states with companies from 150,000 to 3 million per year and come up with that 1.25 rates, which is real conservative.

[RHayden]

The units track movement/no movement, so I am able to tell exactly what time the vehicle left the shop; how long it was in transit to the job site at x mph and how many total miles it traversed (and whether there were any convenience store stops along the way and how long these took); if the vehicle leaves the job site I know for how long and where it went and at what times such as material runs or lunch breaks or finished for the day and heading back to the shop. The software will print out a map showing route taken, stop location and duration times, as well as mph reports etc...

How are we using it?

Accurate billing and scheduling for T&M projects.

Travel time recovery. We are in a rural area and our normal radius is 60 miles. The GPS units have helped verify and improve my travel time estimating.

I use the unit in my G&A vehicle to track my own time when I go to meet a client so that I can recover these times and travel costs
in the bid. Very helpful when I look at several sites in one day.

Info on material runs are used to hammer home to the guys how much time should have been saved (and how much bonus potential they lost) if it was for something routine which should have been on the truck and they forgot it etc...

Payroll savings and improved field documentation. Daily reports now have a balance to be compared with so the guys are much more attentive to the time they are using.

These are the main things off the top of my head. Still a little new to us here so we are learning a little each day. Like any data collection system, how you use the information collected will determine its ultimate benefit.

[rbriggs]

Dale,
Please bear with the simple minded here. But, what metrics are you using to figure your overhead cost of $20.20 per hour?

[Rick Carver]

Rich

You keep on keeping on my friend and dig,,, dig,,,dig! You will continue to see what loss of time REALLY cost's your operation.

1300 hours wasted but paid for????

My friend yous also have to figure this,,,,,,, if you have this amount of unbillable time but in deed paid your employees for it,,,,,,,,,,,,,,,

then you MUST! add the 1300 hours of LOST OPPORTUNITY to gain or earn a net,,,, which simply understood is, whatever your numbers are PER HOUR,,,, is your PER hour LOSS times the 1300 hours.

Soooooo,,,,( EXAMPLE),,,,,, if I bill out at $35 an hour and my guys waste 1300 hours of AVAILABLE PRODUCTION CAPACITY of my operation then I have to believe that my loss's are calculated this way,,,,

Labor 45% or $15.75 an hour,,, paid out to employees for no production,,X 1300hrs = $20,475

Overhead 40% or $14.00 per hour ,,,, no matter if the operation produces or not this has to be paid from somewhere(your net),,,, so $14.00 X 1300 hrs = $18,200

Net,,, 15% or $5.25 per hour YES YES YES,,, PLEASE BELIEVE THAT YOU HAVE TO CALCULATE THE LOSS OF MAKING A NET FROM THE HOURS PAID TO OUR EMPLOYEES!!!!!!! IT IS LOST OPPORTUNITY AND IF I DIDN'T HAVE TO PAY THE GUYS FOR NON PRODUCTION I WOULD HAVE BEEN ABLE TO REALIZE AND (SHOULD HAVE) A NET FROM THOSE HOURS PAID!
Soooo,,, $5.25 X 1300hrs = $6,825 lost.

For a grand total of $45,500 lost!!!! OK Now here is the big question,,,,, is it worse then this???? WHAT? the loss? is it worse? YES!!!!!!!! It is Rich,,,,,
Using my example above and using your 1300hrs lost,,,, lets make sure we really really understand the TRUE COST OF THIS LOSS!!!!!
Would you agree that we pay for all our loss's from our Net? Sure we do,,,,,
and above our net is an affordable 15%,,, right? And that means we SHOULD count on recovering 15% or $5.25 from every hour we bill out,,,,, BUT if we have loss's like we now see that we do,,,, then we still have to pay the guys,,,, as you stated you do (we all do) and we know the money for this pay for non billable time comes from the net,,,, Because we agree that our TRUE cost of loss is our whole hourly rate,,, in this example $35.00 hr,,,, then we HAVE TO divide the value of of our net into what the value of the hours were that we lost from,,,,, soooo,,, $5.25 divided into our billable hourly rate of $35.00 = 6.66 hours!!!!!!! of NET from OTHER HOURS THAT PRODUCED A NET!!!!!!! In other words it TRULLY COST OUR OPERATION 6.66 hours of net proceeds from EVERY SINGLE HOUR WE LOST. In this example we take your 1300 lost (billable time hours) X 6.66 = 8,658 hours is the true cost of loss to this operation in my example.

Don't believe this? Then lets double check,,,, you lost a grand total of $45,500,,,,, it was paid for from your net,,, we all agree,,,,, I say that the true loss in time to your operation is 8,658 hours,,,, so times the net value of $5.25 X 8,658,,???

Whatcha got???? (rounded for percentages of course) ;-)

OHHHHHH,,,, and just think how bad it is if some times we are paying OT against this loss???? OOUCH!!!!!!!!

Rick

[Bill Schwab]

Rick:

Is it not also logical to assess the loss this way if you have a machine in the field that you bill $150.00 per hour for, that if the machine is rendered usless, you have lost the entire hourly rate of that machine and not just the cost?

[Rick Carver]

I would say so,,,,, yes,,,,, without a doubt,,,,,,,, But remember that the actuall loss would be different between a OWNED (paid off) machine, that is being recovered on OH including any replacement percentage,,,, and one that is still has a payment every month with the added replecement percentage etc.
In the first one, I can elect to lower a bid because the machine doesn't cost me as much as the financed machine,,,, line item for line item,,,,,, Some folks may say that really there is not a difference,,,,, I wont argue that opinion. But in reallity the calculation would be less of a loss for the owned machine. Just like any liability against our OH in our P&L,,,,, ;-)

Bill,,,, I finally am learning how to get my private message from this site,,,,, got your message and will get back wid ya.
Hugs for me to everyone. :-)
Rick

[Dale Wiley]

Rick pointed out what I did not when I got tothe end of my post.

The opportunity cost of that money and the net youshould have realized on it. I just set it up at cost, but those hours should have generated you net profit, and did not, so there for you were just changing paper basically.

[HRLand]

You guy's make my head spin sometimes. When are we gonna have those flying cars and robots I heard so much about when I was a kid? I will be losing money everyday until we get 'em.

Seriously though, everytime I check out this sight my eyes are opened a little wider. I just wish I could give back as much as I get from here.

[Rick Carver]

HR says,," I just wish I could give back as much as I get from here."

I feel the same way every time I read or listen to something that really changes my way of thinking or opens my eyes to a direction I hadn't considered etc.

Let me tell ya my spin or your wish above HR.

Last summer I bought and gave my Mom and Pop a new home,,, and built my brother a gorgeous apt. in the basement of the new house. Seperate entrance's etc. It's a duplex now.
I have been asked by neighbors and even some family members why? and ya know what I say?????

If we can,,,,,,,,, we should is why!!!!!!!!!!!!!
Mom and Pop are getting up there in age and not well,,, none of us kids are really close as we need to be to help them,,,,, so they are here on the farm now,,,,,


Soooooo as far wanting to help? with anything?
If we can,,,,,, we should..................... If it aint your turn right now,,,,, just wait a little,,,, it will be soon,,,, and when you have the opportunity,,,,
if you can,,,,, you should. ;-)

Have a great weekend everyone!
Rick