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Excavators: Fleet Expansion for High Productivity and Positive Cash Flow

Mon September 24, 2012 - National Edition
Debbie McClung


According to Doosan Product Manager Chad Ellis, selecting a heavy excavator should include the evaluation of three key factors: utilization, specifications and cost of ownership.
According to Doosan Product Manager Chad Ellis, selecting a heavy excavator should include the evaluation of three key factors: utilization, specifications and cost of ownership.

Few machines have more impact in construction and earthmoving operations than a heavy excavator. In the past five years, more than 84 percent of heavy excavator sales to end users have been in these applications. Whether you’re thinking about adding a new excavator to your fleet to supplement existing excavators or expanding the versatility of your fleet with your first excavator, it’s important to buy the right machine for the work. Selecting a model that doesn’t fit your needs can have negative consequences on productivity and cash flow.

According to Doosan Product Manager Chad Ellis, selecting a heavy excavator should include the evaluation of three key factors: utilization, specifications and cost of ownership. These considerations are very important, because every decision you make in the purchasing process will link directly back to them.

Overall, Ellis recommends that buyers not only determine short- and long-term excavator needs, but gauge the opportunities within their existing fleet.

“Machines are always evolving, so you shouldn’t just buy what you’ve always bought without further research. You may want to make a purchase that complements your current excavator fleet, or you may find that a different size machine can increase productivity, or make it easier for you to complete certain types of jobs,” he said.

Machine Utilization

Ellis said the first consideration in any excavator purchase should be determining how the machine will be used and what expectations need to be met. He recommends that before visiting a manufacturer’s Web site or an equipment dealership, buyers need to answer a few basic questions about a potential new machine.

“Will it perform a single job or multiple jobs? Will the tasks it’s needed for today be the only work it performs during its lifetime in your fleet?” Ellis asked.

If the answers circle back to a single job function like trenching, an owner needs to look at some very specific parameters. These typically include an analysis of the pipe material to be installed, the conduit size, the trench dimensions along with the machine’s bucket size and a machine’s hydraulic capacities for that application. In the case of trenching certain utilities, a very specific size of excavator may be needed.

The key to achieving a good return on your investment is to reach high machine utilization. Leveraging excavator attachments to perform specific tasks can significantly increase utilization rates. If a machine’s called upon to perform a wider spectrum of tasks that also includes loading trucks and land clearing, owners may want to consider a broader selection of machines and a growing variety of attachments. For example, some contractors who dedicate excavators only to heavy digging may be missing an opportunity to fit it with attachments such as a clamp for land clearing, a hydraulic breaker or grapple for demolition or quarry projects, or a plate compactor for trench work.

Ellis suggested that a company’s size also will impact utilization patterns.

“A smaller customer may identify an excavator that will handle 90 percent of the work that needs to be done. However, a machine one size smaller may still cover 75 percent of the work a customer needs to do. The overall cost of ownership would be a lot less, and a machine could be rented to do the other 25 percent of work,” Ellis said.

Specifications

Poring over an excavator’s specifications is as fundamental to a purchase as a hands-on demonstration. Ellis said familiarity with key specifications from digging depth to loading height to hydraulic flow will help clearly define whether a machine is equipped to handle certain challenging materials or power its attachments.

“If you’re going to predominantly use two-way flow attachments, it’s important to make sure a machine has a two-way hydraulic kit to accommodate the demand. If you just have a coupler and a variety of buckets, then there might not be as much of a need for a hydraulic kit,” Ellis said.

While manufacturers provide dozens of specifications to help customers assess machine capabilities, Ellis recommends that customers match their intended work to the following core specifications:

• Engine horsepower

• Operating weight

• Arm breakout force

• Hydraulic flow

• Maximum digging depth

• Maximum reach at ground level

• Maximum dump height

• Carrier clearance with boom

Cost of Ownership

In the final analysis of an excavator selection, prospective customers should evaluate the overall cost of ownership by taking a comprehensive look at a purchase beyond just the machine’s initial acquisition and residual value.

Ellis pointed out that in addition to understanding the length of a manufacturer’s warranty and the scope of its coverage, prospective owners also need to account for the actual money they will put into a machine during its working life. Routine maintenance costs are key elements in the cost of ownership calculation.

“It’s a given that every machine’s going to need fuel and an operator, but the bigger ongoing concerns are maintenance of filters and fluids, as well as maintenance of attachments depending on the type of environment they’re working in. In a rocky environment, wear will be greater on the ground engaging tools, the undercarriage and other wear items,” Ellis said.

That’s why Ellis cautions buyers to be fully educated on a machine’s size and capabilities versus its machine utilization plan. Bumping up to a larger class of excavator may not only add to the purchase price, but will likely result in a higher cost of ownership with potentially higher maintenance costs.

If there is an expectation that the machine will move quite a few times during a year, then transportation costs should also be included in the cost of ownership. Ellis added,

“A contractor needs to know if they will invest in their own transportation equipment or subcontract. Of course, the larger the excavator, the more that cost is going to increase with associated permits and regulations.”

Taking the time to research new excavators within the context of these three considerations will not only help you achieve an educated fleet expansion, but assist your operation in keeping machine productivity and cash flow trending in a positive direction.

Wheel vs. Track Excavators

In general, excavators are versatile enough to be used on a variety of job sites, but they’re not all created equal with regard to their mobility on finished surfaces. According to Doosan Product Manager Chad Ellis, a wheel excavator is ideally suited for a number of applications, such as ditch cleaning, utility installation or road maintenance, that require travel while using a work tool.

“If contractors are frequently transporting an excavator in areas that can be driven, they may need to evaluate whether the capabilities and specifications of a wheeled machine would better fit their needs. It could lower transportation costs and provide more flexibility around a paved jobsite,” Ellis said.

A wheel excavator also can easily navigate a gravel or blacktop base before it’s paved, and the wheels can prevent marring of finished surfaces.