Building the Business Case for Maintenance Investment in Construction
When dark clouds are on the horizon, it’s even more important to fix the roof
While the European construction industry has gone through a period of recovery, there is no room for complacency. Many challenges still persist, such as squeezed margins, economic uncertainty and ever-increasing demands for better environmental performance and productivity. In the UK, margins amongst the top ten biggest contractors fell to 0.38 per cent on a combined turnover of £31 billion (€27.4 billion), as of July 2018.
Darker clouds are also looming over western European construction. Across the EU, together with Norway, Switzerland and Turkey, the industry reached a peak revenue of €1,615 billion and employed over 17 million people in 2017. German-based rating agency Scope has warned of slowing economic growth and persistent labour shortages. The agency has revised its annual growth forecast for 2019 and 2020 to two per cent, down from a 2.5 per cent forecast in December 2017. Scope also points out the credit outlook, particularly for smaller companies, is in danger of deteriorating as the business cycle slows. These figures give a clear indication of the rising pressure main contractors are under to cut costs and improve productivity - and their suppliers should be attuned to these pressures.
This is why getting the most out of their equipment ranks so highly on the to-do lists of construction and equipment hire firms across Europe. In a major survey commissioned by Shell Lubricants, nearly eight out of 10 (76 per cent) of 400 construction staff said extending the lifespan of existing equipment was a priority.
“40% of companies surveyed often experienced breakdowns because of ineffective lubrication”
However, trying to make equipment last for longer is a false economy if it’s going to be breaking down repeatedly while you hold on to it, or worse still, if it proves unsafe for operators. Unexpected breakdowns cut into project profit margins, particularly if parts take days to arrive and machinery is lying idle. Similarly, the breakdown of one piece of equipment can have the knock-on effect of unplanned downtime of other units while the project is stalled. If work is stalled because of faulty equipment, firms can also face hefty penalties and reputational damage.
A study by one global manufacturer found idle time can range from 400 to 800 non-productive hours per year, per machine. This was supported by Shell Lubricant’s data too - more than half of respondents (53 per cent) said equipment breakdowns are a challenge to their business, and 72 per cent said issues with equipment reliability have led to unexpected costs.
Minimising the total cost of ownership is the holy grail for machinery hirers and managers – but it simply won’t happen if companies neglect maintenance. Fortunately, three quarters (78 per cent) of European construction companies realise this and believe effective equipment maintenance can generate savings.
Less fortunately… this theoretical grasp does not seem to extend to what firms are practising - more than half (53 per cent) said that maintenance is often deprioritised until there is a breakdown. A dearth of knowledge and skills, too few staff and a lack of support from senior management are all cited as reasons maintenance regimes are suffering.
What’s holding back maintenance in European construction?*
Three key reasons from lubricant decision makers in the construction industry:
- Inadequate staff expertise – 69%
- Maintenance is not sufficiently valued by senior management – 44%
- Too few maintenance staff – 32%
Firms also appear to be scoring too many own goals when it comes to maintenance practices that can be quickly implemented and yet be highly effective, such as lubrication. The life expectancy and reliability of construction equipment is inextricably linked to the application of the right lubricant, at the right time (and in the right amount) needed to reduce friction, heat, and wear. Despite this, 40 per cent of companies surveyed often experienced breakdowns because of ineffective lubrication, while a similar number (43 per cent) admit that lubrication is rarely a priority.
On a positive note, construction firms are aware that they cannot, and indeed should not, have to go it alone. More than seven out of 10 (73 per cent) agree their maintenance staff would benefit from additional training on effective equipment lubrication - and 73 per cent value lubricant suppliers who can share expertise.
As market trading conditions are likely to get tougher, it makes sense for construction equipment owners and users to consider opportunities to target savings where they can. Putting in place effective maintenance regimes and working with lubricant suppliers who can offer the partnership they need can only help on this front. Shell Lubricants have found that customers worldwide who invest in lubricants and lube services can save anything from a few thousands to many millions per year.
True partnerships can provide good quality services and staff training but ideally, can also contribute to positive cultural change. By working hand in hand with maintenance managers, the right partners can help construction firms build a solid business case for their senior management to invest in scheduled preventative maintenance. Which delivers measurable, and much needed, dividends for everyone in the long term.
*Source: Powering Peak Performance – Shell survey of lubricant decision makers in European construction industry (January 2019)
Find out how lubricants can affect you and your maintenance costs, and what else you should think about, including getting the right partners involved.