Metric Measures

How to measure effectiveness.

BEFORE ANY CHANGES take place, before you install any new computer system, before you improve your new vehicle specification, you must be measuring your fleet's current effectiveness and performance. These financial and other numeric measures should be trended on a monthly basis and summarized yearly. Information and charts should be made public. Most importantly is that the trend charts should be discussed at a monthly meeting.

One of the issues with top management is proving that a month's performance is actually an improvement even when some of the costs go up. Improvements in fleet performance frequently show up as increased expenses in one area (the investment) and reductions in the future costs in another area (the return). Hopefully if the investment was a good one, the returns are greater than the investment.

There is a second issue that can be addressed by trending. How do you know if a particular set of performance numbers are an improvement or part of the normal variability of that measure? Watching the trend of the number will quickly tell you if you are improving or just moving back and forth.

The primary measure of a fleet's performance is "cost per mile" (CPM). CPM is a useful tool when broken into divisions (comparing different groups called classes within your organization to each other, assuming that their equipment is similar). As a fleet management tool CPM is useful when the equipment is divided into classes of like equipment in like service. The worst units of each class can then be managed.

In construction, material handling, and stationary equipment "cost per hour" (CPH) is the primary measure of performance. The comparisons and uses are the same. The general expression is costs per unit of utilization.

The primary utilization of most vehicles is miles or hours. The secondary utilization is how the unit is used in terms of production. The "cost per secondary utilization" measure is closely related to CPM and is used widely by commercial fleets. For example in the beverage industry costs per case (soft drinks, beer) are a valuable measure of a fleet or even a particular route. Any output such as ton, ton-mile, people moved, cubic yard, even revenue dollar can be used as a measure of fleet performance.

Other shop performance metrics include:

  • Maintenance Costs per Asset Value of Fleet

As your fleet ages this number goes up rather rapidly. Both the asset value is declining and the maintenance costs are increasing. If you have a policy of rotating your fleet regularly so that the average age stays the same then this measure can be useful. This is a leading indicator (changes will occur early) of fleet condition and age.

  • Maintenance Cost Index

The total month's actual cost compared to the same month in the previous year or two. The current month should be in-line with the previous years within the variations in fleet size/make-up and inflation. Significant differences may be cause for investigation.

  • Actual Cost Compared to Budget

This provides a check on your budget. Variances could reflect a problem with your operation or with your budget.

  • Direct Labor Effectiveness

There are two related measures of labor effectiveness. The first is simply payroll hours to repair order hours. How much of the shop time is spent on assigned work on the fleet. The second measure looks at payroll hours compared to "a fair days work." In this measure the labor standards (or flat rates) for all jobs completed are added together (regardless of how long they actually took) and compared to the amount of hours paid for.

  • PM System Audit

There are two measures that help verify that the PM system is in place. The first compares Inspection/PM hours to all direct hours. The result of an effective PM system is that repairs are uncovered by the inspector and scheduled. The second measure compares total PM hours to total direct hours.

  • Emergency Hours
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