Adding up investment savings can improve profitability

As the red to white diesel change comes in and market volatility impacts global fuel prices, there has never been a more important time for the sector to control costs and protect profitability.

And it's not just those working on major infrastructure projects that are preparing. Other sectors, including those in housebuilding, are now driving both technology adoption and realising the benefits of Stage V equipment. On a recent visit to one such site in Westwood Ho! I met with Leon Adams, MD of LJ Developments, to talk about his thoughts on the industry's challenges.

Leon: "There are two very different challenges at the moment, the first being a huge demand in the housebuilding sector, which is booming in this region. The second is making sure that you keep costs under control by doing the ever-changing sums whilst delivering projects at probably the fastest pace I have ever seen.

The question of how much it costs per litre to move each tonne of material has never been more important. But it's also not that straightforward, as the key to cost management and project delivery is actually not moving as much material in the first place.

This was never the main consideration for small to medium house building projects until the sector started using new technologies like quantity based drone surveying and 3D machine control. We have recently made this move, and our supply chain engineering and surveying partner has helped us with the 3D design models we need.

In taking this approach, we have won our biggest job to date by modelling how we could move less material in the first place. This saves us cost and time and benefits the customer and the environment.  

Fix the asset and technology costs 

But with any change, there can be a significant increase in the cost associated with adopting new technologies. And in our case, the cost of the latest Stage V equipment goes with it. To mitigate these upfront costs, many business owners use finance to purchase equipment, and I am no different.

But it also pays to ask your finance provider about how you can bundle in the costs associated with new technologies. For example, with the recent purchase of our JCB 245 XR and JCB 86C-2 installed with Leica Geosystems machine control, I financed the whole package with JCB Finance. Also, I fixed my servicing over four years.

Because I keep my machines for around five years, the fifth year is finance free and not only that, the lifecycle of the machine control solution is about double that. So spreading this cost allows you to realise the benefits, and they soon add up immediately.   

We now have the latest equipment which burns less fuel, has longer service periods and of course is more reliable. Add this to the fact that we have a completely 3D modelled site, and you take out the need for engineers for setting out. This cuts costs and idling time, as the operator knows exactly what they need to be doing using the machine control. We now dig to the exact level and move less material, removing the cost of over or under digging. Operator training on the system also means our experienced team can be more productive.

Looking at the work you can achieve using technology, you can also opt for different types of equipment, like the larger JCB 245XR, which can perform both dig, lift and fine grading tasks. This reduces the number of machines needed onsite. 

So, every little change has a cost-benefit associated with it, and where you can fix key costs, the variable costs then become the ones to concentrate on. 

This is further helped when you can get data like fuel burn and idles times from machines using systems like JCB LiveLink. By marrying this information with 'as dug' data from the 3D model, wages and other costs, you can really understand more about how good investment and great people can impact your profitability.