Dispatchers, operations managers, and fleet owners bear massive responsibilities. With changes in demand, scheduling, maintenance, and routing, finding ways to increase profits without increasing the number of trucks and personnel is vital for long-term business success.
Perhaps you're a fleet owner or manager with your sights on knowing how to better manage varying demand. Maybe you want to create more effective maintenance schedules, or improve customer service and compliance. You're probably asking that all-important question: how?
Ultimately, it starts with maximizing billable hours. This requires tracking multiple metrics, which begins by tracking utilization.
All fleet owners should know how to use the fleet utilization formula to lock in improvement. With a thorough understanding, you can improve performance and boost profitability. Read on for a fleet utilization formula to get you on the journey toward better efficiency.
Inside this article:
- What is fleet utilization?
- How to calculate fleet utilization [metrics + formula]
- Tips for calculating fleet utilization
What Is Fleet Utilization?
Fleet utilization works as a baseline measurement. It reads as a percentage, comparing how much a fleet is used to how much it could be used at peak capacity.
After obtaining the percentage, fleet managers can analyze current practices to identify inefficiency and institute meaningful changes.
Done correctly, maximizing fleet utilization offers some incredible benefits, including:
- Improved profitability
- Reduced downtime
- More predictable maintenance schedules
- Improved operator safety
- Better customer service
Managing fleet utilization is centered on data collection. The more data companies record, the more accurately and swiftly they can address outstanding issues. For more about improving your fleet utilization, check out our Ultimate Guide to Maximizing Fleet Utilization here.
How Do You Calculate Fleet Utilization?
Fleet utilization comes down to tracking operating data on individual vehicles. It starts with looking at each vehicle and verifying if they are hitting the company standard regarding billable hours.
3 Fleet Utilization Metrics You Need to Track
The most basic formula for fleet utilization requires three metrics:
- Total number of working vehicles in a fleet.
- Total billing hours available. This is the total number of possible hours billed per day.
Typically, each company sets this number as standard and is typically related to your operating hours. Many concrete pumping companies set this at six billable hours per pump.
But for other heavy machinery, it could be as high as 10. - Total hours billed. This is the total number of actual hours billed per day, per truck.
These three numbers work to fill out a simple formula to obtain the baseline fleet utilization metric.
Sample Fleet Utilization Formula
The following formula works as a simple fleet utilization calculator:
Fleet utilization (%) = (Total hours billed / Total billing hours available) x 100
Here's how it looks in the real world. Say your fleet consists of three vehicles. Then, say each vehicle has a max work capacity of eight hours daily. After tracking utilization, records show the first truck works eight hours, the second works seven hours, and the third works five.
That comes out to 20 billable hours compared to 24 available billable hours.
With this info in hand, you can calculate the actual utilization rate:
Fleet utilization (%) = (Total hours billed = 20) / (Total billing hours available = 24) x 100 = 83%
After discovering this percentage you can identify areas for improvement, which could be anything from maintenance issues to poor routing to human error.
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Tips for Calculating Heavy Equipment Fleet Utilization
Managers of heavy equipment fleets, such as a concrete pumps or hydrovac excavators, should consider the following when calculating your fleet utilization:
1. Base calculations on your total available billing hours. This should be a consistent number, so avoid including data from jobs or instances that are statistical outliers.2. Don't forget to calculate seasonality. There may be seasonal upticks or slow periods due to geographical conditions like weather, daylight, or construction. You may want to recalculate utilization percentages during construction-heavy periods with longer days, as it may reveal different areas of need. Most companies do this by changing the number of possible billed hours and calculating their annual utilization as the average of their monthly utilization percent.Example: If your company typically operates eight to ten hours and only during the weekdays, don't include jobs in the utilization formula that fall outside of the typical work week. In other words, if you have an emergency job on a weekend, leave it out or count it in a different data set, as it could falsely influence the percentage.
Example: Some hydrovac teams set their available billable hours as high as 10 in the summer months, but they may drop as low as four in the winter months. If your company works fewer hours in the winter, calculate a new percentage based on reduced workloads.
Especially for heavy equipment teams, utilization rates can vary based on month. As such, it's wise to plan accordingly to track percentages, which leads to more consistency.
3. Automatically calculate and manage utilization with a dedicated job management software. If you're looking for the best way to easily juggle many metrics, consider using a dedicated job management software platform that includes fleet utilization analysis. RapidWorks automatically calculates utilization based on your unique company profile and usage data. This way, you can access real-time data showing your performance, areas of concern, and where you need to improve to boost efficiency, safety, and profits.
Consider becoming one of the next heavy equipment companies to track fleet utilization metrics with RapidWorks. If you want to see it in action, take it for a test drive and schedule a demo here.
