Why Construction Companies Need to Take Control of their Fuel Costs

Construction companies should pay more attention to their fuel costs, which are most often the largest and worst-managed expense that they face. According to construction company advisor Mike Vorster, fuel can actually account for up to one-third of the total equipment cost for many companies. Despite this, fuel is something that usually goes unmanaged, with companies focused heavily instead on buy/sell/lease decisions and tracking repair and maintenance costs.

Fuel Costs: The Largest and Worst Managed Expense

While companies know exactly what a $30-per-hour employee is doing, they usually have no idea about the fuel consumption of a machine with a fuel cost of $30 an hour, according to Vorster. He believes that fuel is a significant, badly managed, and volatile cost component that should get urgent attention from them. If labor costs had increased as much as fuel costs, the industry would by now be in a state of panic, but as fuel prices rise, construction companies have done little to manage the cost.

The Need for a Fluids Czar to Manage Fuel and Other Fluids

Vorster proposes that companies appoint a fluids czar to manage all machine fluids, including fuel, oil, diesel exhaust fluid, coolant, and air. This person would be responsible for buying, storing, distributing, and record-keeping for all fluids, but the focus would be on fuel given its rising price. The ideal fluids czar would be less mechanical and more of a chemist, with a passion for cleanliness and a keen eye on the bottom line.

Cleanliness and Dryness: Critical for Fuel Efficiency

The fluids czar would need to focus on keeping fuel clean and dry. Dirty fuel and wet fuel are the main causes of engine failure, with many engine failures starting in the tank, according to Vorster. There are many opportunities for fuel to become contaminated, especially when transferring fuel from a bulk tank to a fuel truck and then to a machine. Therefore, contractors must ensure that their stationary fuel tanks on job sites are clean and the fuel is free of contaminants.

Fuel Costs Have Reached a Tipping Point

With diesel prices rising significantly, contractors need to recognize that fuel has become a high-risk component of their fleet costs that they can no longer afford to leave unmanaged. According to Vorster, fuel costs have reached a tipping point, where they can no longer be shrugged off as a necessary evil. Instead, companies must take action to manage fuel costs and cut waste to the absolute minimum. By doing so, they can actually achieve significant savings and improve the bottom line.