The Bottom Line: Is Machine Control Just for the Big Guys?

 

Often times when new productivity-enhancing technology emerges, many think that it is only applicable to certain segments of the market.  3D machine control is one of these technologies. Many small to medium sized contractors erroneously believe that the benefits of early adoption are only for much larger companies.  Especially in our current economic environment, nothing could be further from the truth.

While 3D machine control is certainly a significant investment, that expense pales in comparison to the potential return-on-investment.  What is the impact of getting into machine control now, in terms of the competitiveness of your bids and your company’s profitability?  These are issues worthy of further investigation, so I contacted machine control suppliers and contractors to see how they viewed the belief that 3D machine control is just for the “big guys”.

Dan Cantey, President and co-owner of Cantey Construction, in Camden, South Carolina is one of the early adaptors of 3D machine control in his area.   Cantey Construction employs 13 full-time people and focuses on small-medium size commercial, residential and some small public works projects like schools and sports fields.  According to Dan, machine control enables him to successfully bid on more jobs and still remain profitable.  Some of the challenges he faces are: increased competition due to fewer jobs being let and new competition from larger contractors who have started bidding smaller projects to keep busy.  Dan cites higher productivity due to fewer passes and reduced surveying and engineering costs thanks to his Topcon machine control system. He also says that 3D machine control takes out the guesswork allowing him to know exactly where he is, relative to grade, at all times.  As a small company, they have decided to outsource data prep services and utilizes professional surveying firms to perform control work and site localization, rather than add in-house staff. Cantey Construction factors in these costs as line items on their bid, so if they get the job, the money is already been allocated for them.  They use their GPS system components for both machine automation and layout work.  “One of biggest benefits is the layout features” Dan says.  They run their jobs pretty much stake-less while they are grading. However, they use their GPS rover for their own layout, grade checking work and also laying out points for sub-contractors, saving them outside surveying costs and time delays.  In Dan’s area, the volume of jobs has decreased and competition has increased, so being more efficient than the other guy has helped him win more bids. He credits his machine control system for making him more efficient and allowing him to compete with larger companies and still be profitable. Dan believes that machine control has definite benefits for contractors his size in terms of increased productivity and cost savings.  It may be of interest to know just how he ended up owning and operating 3D automated machine control systems.  Cantey Construction had implemented laser-based machine control in the past. They later decided to purchase a GPS system to get comfortable with that technology and use it for grade checking and layout.  The next logical step was to automate a dozer and after that, a motor grader.  They switch machine control components between the dozer and motor grader, as the project requires, which increases the cost-effectiveness of their investment. This migration to higher and higher technology is common among contractors who are always looking for a competitive advantage. When I asked Dan if he felt that machine control gave his company a competitive advantage over other companies bidding small-medium size projects he answered:” It is definitely a competitive advantage.  Time is money and I have spent 15 years in this business running over hubs and having to call the surveyor out (to re-stake the points).  Dan adds: “It’s certainly been good for us; we’re getting jobs done faster and more efficiently.  Once the data is in the dozer and the site is localized; you’re off and running.” “We’ve never said we wished we didn’t have it.”

Next I spoke with Machine Control Online columnist Marco Cecala.  (Cantey Construction uses Marco’s company, Take Off Professionals, for their data modeling needs.) Of the thousands of jobs they have prepared data for, around 60% have been for small-medium size projects. Marco told me that large heavy/highway contractors and smaller companies perceive machine control differently.  The heavy/highway guys have the benefit of phased projects and can plan their work in a very predictable way.  They consider machine control to be just another productivity-enhancing tool. The small project contractor must stay flexible and be ready to attack any part of the job when delays occur.  Since the entire job is loaded into the machine control system, they can easily switch from one task to another.  The ability to swap machine control components from one machine to another adds to this flexibility.  From Marco’s perspective it is more important for the small contractor to have all the data than the larger companies.  As job volume has dropped and competition has increased the price of moving a yard of dirt gets cheaper and cheaper on competitive bids.  Unless you can increase efficiencies, profits become less and less.  Those contractors adopting machine control can lower their bid price if necessary and still be profitable in such a competitive environment.  Cecala also states that his clients tell him that machine control has provided predictable production on smaller jobs. He points out that the industry support infrastructure has greatly improved since the early days of machine control.  You know longer need a lot of in-house staff to adopt the technology, as manufacturers, dealers, and data prep. services have become so much more knowledgeable and better in supporting the contractor embracing their first system.  This is typical in a maturing market, so no longer is machine control just a product for the big guys and their big guy resources.

Johan Larsson, of SITECH-Northern California, states that many of his customers are small-medium size contractors.  He points out that those who adopted the technology early-on now find themselves in a strong position when it comes to competitive bids. As the systems have already paid for themselves, they no longer have to charge the cost of the system against the job.  “The small guys are starting to realize that they need to get involved with technology to compete with the big guys, who are moving down to smaller and smaller jobs to stay busy” Larsson said.  Competition has increased on projects of all sizes.   Therefore, small-medium size contractors need to have some competitive advantage to win bids and stay profitable. For Northern California, the good news is that construction activity has been increasing in the past months, primarily from the commercial and residential sectors.  The smaller contractor, with fewer resources, is relying on support and services from third parties, like their machine control dealer, including model building.  As the technology applies equally well to small jobs as it does to bigger ones, the small-medium size contractors must have a greater volume of jobs to realize the same return-on-investment as the big transportation contractor who may sit on the same job for over one year.  However, the payback period is the same if the equipment can be kept working. “If a contractor wants to be in business for the next fifteen years they must adopt the technology, but those who get into it first will reap the greatest rewards. Once the system is paid off they no longer need to burden the job with the costs.  It’s always the early adopters that realize the greatest advantage and most benefits.”  As more and more companies add machine control system, adopting it may become an issue of survival in some cases.  It’s getting to the point that machine control could be considered a necessary evil, if it weren’t for the fact that it also makes you more money in the process. “It’s not if you are going to get into it, but when, and it’s better to do it now than later” Larsson believes.  SITECH has seen both a migration from 2D systems to 3D systems and those contractors who make the jump all at once.

Leica and AccuGrade (Caterpillar) dealers have seen similar adoption-rate increases from small-medium size contractors as opposed to the big heavy/highway contractors.  The trend is industry-wide.

So, if you do a small number of large jobs or a greater volume of smaller jobs, the benefits and return-on-investment can be quite similar.  Don’t consider the size of your company to be a restraining factor.  Those that investigate and invest first will see the greatest returns and realize the greatest competitive advantages and that will impact the bottom line.

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