Fuel Management in the Construction Industry: End-to-End Tracking

Posted by Reza Tavassoli on 13-Jul-2021 10:00:00 AM
Reza Tavassoli

construction-shovels and bulldozers standing by

We apologize in advance for delivering bad news. If your company is in the construction industry, you likely aren't managing one of your top expenditures optimally.

Let's start by stating the obvious. After labor, fuel is the most expensive part of operating a fleet. You'll need a fuel management system if you have your own storage tanks and dispensers. The level of sophistication and control necessary depends on a number of factors: your fleet’s size, fuel consumption, and the industry in which you operate, to name a few. But the requirement for some level of distribution management is unquestionable. Fuel is costly, and buying it without knowing who takes it, how much of it is taken, and where it goes is as intolerable as not having the same type of control over your bank account.

In a previous blog, we went through some back-of-napkin math to illustrate the financial benefits of a fuel management system; the gist of it is that a fuel management system can save a 50-vehicle fleet about $13,000 annually.

But when it comes to the construction industry, those stakes and potential benefits are taken to a whole new level.

The goal of this piece is to serve as a guide to construction fleet operators who may be in the market for a fuel management system to make their fleet lives easier.

Fuel Management in the Construction Sector

Fuel Trucks and Transfer Tanks (A.K.A. slip tanks, A.K.A. saddle tanks)

In the construction industry, the dynamic operation, usage, and servicing of important heavy-duty vehicles and equipment is a common thread throughout all projects, which vary from roads, bridges, and mass-transit systems to commercial buildings, oil and gas exploration sites, and wastewater infrastructure.

Predicting a potential client's purchasing power is simply that: a guess based on cyclical economic trends as much as statistical research. Some spending, on the other hand, follows predictable patterns. During the middle and late phases of economic growth, for example, many business clients may raise their investments and pull back during downturns. The opposite is true for municipal government.

Regardless of the client, project size, or fleet size, one thing stays consistent for every construction operation: fuel consumption. Daily, a construction fleet might burn hundreds of gallons of diesel fuel. And thus, based on an average engine load for some of the most popular pieces of equipment (which may use an average of three to six gallons of diesel fuel per hour), fuel consumption becomes one of the largest daily expenditures for any project. And fuel management has become one of the most important imperatives.

When it comes to controlling fuel consumption on a construction site, profit is determined by the difference between the fuel pumped and the fuel purchased at the end of the day, week, or month. Typically, fleet managers will definitely want to keep fuel inventory shrinkage to less than 2%. That would be a lot of fuel spilt. Is it, however, spilt? Fuel can go missing for various reasons, including misappropriation to another location or outright theft. Accountability becomes an issue of profit and loss in these situations.

The importance for a construction company to manage fuel tightly is very clear based on the sheer consumption volumes alone. As discussed in a previous blog article, the best way to achieve this for fleets, in general, is to implement a fuel management system. However, such systems are not all created equal, and one place where that fact is very much relevant is the construction industry.

Your “average” fleet operation comprises one or more fuel sites with dispensers and storage tanks. The minimum required of a fuel management system is to monitor and control fuel dispensed at the pump(s) and manage inventory in the tanks. Of course, there are different levels of automation and sophistication amongst the different vendors of fuel management systems, but nonetheless, that is the high-level overview of what any system is supposed to do.

Mobile fueling truck delivering diesel to construction equipment on site.

That being said, the construction sector is different.

The level of tracking described above is not enough for companies using heavy equipment in the field. To only monitor fuel dispensed at fixed fueling sites would only be half the story and would constitute a major accounting hole that shouldn’t be acceptable by any operation.

Think about it: you buy fuel and have it either delivered to your own storage tanks or your fuel trucks directly. You know the volumes purchased and the cost. So far, so good. If you have a pump control system in place complemented by an electronic tank gauge, then you are also on top of fueling operations in your yard(s). That is great.

But once your fuel trucks and/or transfer tanks fill up and head for the project sites, is that the last your accounting system sees of your fuel before it has to rely on manual logs and human data entry? If that is the case, then you basically forfeit one of the fundamental benefits of a fuel management system: tracking fuel all the way to the unit that will consume it. With this big of a blind spot in your fuel management, how would you know if an asset consumes an abnormal amount of fuel? Does all the fuel actually make it to the equipment on the project site? Does fuel purchase line up with fuel pumped on-site? To answer these questions and more, an integrated construction fleet management software is required that also has the flexibility to be customized to suit the unique demands of each construction company.

It’s abundantly clear that fuel tracking mustn’t stop once mobile tanks leave your yard. So right away, we know that any fuel management system you choose to install must be able to manage fuel distribution on construction sites. But as we have mentioned, all systems are not created equal. Here are some points to consider:

  • Fuel trucks: the system must not only be able to control and record fueling transactions, but it must also be able to accommodate multiple pumps and fluids. To be useful, it must also capture all crucial data related to each transaction—asset number, user, quantity, product, engine data, etc.
  • Data entry: there should be as little of it as possible. Human entry of data not only opens the door to errors and decreases buy-in from the users in the field. Based on our own experience, workers on site have very little patience when it comes to entering information on a keypad to fuel and continue their work. So, they either do it quickly in a less than diligent manner, or they just bypass the entire process by going into manual mode. In this scenario, RFID tags are recommended, as they minimize the friction to start fueling transactions and are not affected by typical construction site elements such as dust, mud, or ice.
  • Transfer tanks: this is potentially a big one, seldom addressed by construction companies, much less in an automated kind of way. Here, we talk about small tanks typically mounted on pickup trucks and sent out to fuel onsite equipment. There are two main reasons why these day tanks escape the accounting department’s net:
    • They are typically small and easy to dismiss as not worthwhile tracking
    • They are deemed too small to invest in any kind of onboard pump control system.

But if you have five, ten, or more of them distributing fuel on site and you have no real control over what goes out there, then you find yourself right back where you were when you had no fuel management system at all. That said, such a control system cannot cost more than a couple of thousand dollars, as the small volumes each transfer tank dispenses do not justify the same investment as a system that manages larger fuel trucks.

Inventory Transfers from Storage Tanks to Fuel Trucks

giant puzzle pieces at sunset

So far, we have discussed how, in many cases, typical fleets have their own fueling facilities and how construction companies are different, given the fact that they often heavily rely on fueling their equipment on project sites using fuel trucks and transfer tanks. We have also gone over the complexities of mobile fueling operations. But to truly run a tight ship, you must tie it all together with sound mobile fleet fueling software.

For a fixed tank in your yard, whether above ground or underground, fuel inventory management involves important tasks such as tracking fuel deliveries, reconciliation reports (deliveries against fuel dispensed and storage tank level), and frequent period closures.

However, fuel trucks are, in fact, mobile storage tanks. So, they must also be managed as tightly as their counterparts sitting in the yard. Furthermore, if fuel trucks are loaded in the yard (as opposed to being loaded at the fuel supplier), then your fuel management and accounting mechanisms must reflect that. This means that fuel dispensed from your fixed tank must also be recorded as a fuel delivery to your fuel truck, i.e., a fuel inventory transfer. This will enable you to apply proper fuel inventory management to your mobile tanks.

There is no reason why you couldn’t do this using manual logs and spreadsheets as long as you are very diligent about it. But in the context of the construction sector, where immense amounts of fuel are consumed, it would be strongly recommended to automate as much of this end-to-end tracking and management as possible. The better fuel management systems out there allow you to automate the process fully, so it would certainly be an investment worth considering seriously.

Conclusion: Fuel Management is more complex than average for construction companies

Given how much fuel is consumed by the average construction company, managing your fuel tanks and fueling transactions should involve as little human intervention as possible. It’s simply too big of an expense to take that chance, and a fuel management system is an absolute must.

As mentioned, all fuel management systems are not created equal. A good match for the construction industry must not only be able to track and manage fuel, both in the yard and in the field but also tie it all together to avoid big gaping accounting holes.

We hope to have provided a solid starting point in your journey to find the right system for you. If you have questions or comments, please leave them in the comments section below.

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Topics: construction fuel management