Michael Kelley and Mike Vorster interview Craig Gramlich from Lonewolf Consulting about his experience in equipment management on the Yellow Iron, Black Smoke podcast.
Listen to the podcast on Apple Podcasts: https://podcasts.apple.com/ca/podcast/getting-traction-with-equipment-improvements/id1545466253?i=1000662063538
Listen to the podcast on Spotify: https://open.spotify.com/show/2IYceoC3qIvPx5VbnprmPz
Transcript below.
Michael Kelley:
Doctor Mike Vorster and I are here with a special guest today—Craig Gramlich, founder of Lonewolf Consulting. And I can already tell I haven’t had enough coffee because I’m stuttering, and we’re not even five minutes into the podcast. But that’s a good sign—it means I’m excited, and we have a great topic ahead of us.
Craig has done a lot of work in equipment consulting, both as an internal employee and as an external consultant. He brings a wealth of experience, so we thought we’d invite him on to talk about how to apply the theory of equipment management in the real world.
Before we dive in, Craig, why don’t you introduce yourself? Tell us a bit about who you are and how you ended up in this space—writing for the equipment magazine, analyzing equipment, and being recognized as a thought leader in equipment management.
Craig Gramlich:
Thanks, Michael. I appreciate the introduction.
It’s been a long journey, but there are a few milestones that stand out. I grew up in Saskatchewan in a farming family, surrounded by machinery and equipment. I was that kid climbing all over the tractors, riding in the fields, and even sketching equipment in a notepad because I loved it so much.
Later, my family moved into oil and gas. I’d be the kid opening the door to the coffee room, chatting with the guys in the shop, overhearing things I probably shouldn’t have, and wandering through the shop, fascinated by the oil, grease, and the smell of it all. Again, I fell in love with equipment.
When it came time to choose a career path, I was torn between engineering and business. Ultimately, I took the business route but never lost my love for the technical side of equipment.
After university, I started as an accountant—please don’t hold that against me too strongly! But after a couple of years, I realized accounting wasn’t for me. I needed more engagement and excitement, which led me back to equipment.
I was recruited by North American Construction Group here in Canada, a large global operation. I spent nearly a decade in their fleet and equipment group, helping establish structures, roles, responsibilities, rates, and systems for success. That’s actually when I first took Mike’s course—down in Texas, back in 2008. Ever since then, I’ve been drawn to the material.
Equipment economics fascinates me because it blends my love for equipment with my background in accounting. From there, I worked with several other employers, helping their fleets and equipment departments grow, standardize, and implement best practices based on Mike’s teachings.
Eventually, I reached a point where I was ready for a change. I made the leap from working for large multinational corporations to going out on my own, and that’s how Lonewolf Consulting was born.
Thankfully, the industry has been very supportive, recognizing the need for what we do. In simple terms, we help companies integrate mobile equipment management with people, processes, and systems in the most efficient way possible.
We focus on the principles outlined in Mike Vorster’s Construction Equipment Economics, working with companies to assess where they are today, understand their goals, and guide them toward their ideal future. That might sound straightforward, but when organizations are large, siloed, or have multiple decision-makers, even small changes can become incredibly complex.
I know we’ll dive into some of those challenges today. At the core of our work, we focus on the three key departments in equipment-intensive businesses—accounting, equipment, and operations. That’s the internal equipment triangle we operate within, and our goal is to help companies align those three areas for better performance and profitability.
Michael Kelley:
Perfect. That brings us right to today’s topic and the real reason we wanted to have you on the podcast—because there’s so much to explore here. It’s a rich field.
You mentioned your background in accounting and business. There’s a lot of math, a lot of spreadsheets, but there’s also the hands-on side—the oil and grease, the smell of the shop, the understanding of how machines actually work. A well-run fleet has a huge impact on operations in multiple ways—from ensuring the work gets done to improving employee morale when equipment is well-maintained.
That’s what I really want to focus on today. If the three of us were advising a company that was hiring or about to hire a world-class fleet management team, how would we guide them? How would we help these leaders implement the principles we’ve been discussing in this podcast and in Construction Equipment Economics? What does that process look like?
Mike Vorster:
Michael, I’d like to jump in here because Craig made a really important point—he started by working with organizations to set up the structure for how they manage their fleet. That’s key.
My advice to your question would be to start with serious thought about how the organization is structured to manage its fleet. Because, yes, fleet management is about oil and grease, and it’s about dollars and cents, but it’s also about organization and responsibility—who owns what, how the money flows, and how decisions get made. In many cases, the real issue isn’t the equipment itself—it’s the corporate structure.
So before a company makes a decision about its fleet, they need to zoom out and assess how they’re organized to manage it. In most of my work, that’s always where we start. We begin by looking at the equipment, and very quickly, we find unanswered corporate-level questions that need to be addressed first. Once those are clarified, we can implement effective fleet management strategies at the equipment level.
Michael Kelley:
That’s a great point. Let’s dive into that. What does the proper organization look like for a company that wants to run a world-class fleet? How should leadership think about structuring it?
Craig, based on your experience with clients and previous employers, what organizational setups have really enabled companies to implement strong fleet management practices?
Craig Gramlich:
Great question, Michael. What I’ve seen is that it really comes down to leadership commitment. That’s first and foremost. Senior leadership has to be aligned with a clear vision of what they want to achieve.
Are they in the business of moving dirt? Are they focused on piling? Are they installing pipelines? Whatever their core business is, they need to recognize that fleet management isn’t just a supporting function—it’s a business within the business. There’s a mini equipment business operating inside their larger operations business.
The leaders who truly understand this are the ones who embrace fleet management at a higher level. They recognize that beyond just field activities, effective fleet management plays a crucial role in profitability, efficiency, and long-term success.
To touch on your earlier question—what does it take to implement this? Mike’s answer was spot on: start by evaluating corporate structure. My approach builds on that. When I first speak to an organization, one of my first questions is:
“Have you ever heard of a man named Mike Vorster? Have you read his book or taken any of his courses?”
That’s the foundation. Once an organization understands those principles, we can have a more meaningful conversation about what they want to become and how to get there.
Michael Kelley:
Yeah, for sure. In many ways, we now have a foundation to build from in a way we didn’t before. In other industries, like accounting, we have established standards—GAAP, for example—where experts regularly update accounting principles and best practices.
But in equipment management, we didn’t really have that until the first version of Construction Equipment Economics came out. That book has become a key reference—at least one of the competing standards in the broader field of equipment economics.
I agree that we start there. Understanding the theory—what we’re looking at and why it matters—is important. But how does that theory disseminate throughout an organization? How does it reach senior leadership and influence real decision-making?
Go ahead, Mike.
Mike Vorster:
Michael, first, let me say—Craig, you flatter me. It’s been a privilege to work in this field for many years, but in the end, it really is just common sense. And I’ll say something here—then, as always, I’ll tell a story.
You made a great point, Craig, about knowing your business. One of the things I always ask is: What’s the name on the building? Is it a construction company? A quarrying company? A pipeline company? The name tells you the business you’re in, and that’s where the focus should be.
That leads me to a story. I grew up in this business. My father sold our family farm, took the money, bought a couple of D4 tractors, and started a construction company building dams. After I graduated, I worked there for several years, and in that environment, equipment was seen as the personal property of the proprietor. It was the storehouse of family wealth. When we made money, we didn’t buy a villa in Spain—we bought another tractor.
Then my father got very ill, and we had to sell the business. I went to work for the largest heavy and highway contractor in South Africa. My first job was in Malawi, about a four-hour flight from Johannesburg. One day, I was sitting knee-to-knee with the president of the company on one of those flights, and he looked at me and said, “Mike, I understand you have a passion for equipment. Let me tell you—equipment is just a means to an end.”
That hit me. In just a few years, I had gone from one successful business where equipment was everything to another successful business where equipment was just a tool. One saw equipment as a cherished asset, the other as a self-destructive necessity.
And I realized—that’s a subject worth studying. That moment shaped my thinking.
So when people ask me, “Is there a right way or a wrong way?” my answer is: no. There’s no single set of universally accepted principles. But there is your way—the way that suits your business, your culture, and your objectives. What matters is knowing what you want to be and then making that vision a reality.
Michael Kelley:
Absolutely. One of the maxims we have at Silver Trek is “Have strong opinions and an open mind.” That’s what I see in your work, Mike. It’s not that there’s just one right way to do things, but we do have strong opinions—opinions formed through hundreds of conversations with people doing real work.
Over time, we’ve gathered the heuristics and data to prove that while there are many different approaches, some are clearly better than others. And we’ve seen businesses fail because they didn’t approach equipment management the right way.
Today, we’re in a better position than ever. We have a real body of theory. We have organizations like AEMP and CFMA. We have people who’ve been through CEMP training and other industry leaders pushing the conversation forward.
So let’s go back to your original point, Mike. You said we should start by looking at how a company is organized.
Let’s say we’re in a boardroom, advising a newly formed fleet management team on how to structure their department. What would we recommend as the ideal starting point?
Now, we know there’s no one answer, but we can propose an answer that would work. And I think we’d all agree on one thing: we’re not organizing to preserve the yellow iron—we’re organizing so that the equipment group serves operations.
Mike, I’ll let you go first, then Craig can jump in.
Mike Vorster:
Well, first of all, we’re assuming we’re in the construction industry, right?
One of the most interesting things about construction is that it’s one of the few industries where you fix the price of something before you’ve ever done it. In fixed-price construction contracting, you set the price for a project before it’s built—and no two projects are ever exactly the same. Compare that to the automotive industry, where manufacturers build hundreds of thousands of identical cars and can adjust pricing as needed.
That means rule number one in construction is: Know your costs. It’s the price of admission.
Understanding construction costs—labor and materials—is relatively straightforward because you earn and spend money daily, which makes tracking and forecasting easier. But equipment costs? Those come in spurts. There’s a well-known 1966 article that discusses this exact challenge—how equipment costs don’t come in steady streams but rather in unpredictable bursts.
We need a mechanism to control and manage these cost fluctuations and systematically feed equipment costs into our construction costs. That’s where the rate system comes in.
If we don’t fully understand our equipment costs—how they accumulate, how they impact job costs, and how they should be accounted for in future bids—then we’re flying blind. And that’s why my first recommendation is simple: Know your costs.
Craig, what are your thoughts on that?
Craig Gramlich:
I completely agree, Mike.
If I were in that boardroom advising this new team on structuring their setup, the very first thing I’d do is look at their financials. What do the numbers tell us? Are they making money? Losing money? And most importantly—where is that happening?
When you follow the money, it quickly reveals how the business is structured. It also shows, at a glance, whether the systems and processes in place are actually supporting the business.
Labor and materials costs are usually well-managed because operations teams track job margins closely. But on the equipment side—which is often treated as a cost center—I tend to see one of two things:
- Large, generalized expense accounts – Everything gets dumped into broad categories like “parts,” “repairs,” and “labor,” making it impossible to analyze costs properly.
- Overly complex cost codes – Some organizations have 50 to 100 detailed codes for every small component or system, but they don’t actually use them. Instead, all transactions end up funneled into miscellaneous or general accounts.
Both approaches obscure true costs and prevent leaders from making informed decisions. So when I look at financials, I can quickly tell whether an organization truly knows its costs, and that insight helps shape the conversation about where they want to go.
Michael Kelley:
So what I’m hearing from both of you is that this new fleet management team needs a person—or a group of people—who understand and can track costs.
Now, think about how controversial that idea would have been back in the day, Mike. Imagine going to your father as a young man and saying, “Hey, Dad, we need someone dedicated to tracking equipment costs.”
I can almost hear his response: “Why? I already know the costs. I have a gut feel for it.”
I never met your dad, but I can imagine how strong that pushback would have been. Because for many people, fleet management isn’t about spreadsheets and accounting—it’s about running the iron, keeping things moving, and getting the job done.
But if we don’t track equipment costs properly, we can’t manage them effectively. And that’s where the conversation needs to shift.
Mike Vorster:
Yes, yes—this brings up another very important point in this high-level conversation: What is the role of intuition, and what is the role of analysis?
Long ago, most decisions were made based on intuition—on gut feel and hands-on experience. But today, we’re shifting toward a world where decision-making is increasingly guided by analysis. Strong decision-making now requires both intuition and data-driven insights.
So, the real challenge is bringing together the best aspects of intuition—knowledge, experience, boots on the ground, the ability to smell the oil and grease—and combining them with the ability to analyze data, extract meaningful facts, and make informed choices. It’s not about choosing one over the other; it’s about using the best of both.
Can I tell another story?
Michael Kelley:
Please do.
Mike Vorster:
My first mentor in the construction business was a man named Dick Van Appel. I owe so much to him. He was my direct supervisor on that job in Malawi, where I was responsible for laying track—ballast, sleepers, and rails.
At the time, I didn’t need much analytics. It was a straightforward production job. I could see it happening in real-time, and I understood it just by being there every day.
One day, Dick—who had been a pilot in World War II—walked into my office during one of his monthly visits. He looked around and said, “I don’t see any charts or graphs on your walls. How do you manage this business?”
I told him, “I run the job every day. I see it, I know it, I feel it.”
He nodded and said, “I want you to learn to fly more complicated airplanes.”
Then he explained:
“Right now, you’re flying a single-engine plane, and you’re the only person in it. But in time, you’ll be flying a four-engine jet with people in the back. You won’t always be in clear skies. You’ll fly at night, through bad weather, and sometimes, you won’t even know which engine is failing because there will be four of them. You’ll be responsible for everyone sitting behind you. And when that happens, you need to fly by instruments—not just by feel.”
The next time he visited, I had a single graph on my office wall—tracking miles of track laid over time.
It’s funny, because today I talk so much about analytics, but I started out making decisions purely by intuition. That worked when I was flying “small, simple airplanes” in broad daylight. But as careers progress, responsibilities grow. The “planes” get bigger. The conditions get more difficult. And at some point, you have to learn to fly by instruments. You can’t rely on intuition alone forever.
Craig, guys like you have grown up in the instrument flying age, right?
Craig Gramlich:
We absolutely have, Mike. I love that story.
For me, the “instrument flying age” highlights just how much business complexity has changed. Even in my generation—I’m still relatively young, in my early forties—I’ve seen massive shifts. I tell my youngest son, “I’m older than the internet. I’m older than Google,” and he can’t believe it. He’s only ten, but he takes all this technology for granted.
When I think back to the equipment I first operated on the farm, everything was manual. You had to shift between gear ranges, move levers—there was a real physical connection to the machine. But as equipment has evolved, so has the complexity of managing it.
As fleet sizes grow, that complexity multiplies. Business today is scaling exponentially, and for companies to stay competitive, they have to fly by instruments. They need systems to track costs, monitor performance, and guide decisions.
Otherwise, as your story illustrated, Mike, we’ll see large organizations with great equipment that simply don’t exist anymore. It’s a sink-or-swim industry, and without the right structure, companies risk falling behind.
Mike Vorster:
No doubt about it—business has changed dramatically, and with that change comes another challenge lurking in the background: the concept of responsibility centers.
When a business is small and simple, one person can wrap their arms around everything. But as a company grows, complexity forces specialization, and suddenly, different departments emerge, each with its own leader.
In our world, that typically means separate managers for operations and equipment—each responsible for different aspects of the business.
The question then becomes: How do we measure the performance of these responsibility centers? How do we ensure they focus on the company’s success rather than pursuing internal agendas?
This is where things get tricky. Equipment is a classic responsibility center—it serves the operations group, which interfaces with customers and delivers the final product. Equipment enables that work, but it also comes with costs that need to be recovered. Many companies structure their equipment department as a cost-recovery system, which is where rate systems and cost tracking come into play.
Michael Kelley:
That’s interesting, because—and maybe it’s just the companies I work with—but I’ve noticed a common pattern as businesses grow. As complexity increases and leaders can no longer oversee everything directly, three distinct equipment-related functions emerge:
- A shop manager – Responsible for mechanics, field service, and overall maintenance operations.
- An accounting or finance person – Managing compliance, risk, and fleet asset tracking.
- A senior executive, often the CEO (or even their dad!) – Overseeing equipment acquisition and disposal.
I’ve seen this over and over. Sometimes, it’s not even the current CEO—it’s their predecessor, who now does nothing but go to auctions and buy iron.
I suspect this happens because equipment is such a massive capital expense. Get it wrong, and you’ll feel the consequences for years. And, let’s be honest—it’s also a fun part of the business.
But here’s the issue: These three groups often evolve independently. They don’t report to one another in any structured way. The need for them emerges, but they aren’t unified.
Now, since we’re in this fictional boardroom, we have the chance to define how things should be structured.
For a business of a certain size and complexity, should we start with this three-part structure? Or, if we had a magic wand, would we organize it differently?
Craig Gramlich:
One thing I’d add before we answer that: We can’t forget about operations.
As we refine equipment management—separating maintenance, financial oversight, and capital planning—we have to keep operations in the conversation. If we don’t, it creates an “us vs. them” dynamic that ripples through the company.
I’ve seen this play out firsthand. If operations isn’t included in decision-making, the result is a combative relationship. Suddenly, the CEO has to step in and act as a referee between the groups. And trust me, that doesn’t work.
Mike Vorster:
Absolutely. That tension—between equipment and operations—is one of the defining features of this industry. It’s also what makes construction such an interesting business.
We have two mutually interdependent responsibility centers:
- Equipment – Provides and maintains the fleet.
- Operations – Uses the fleet to complete projects.
They need each other. But they also naturally compete.
From the equipment manager’s perspective, they want to maximize the difference between true cost and internal transfer price. From the operations manager’s perspective, they want to maximize the difference between internal transfer price and the rate the customer pays.
That’s a competitive dynamic, but it shouldn’t be a destructive one. The internal transfer price is just a balancing mechanism—it zeroes out in the end. What really matters is:
- The true cost of equipment.
- The true value of work done.
The goal isn’t to win against the other department—it’s to create a system where both sides contribute to the company’s overall success.
Craig Gramlich:
Exactly. If we let it become an “us vs. them” battle, all we’re doing is slicing the pie thinner—shuffling costs and revenue between departments instead of improving the business.
Mike, you’ve used this analogy before: Moving money from your left pocket to your right pocket doesn’t change how much money you have.
At the end of the day, what matters is company-wide profitability. That’s the big picture we need to keep in mind.
Michael Kelley:
I had an interesting call yesterday with a company that had previously used an internal rate system but had moved away from it for various reasons. They were in the middle of their annual budgeting process, and they had calculated their gross margin without charging for equipment while including equipment costs in their indirects.
The result? They were missing $1.5 million in costs.
I told them, “This doesn’t work. You’re going to pay that cost somewhere, whether you account for it or not.” That’s why these discussions are so critical—because costs don’t just disappear. We need to be clear about where they reside.
And that brings us back to a key point: Operations needs to be at the table. They’re the ones who know what’s actually required to get the job done.
It doesn’t matter if we get a great deal on a scraper if the job actually requires an excavator and hauler. Equipment decisions have to be made with input from operations so that the right tools are in place for the right jobs.
Michael Kelley:
So, moving forward in our fictional boardroom…
We’ve established an organization with:
- A team that understands costs
- An accounting lead managing financial oversight
- A shop lead with expertise in maintenance and repairs
- Operations involved in decision-making
- Executive buy-in (which, while I’m mentioning it last, is actually the most important).
Now that we have this structure in place… what’s next?
How does this team determine whether they’re functional or dysfunctional?
Mike Vorster:
The construction industry is brutal. Margins are thin, competition is fierce, and if you’re dysfunctional, your financials or your position at the bid table will expose you very quickly.
It’s not a forgiving industry. If something isn’t working, we have to recognize it quickly and adjust—because if we don’t, the market will punish us.
Craig Gramlich:
Absolutely. You see this play out all the time, especially in smaller municipal bids.
Take a typical pipeline or road project. These aren’t massive builds—they’re relatively small jobs with a lot of bidders. And since the bid data is public, you can see exactly what’s happening.
I’ve heard contractors say things like, “I don’t know how they won that job. They must be crazy. If I had bid that, I’d be bidding at a negative margin.”
But are they really? Maybe they have a different approach to the project, or maybe their equipment rates are structured differently. That alone can create huge cost swings.
Like you said, Mike, if a company is dysfunctional, they’ll find out one of two ways:
- They don’t win the job.
- They do win the job… and realize too late they bid it wrong.
Either way, reality catches up.
Michael Kelley:
But let’s go deeper.
It’s one thing to say, “We’re losing money, so something is wrong.” It’s another to say, “We’re losing money, and here’s exactly why.”
If a company’s financial struggles are tied to dysfunction in the equipment department, how do we measure that? How do we pinpoint the problem?
Craig, in our mythical boardroom, how would you advise this team? What would you tell them to start tracking? What report would you ask for?
Craig Gramlich:
To figure out where a company is hemorrhaging money, you have to start by looking at the budget. You can examine rate buildups, track how costs flow through the company, and compare actuals as they come in.
Nine times out of ten, you’ll spot a few big-ticket issues almost immediately. Take mining, for example—tires are a massive cost. If a company has a pattern of tire failures due to overheating, that can dramatically swing equipment rates and overall costs.
The problem? Since tire costs are often embedded in equipment rates, operations won’t see them directly. The company only realizes the impact at the end of the year when they “true up” the numbers—and suddenly, there’s a loss on the books.
So, the key question is: How do we pinpoint where the money is going?
There are two things I always focus on next:
1. Monitoring & Tracking
- What should we be tracking?
- Start with the basics: fleet count and composition.
- Do we have a clear picture of our fleet—how it’s grouped, categorized, and utilized?
- Are our assets classified by function, size, and capability, or just by manufacturer and model?
A lot of waste gets buried in the details here. If a company isn’t tracking their fleet properly, it becomes almost impossible to pinpoint where the money is being lost.
2. Fleet Health
- Once we understand our costs, we need to assess the condition of our fleet.
- Are we proactively monitoring fleet health?
- What do our inspection programs reveal?
- Do we have visibility into upcoming repairs—transmission rebuilds, undercarriage replacements, tire replacements?
If we’re not tracking these things, major repairs become surprises. And by the time we react, the financial damage is already done.
So the first step is drawing that line in the sand—knowing our costs, tracking key data, and assessing fleet health. That gives us the clearest possible picture at any given moment.
Mike Vorster:
Craig, you just said something really critical that I want to build on—the concept of waste.
If a company is losing money, the real question is: What waste are we tolerating?
The pioneers of lean manufacturing, like Toyota, gave us the term waste, and I think it’s still underutilized in our industry. In a lean, competitive business like construction, waste is the enemy.
Let’s go back to your tire example.
If we discover that we’re wasting tires and not getting full life out of them, the next step is asking: What’s causing the waste?
- Is it overheating and pressure issues? → That’s a maintenance problem.
- Is it cuts and abrasions from job conditions? → That’s an operations problem.
Now, here’s where companies go wrong: They don’t assign the waste to the person who can fix it.
- If you tell operations, “You’re burning through tires,” they’ll say, “Not my problem—maintenance is responsible for checking pressures.”
- If you tell maintenance, “We have a tire problem,” they’ll say, “Not my fault—operators are running over debris and damaging them.”
So step one is identifying the waste.
Step two is identifying the cause of the waste.
Step three is placing responsibility with the person who can actually manage it.
Michael, you know the drum I beat regularly—utilization.
Utilization is one of the least understood cost factors in this business, but it has a massive impact on internal equipment rates. The problem is, companies often assign utilization risk to the equipment manager, but the equipment manager has zero control over utilization.
This is why I always push for separating owning costs from operating costs.
- Owning cost issues are often tied to low utilization, which is an operations problem.
- Operating cost issues tend to be maintenance-related.
If we lump everything together, we can’t pinpoint the actual problem. And that’s where companies fall into finger-pointing instead of problem-solving.
Craig Gramlich:
Exactly.
When a company is losing money, they tend to look for a quick fix—like blaming tires or pointing fingers at operations. That takes the pressure off temporarily, but it doesn’t solve the deeper issue.
It’s like moving money from your left pocket to your right pocket—it doesn’t actually change how much money you have.
At the end of the day, the goal is to eliminate waste, not just reallocate costs on a spreadsheet. And to do that, you have to:
- Track your data.
- Separate different types of costs.
- Hold the right people accountable for the right issues.
That’s the foundation of a truly functional equipment department.
Michael Kelley:
Mike, something Craig said really stood out to me—you have to start with organization in the first place.
That might sound obvious, but it’s not. I’ve worked with one company for over ten years, and they have a phenomenal organization. We have great conversations about equipment, and they understand equipment theory better than I do. After spending time with them, I sometimes catch myself thinking, “Well, everyone must have a strong organization like this.”
But that’s just not true.
Craig, you asked a simple but crucial question: Do you know all of your assets?
I recently spoke with a company that had grown rapidly through acquisitions. Not only did they not know how many assets they owned—they didn’t even know how many operating companies they had that owned equipment.
During the COVID years, they received an influx of cash and went on an acquisition spree, buying multiple companies. Now, they were two steps behind—before they could even start optimizing their fleet, they had to figure out what they actually owned.
That’s so fundamental.
Before they could categorize their fleet, optimize usage, or track costs, they had to establish a basic inventory. And when a company operates in multiple regions or business units, categorization becomes even more critical.
For example, in one division, they might group equipment by function—dozers together, excavators together. In another, they might organize by manufacturer or model. But if one person is tasked with understanding the entire fleet across all divisions, there needs to be a consistent categorization system that allows for clear communication across the company.
That’s why I thought Craig’s point was so smart—step one is getting organized. Then, and only then, can you move to the next step: identifying waste (ie: unnecessary costs).
Michael Kelley:
Both of you have mentioned tires, and that’s such a great example. CEOs have to make a million decisions every day, so when they see a massive line item for tire costs, they latch onto it. “We’re spending too much on tires. We need to fix this.”
And sometimes, that’s valid!
If there’s a cuts and abrasions issue, if there’s a tire pressure problem, those need to be addressed. They might represent a significant cost that requires executive attention.
But in my experience, the real problem is often death by a thousand cuts.
Craig, I know you have a story that ties into this perfectly.
Craig Gramlich:
Yeah, this reminds me of a company I worked with in public transit—putting buses on the road.
In public transit, AM and PM peak service is everything. You need a set number of buses ready in the morning and again in the evening. That means you have 24-hour shop coverage, multiple facilities, and a lot of moving parts. It’s a complex operation.
When I stepped into a leadership role, I noticed something right away—maintenance and operations were constantly blaming each other.
Here’s what would happen:
Let’s say they needed 100 buses for the morning service. But when dispatch time came, only 85 buses were available.
If operations had all 100 drivers scheduled that day, then the maintenance team took the blame for not delivering enough buses.
But on another day, they might still need 100 buses, but operations only had 80 drivers available.
What happened then? Maintenance would point the finger at operations. They’d say, “It doesn’t matter that we didn’t have enough buses—you didn’t have enough drivers!”
It was a constant game of shifting blame instead of solving the root issue.
This is a classic example of what Mike was talking about earlier—waste hiding behind finger-pointing.
As long as one department could redirect the spotlight to another, the inefficiency was allowed to continue.
But that’s not how you build a successful operation. The goal should always be to improve the business—to find ways to increase efficiency, reduce waste, and raise the bar.
If the standard is 100 buses out every morning, then that’s what you aim for. And ideally, you aim for spares, because something will always go sideways.
That mindset—of constant improvement, accountability, and collaboration—is what separates truly great companies from those that struggle.
Mike Vorster:
Craig, you made me think of two things.
As both you and Michael know, I’m a Formula 1 racing fan. I was listening to someone discuss a Formula 1 team the other day, and they said something that really stuck with me.
In a Formula 1 team, you have two cars and two drivers, and, needless to say, those drivers are fiercely competitive—just like equipment and operations in a construction company.
This person said:
“History shows us that when our drivers compete against each other more than they compete against the real competition, our team falls apart.”
And I thought, Wait a minute—where has this guy been? That’s exactly what happens in our industry!
When responsibility center managers—whether they oversee equipment, operations, or another function—compete against each other instead of focusing on the marketplace, the company suffers.
The goal should always be the success of the organization, not just the success of individual departments.
The other thing your story reminded me of was my time dealing with construction claims, delays, and liquidated damages.
I used to joke that when an owner came to cut the ribbon on a project that was six months late, I would hide the scissors they needed to cut the ribbon. That way, the ribbon-cutting ceremony would be delayed by 30 minutes while they searched for the scissors—ensuring that the delay on the scissors was now concurrent with the construction delays!
It’s a ridiculous example, but it illustrates a real problem: People often shift blame instead of solving issues.
That’s what I thought of when you described the buses and drivers situation. It’s not about “Who has the drivers?” or “Who has the buses?” It’s about delivering results for the customer.
Just like a Formula 1 team, a construction company doesn’t win by competing internally—it wins by competing in the marketplace.
Michael Kelley:
That reminds me of something I heard recently that I thought was really smart when it comes to internal politics and competition.
When was the last time someone in operations turned to the equipment team and asked, “What can I do to help?”
When was the last time they said, “I have an extra haul truck driver today. Can he run your lowboy?”
When leadership at the top fosters that kind of collaboration and humility, a lot of the internal friction disappears.
And it goes both ways. The equipment team should be asking the same thing:
- “What can we do to help operations?”
- “If a job is going poorly, what can we do to make it better?”
At the end of the day, this isn’t just equipment management theory—it’s psychology and teamwork.
Mike Vorster:
Yep, exactly. This is organizational behavior at its core.
But there’s another bad practice I see all the time—how companies structure their at-risk compensation systems (which is a fancy way of saying bonus plans).
Too often, an operations manager’s bonus is based on job margin before the equipment costs are fully accounted for.
- That means they can inflate their performance numbers by shifting costs onto the equipment department.
- The result? They look good on paper while the equipment group struggles to recover costs.
I’ve seen so many dysfunctional relationships between equipment and operations, and the first thing I ask is:
“How do you calculate your at-risk compensation?”
If operations gets their bonus before equipment costs are fully trued up, then you’ve built a system that incentivizes bad teamwork.
The solution is simple: True up the equipment costs first, then calculate performance-based compensation.
That alone eliminates a huge source of internal conflict.
Michael Kelley:
Craig, going back to your earlier comment—and building on what Mike said—if we take the waste we’ve identified and lay it at the feet of the people who can actually do something about it, we eventually reach a point where there are no more easy wins.
At first, you can find quick fixes—maybe you start charging jobs for equipment for the first time or adjusting cost structures—but eventually, you reach deeper, more complex issues.
At that stage, we’re talking about initiatives that require a high level of effort, and the return on investment might take years to materialize. These aren’t just equipment department changes or operations adjustments—they often involve:
- Behavioral changes across multiple teams
- New software implementations
- Updated training programs
- Coordination across multiple regions, states, or provinces
So, how do we manage these long-term, high-effort initiatives?
Craig Gramlich:
That’s a great question, Michael.
The easy wins—the low-hanging fruit—can usually be identified within individual departments:
- Maintenance can find their own waste.
- Operations can find their own waste.
That’s where the 80/20 principle applies. You can usually knock out 80% of the inefficiencies within a department, but that final 20%? That’s where it gets difficult.
The best way I’ve found to tackle that last 20% comes down to two things:
- Involving Your People
- Leaders can’t operate in a bubble.
- You have to engage the frontline employees—the people working on the equipment, in the field, or behind the numbers.
- Going deeper into the organization helps uncover blind spots and hidden inefficiencies that leadership might miss.
- Cross-Departmental Collaboration
- Once departments clean up their own inefficiencies, the next step is working together across teams.
- If maintenance and operations sit down and say, “We’ve optimized within our department, but we know there’s more. Can you help us identify it?”—that’s when real breakthroughs happen.
Sometimes, teams spend effort on tasks that don’t actually add value. Operations might say, “Hey, maintenance, we appreciate you doing these extra inspections, but they don’t actually impact uptime or performance. We don’t need them.”
That kind of perspective shift is critical.
Craig Gramlich:
Another thing we’ve touched on today is how companies grow and evolve.
Many organizations start as owner-operators—a small team with their finger on the pulse, knowing every piece of equipment firsthand.
As they grow, they add structure—creating separate departments with subject matter experts:
- Maintenance hires heavy-duty mechanics and fleet specialists.
- Operations hires engineers and experienced operators.
- Accounting brings in CPAs, CFMs, and financial analysts.
Each group becomes more specialized, which is a good thing—but something gets lost along the way: the ability to communicate across departments.
- Can operations communicate with maintenance in a way that is heard?
- Or does it just sound like complaining and venting?
- Can maintenance communicate with accounting effectively?
- Or is it just adding complexity to the cost structure?
As organizations scale, they root deeper into their silos, and cross-functional collaboration starts to break down.
That’s why—when we talk about finding deeper efficiencies—the key is getting departments to work together and bridge those gaps.
Craig Gramlich:
One of the biggest lessons I’ve learned is that leaders don’t need to have all the answers.
It’s okay to say, “I don’t know everything. I need your eyes and ears to help solve these problems.”
That kind of honesty and humility fosters the collaboration necessary to tackle those big, long-term challenges.
And that ties into something else—organizational culture.
Mike, you’ve worked with companies for decades. What role does culture play in all of this? What have you seen over the years?
Mike Vorster:
Craig, I’ll pick that one up and highlight two critical points you just made.
I used to hear people say, “Culture trumps strategy.” For years, I didn’t really buy into that—I believed you had to have a strategy, a plan, a clear direction. But over time, I’ve come to appreciate that culture truly does trump strategy.
You can have all the strategic goals, visions, and long-term plans in the world, but if your culture doesn’t support execution, those strategies will fail.
Your point about culture and its importance in an organization is absolutely critical.
Mike Vorster:
The next point I want to emphasize is the power of involving your people.
I often talk about the three H’s: hands, hearts, and heads.
It’s not enough to just think about the hands—the people physically doing the work.
- You must engage their hearts (culture, motivation, sense of ownership).
- You must engage their heads (experience, knowledge, problem-solving ability).
Because here’s the truth:
You’d be surprised how much the people doing the work actually know about doing the work.
We see it time and time again—solutions to the most complex problems often come from the frontline workers who are actually in the field, turning the wrenches, running the equipment, and solving real-world challenges every day.
Mike Vorster:
The third point I want to highlight is something Stephen Covey said about sharpening the saw—the importance of continuous training and learning.
If you’re only focused on hands (execution) and neglect hearts and heads (culture and knowledge), you’re unlikely to invest in training.
But if your focus is on developing both people and processes, you naturally create a culture of continuous improvement.
So, Michael, to answer your question—What do you do when there are no more easy wins?
You sharpen the saw.
That’s what moves an organization forward.
- You invest in people.
- You engage their knowledge and insights.
- You develop a culture of constant improvement.
Craig Gramlich:
I have a story that ties into this perfectly.
Back when I was a project manager, I worked on a remote project in Saskatchewan, installing a circular secant pile wall—a very technical design-build project.
The engineering team had handpicked the equipment for the job, selecting what they believed was the right setup for the installation.
For those unfamiliar, with secant pile walls, you install primary piles first—skipping every other pile—and then you install the secondary piles, which cut into the primaries and lock them together.
The cutting-in process is extremely precise:
- If the concrete sets too much, cutting becomes nearly impossible to cut the secondary pile into.
- If the concrete is too soft, the piles blow through, ruining the seal.
We had a casing shoe with flat carbide teeth that engineering specified for cutting in.
And it wasn’t working.
I watched as our operator struggled.
He crowded down hard, using the crowd winch on the rig, lifting the front tracks in an attempt to bite into the concrete. The cutting tool just spun, barely advancing.
What should have been five piles per day turned into 0.2 piles per day.
Meanwhile, my next 10 primary piles were setting up, getting harder by the minute.
This was turning into a disaster.
At lunch, I walked into the site trailer and asked the crew, “How’s it going?”
Their response? “Not well. This is not working.”
By that point, we had already tried everything:
✔ Switching operators.
✔ Running the tool in reverse vs. forward.
✔ Checking temperatures and break strengths.
✔ Contacting the equipment manufacturer.
✔ Calling engineering for guidance.
And engineering’s response? “It should be working.”
That was all they had.
So I asked the crew, “What do you think we should do?”
One operator hesitated before saying, “Do you actually want to know what I think?”
I told him, “100%—yes.”
He said:
“Before we use the tool that engineering wants us to use, we always use a coring tool with bullet teeth to score the top of the pile. That allows the main tool to lock in and advance. If we do that, it takes 15 minutes. If we don’t, the tool skips off and would take days.”
Light bulb moment.
I asked him, “So why don’t we use bullet teeth on the primary cutting head?”
He shrugged, “Because engineering said didn’t specify it.”
It was so simple—but so brilliant.
I immediately went back and made some calls.
Engineering’s response? “Nope. You can’t do that.”
I wasn’t taking no for an answer.
There was no off-the-shelf tool that fit our needs, so we made our own.
Over the weekend, we sent one of our cutting heads to a welding shop. I called the foreman and welder, lined up everything, and had them:
- Cut off the flat carbide teeth.
- Replace them with interchangeable bullet teeth.
When we brought the tool back to the site, it not only met the original production rate—it exceeded it.
We went from 0.2 piles per day to 10+ piles per day—all because we listened to the people actually doing the work.
And you know what stuck with me most?
When I first asked for ideas, the operator said:
“Do you actually want to know what I think?”
It made my heart sink—because I could tell he had been ignored before.
That’s why culture matters.
If you build a company where people don’t feel heard, you miss out on game-changing solutions that are right in front of you.
Michael Kelley:
That’s absolutely true.
We all tend to rely on the tools we’re familiar with—we have our hammer, and every problem looks like a nail.
- If you ask shop personnel, they’ll see things one way.
- If you ask accounting, they’ll see it another way.
- If you ask operations, they’ll have yet another perspective.
Each group has a different toolset, a different hammer, and a different way of solving problems.
Craig, your story reminded me of something else—the panic you feel when you’re deep in a problem.
I was teaching my son how to play chess, and I noticed he gets so focused on the immediate danger that he doesn’t see the other side of the board.
And I realized—I’ve done the same thing.
I’ve had tunnel vision, hyper-focusing on an immediate crisis, unable to see the bigger picture.
But someone else—someone removed from the situation—can see a solution that’s invisible to me.
That’s why building relationships before a crisis happens is so important.
When the pressure is on, when you really need help, that is not the time to suddenly say, “Hey, forget all those things I said about you in the last management meeting, but I really need your help now.”
A culture of trust and collaboration has to be built in advance so that, when it matters most, people are willing to step up and work together.
Craig Gramlich:
That’s so true, Michael.
On that particular project, we jokingly called it the United Nations because we had people from almost every region in the company.
Many of them had never worked together before, and they each brought different habits, leadership styles, and experiences from working under different management.
Now, suddenly, they were all expected to function as one unified team—and those small cultural differences started to show up.
That’s why it hit me hard when I realized the operator in my story was afraid to speak up.
Michael Kelley:
Yeah, and unfortunately, that’s pretty common.
But what stands out about your story is that it was a critical productivity issue.
- The equipment team had to work with operations.
- The operator had to be willing to speak up.
- Even engineering, though reluctant, had to be involved in the final solution.
When those pieces come together, things work smoothly.
We see the same thing in other areas—sometimes with something as simple as time cards.
On the surface, time cards seem straightforward. But in reality, they can create a surprising amount of conflict:
- Mechanics want to get paid accurately.
- Supervisors want clean, minimal paperwork.
- Accounting wants detailed records for payroll and compliance.
And then, in the U.S., you have regulatory requirements like Davis-Bacon Act prevailing wage jobs, where workers must be paid a specific rate per hour.
Suddenly, something as simple as time cards becomes a tangled web of competing needs.
Michael Kelley:
The best solutions?
They don’t come from forcing a system onto people.
They come from listening—actually listening.
- Why doesn’t the mechanic like the new software?
- Maybe it’s because he has oil on his hands and is expected to use a tablet.
The best solution isn’t always the most advanced technology—it’s the one that actually works for the people using it.
Any thoughts on that, Mike?
Mike Vorster:
It’s interesting—we started this conversation intending to talk about equipment management and fleet management, but we’ve naturally migrated toward people, organizations, structure, and waste.
And in many ways, that brings us full circle.
Because at the end of the day, managing a fleet is just a specialization within a larger organization.
- You have to create the right environment for effective fleet management.
- You have to align your organization so that fleet management can function as it should.
- You have to maintain the aim—remember what’s on the building and what the company truly exists to do.
So even though we’ve talked about culture, communication, and performance management, we’re still talking about equipment management—just at the level that really makes a difference.
Michael Kelley:
Yeah, that’s exactly what I’m hearing too.
A lot of the lessons from general business literature apply directly here.
Take Patrick Lencioni’s ‘The Five Dysfunctions of a Team’, for example. One of the biggest dysfunctions? Absence of trust.
And if there’s an absence of trust between operations and equipment, you’re in for a world of hurt.
So going back to the first question I posed in our fictional boardroom—if we could wave a magic wand, what would we do?
It sounds like we all agree:
- Build a great team first.
- Be proactive by having good data.
- Use that team and that data to continuously improve.
That’s what actually works.
Craig, your story highlighted that—it wasn’t just about the equipment, it was about the team working together to solve a problem.
And, Mike, your story about flying a bigger, more complex plane emphasized the need for data—but more importantly, for a team that can act on that data.
Mike Vorster:
That reminds me of something from Formula 1—data doesn’t make decisions.
We live in an age where we have too much data, but not enough information.
The challenge isn’t just collecting data—it’s understanding it, filtering out the noise, and making smart decisions.
Michael Kelley:
This has been an awesome conversation.
And we could keep going—there’s so much more to explore:
- How to improve rate structures.
- How to optimize administrative processes.
- Even how to improve compliance and risk management.
But, of course, we’re limited by time.
For those listening, I hope you walk away with a few key takeaways:
- Look at the team you have. Understand your people and their roles.
- Look at the data you can generate. Make sure you’re turning data into useful information.
- Talk to people humbly. Ask questions. Listen to the people doing the work.
- Always be improving.
And what’s funny is—the companies that actually do these things? They’re the most enjoyable companies to work with.
I look forward to my calls with them. I look forward to visiting them.
Michael Kelley:
Craig, any final thoughts before we wrap up?
Craig Gramlich:
Yeah—what really stands out to me is genuine care.
At the end of the day, if you want to win the hearts and minds of your people—if you want real engagement and buy-in—it has to come from genuine care.
Mike Vorster:
Absolutely. That’s a perfect point to end on.
Michael Kelley:
Craig, thanks so much for joining us today!
For those listening, be sure to check out Craig’s website at lonewolf.consulting to learn more about how he’s helping companies—maybe even companies like yours.
And, as always, Mike, thanks for the great conversation.
We’ll talk to both of you again soon!
