The Complete Guide to Construction Asset Management
Construction industry always took a cautious stance towards new technologies. And that has taken its toll: according to McKinsey, labor productivity in construction grew by a mere 1% a year over the last few decades, compared to 2.8% for the world economy, and 3.6% for the manufacturing sector. One of the everlasting barriers to productivity in construction is poor construction asset management.
Expensive and highly valuable assets – vehicles, instruments, and materials – are misused by workers, not fixed on time, and sometimes simply stolen from construction sites. Badly managed assets end up wasting contractors’ money, delaying project completion, and endangering workers on-site.
In this article, we’ll explain how to overcome common challenges and take construction equipment asset management to a different level. Shortly speaking, you need a well-developed management process and efficient construction asset management software. Let’s take a closer look at each part of this simple formula.
What is asset management in construction?
An effective construction asset management process guarantees that all assets are accessible, accounted for, regularly checked, and provided to workers when needed.
What is the difference between construction asset management and facility management?
Asset management is often used as a synonym for facility management. That’s not exactly true. Facility management concerns facilities – schools, hospitals, or offices to name a few – and refers to both physical maintenance of facilities and creation of a comfortable environment for its users. Facility managers make sure that the building is functional, safe, energy-efficient, and regulatory compliant.
By contrast, asset management is about equipment maintenance and machines. It’s about ensuring the availability of instruments and vehicles for workers on a construction site. Construction asset management is a more technical process, focused on the maintenance and functioning of essential equipment.
Now, controlling whether a concrete mixer works or not is a pretty straightforward task. Yet construction firms track the condition of dozens or thousands of assets simultaneously. Sounds daunting? It can be tough at times.
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Challenges of asset management in construction industry
Here are some of the troubles most construction firms face when trying to manage their assets in a sound manner.
Assets are stolen
According to National Equipment Register, theft of construction machinery and equipment costs contractors from 300 million to 1 billion dollars a year. Equipment worth £17.5m was stolen just in London in 2020. Heavy machinery is an easy target for thieves because it’s often badly secured and very expensive. In addition, construction equipment often lacks standardized identification numbers, and records of construction equipment are poorly kept.
Assets are invisible
Even if nothing is stolen, one still needs to be able to find the equipment. Inventory control and construction asset tracking are major headaches for asset managers. Construction equipment is moving all the time – from one construction site to another, from one worker to another. As a result, managers often fail to find their equipment and end up purchasing things they already have and wasting time on delivery.
Assets are broken
Equipment breaks down frequently. Managers who don’t have a 360-degree view of the condition of assets, repair and care costs, and history of malfunctions, are forced to spend an obscene amount of money on maintenance. In the end, they fail to implement preventive maintenance that extends the asset lifecycle. As a consequence, they run the risk of overspending on unnecessary maintenance or experiencing costly equipment downtime.
Assets lack replacement parts
Some assets break down more often than others, and some parts of a single asset break down more often than others. When that happens, managers need replacement parts – and quickly. When the most common problems of assets aren’t known, managers can’t collect necessary replacement parts in a single, quickly accessible storage. Extended downtime is a common result.
These problems are commonplace for contractors. And effective solutions can yield significant business advantages.
Benefits of effective construction asset management
Here are some of the benefits awaiting a construction business if it implements effective construction asset management practices:
- Reduced downtime
Smart maintenance management makes equipment function properly at all times. When you keep track of all repairs and perform preventive maintenance checks, your assets won’t fail when you need them the most.
- Saved costs on warranty
If you have a detailed inventory, you always know if a particular piece of equipment is still under warranty or not. Effective asset management in construction industry guarantees that you won’t incur extra costs on fixing warranted instruments from your own wallet.
- Improved scheduling
Sometimes several construction sites need a particular instrument or vehicle at the same time. Knowing where your equipment is, who needs to use it, and for which time period lets you plan equipment use better.
- Better repair-or-replace decisions
A detailed history of use, maintenance, and repair of an asset is crucial data that lets you make better decisions on the future of an asset. An old broken asset might be cheaper to replace than to maintain – or the opposite. Having that information at your disposal enables you to use your assets to the fullest without damaging your finances.
- Improved safety
Construction work can be very dangerous if the equipment is not maintained well. When your assets are properly managed, the risk of workplace incidents is reduced to a minimum.
Now, it all sounds great, but is there a recipe for heavy equipment asset management success? Well, you won’t find a universal solution, but some practices always make the situation better.
Best practices of construction asset management
Over decades of management experience, top contractors have developed tactics to improve asset management. Here are the best construction asset management practices that will help you streamline the construction process and avoid troubles with your equipment.
- Get an asset management team
You won’t make it on your own. Even a small construction business needs a couple of professionals looking after the assets. Large construction companies often have a whole team of asset managers in charge of the most valuable assets.
- Know the profitability ratio
It might seem like something is working when in reality it’s not. For some of your assets, maintenance and repair costs can be larger than the profit an asset brings to your business. Calculating the profitability ratio of each valuable asset will help you discard unprofitable assets in favor of more economical ones.
- Regularly evaluate asset conditions
Your asset management team should analyze the condition of your assets at least quarterly. This big picture will help you prevent issues with equipment and schedule planned maintenance.
- Know the value of your equipment
Collect the detailed history of each valuable piece of equipment. This includes purchase date and price, mileage at the time of the purchase, hours worked, and maintenance and repair logs. As Tanner Arnold of Revelation Machinery states, "Determining the values of second-hand machines is crucial to ensure a smooth process in making insurance claims, renting, selling, or liquidating the items." Knowing the true value of an item is a must if you plan to make an insurance claim, rent, sell, or liquidate the item.
- Inspect equipment after use
Workers can forget to report some of the issues. That’s why inspecting key equipment at the end of the workday should be a task of your asset management team. Early detection of problems can be of critical importance both for the construction process and workers’ safety.
- Have a plan if things go wrong
Your project management team should devise a plan in case of multiple simultaneous breakdowns of inventory. This kind of risk management will prevent major problems and delays in project completion.
Now, a part of the responsibility is always on your team members. However, a large chunk of the job can be automatized and streamlined with the right construction equipment asset management software.
What is asset management software?
Asset management software for construction is usually a custom-made centralized system that tracks, integrates, and analyzes data from all connected assets. When integrated, construction inventory and asset management software can provide you with a full view of all operations with your valuable assets. Construction asset manager can track the location, condition, and utilization of each asset, schedule maintenance and repair, and get your work orders in order.
Features of asset management software
Some of the features to look for in a high-quality asset management software include:
- Location tracking
Construction asset management solutions often have a GPS location feature. These autonomous trackers can be attached or plugged into your vehicles and equipment. You may also use barcodes or QR codes for quick identification of tools. Some solutions even let you track who is using your asset at the moment by requesting a digital signature.
- Configuring workflows
You can track the time worked, training, and certifications of each worker.
And assign tasks to crew members to make sure all equipment is safe and working properly.
- Tracking maintenance and repair
Asset management software lets you schedule maintenance checks and set up calibration alerts. It also simplifies the repair process - for example, a worker might be able to request a repair by simply scanning a barcode.
- Full lifecycle tracking
Construction equipment tracking software lets you track the whole lifecycle of your assets, including depreciation, stock, and lifetime costs. You can also project the lifetime of your assets based on the number of material exits, borrowing time, reported breakages, and other parameters. In many cases, you can track both highly valuable equipment like vehicles, and consumable stock like wood and bricks.
- Forecasting availability
An in-built calendar lets you know which pieces of equipment are available and when. This enables you to avoid conflicts with reservations and change arrangements in advance.
- Ensuring compliance with regulations
Construction asset tracking software makes compliance tracking and sustainability reporting easier. Integration of the legal documents in a single system helps you cross-check reports with requirements to make sure your crew complies with regulations. As a bonus, sustainability also helps you attract new investors.
- ESG in construction
Construction projects deeply affect our planet, our communities, and how our economies function. Considering the materials, energy, and waste involved, every step in a construction project has a lasting impact. Seeing this, more and more stakeholders and clients want construction companies to follow ESG in construction industry guidelines. This ensures that their projects are not just about making money but also about sustainability in construction management and caring for society.
Now, it all sounds good in theory, but how do all these digital changes work in practice? Well, multiple companies have tried construction equipment maintenance software. Let’s see what they have to say.
- Knowledge management platform
- Mobile app for technicians
- Accounting module
- Reporting system
Examples of construction asset management software implementations
Construction asset software has become a part of the routine for multiple construction companies and showed measurable results.
For example, a Chief Financial Officer of a construction company from Arizona, US, reported saving around 4 hours of work time a day by using construction equipment management software. They highlight features like work orders and maintenance, customized reporting, and inventory management, noting improved workflow and easier management.
Another large Maltese construction company has been dependent on ineffective static spreadsheets to document the use and repair of their equipment. Implementing an asset management system improved the accountability and productivity of their crew. It also simplified maintenance to the point that the company now aims to reduce downtime to zero.
As these and many other cases show, implementing construction assets management software makes a real difference for businesses. To wrap things up, let’s see what technologies are shaping the future of asset management today.
Future of construction assets management
Some technologies are already defining how the future of the construction industry will look.
- Artificial Intelligence
Accenture has predicted that AI implementation will increase industry profits by 71% til 2035. Machine learning and predictive analytics help to optimize workflows, mitigate risks, and make better projections of the future.
Check out more details about how AI is implemented in construction industry.
- BIM construction asset management
Building Information Modeling facility management is already changing the ways facilities are taken care of. Digital twin construction asset management is a step forward: by creating digital twins of your equipment, you can get a deeper insight into its efficiency for your business.
- Use of sensors
Emerging types of sensors aren’t just for location tracking. Innovative sensor solutions allow to analyze use curves and predict asset failures well in advance.
In sum, digital technologies are transforming all industries – from logistics to manufacturing and construction. The key task for the implementation of construction asset management solutions is to combine a talented management team and a software solution that effectively responds to pain points and helps to reach your business goals.