Most businesses have a wide range of assets, and construction firms are no exception.
Employees are often described as a company’s greatest asset and having the right talent in place is, of course, hugely important for businesses of all kinds and all sizes. People tend to fall under the umbrella of human resources, but for the purpose of asset MISmanagement, we’ll concentrate on the tools, vehicles, equipment, and other assets that are often mismanaged when running a construction firm.
What is asset management?
Assets and inventory are often confused or used interchangeably. There are some areas of overlap, but in retail terms at least you can view inventory as the total items stocked by the business to be sold in order to make a profit.
Assets are the physical items that allow the business to operate in the first place. Inventory is slightly different in the construction industry, however, as it can refer to materials used in the building process. Inventory isn’t directly sold, although it allows the business to operate, but it’s more so depleted or worn down in the process, requiring a different kind of management.
Some assets can be intangible, meaning they lack a physical substance.
This category could include:
These assets do require careful management, but this also tends to be a slightly different process compared to tool and equipment management.
Physical assets might be owned outright by the business or they might be rented or obtained on some sort of purchase plan, but each item has a value that is the responsibility of the business using it — even if it’s not on a permanent basis.
Depending on the type of firm, physical assets would include vehicles, computers and electrical equipment, robotic stations and layout hardware, office and site equipment, onsite tools, gas tanks, and any other item that is “trackable.” Some industries, such as construction, are heavily reliant on mobile equipment as well as a huge range of small but vital tools. These can be vulnerable to theft, misplacement, or damage due to a lack of proper maintenance.
This is where the discipline of asset management comes in. The use of tool and equipment tracking and other aspects of asset management can help save time and money, ensuring that you get the job done. But what are the signs of asset mismanagement and what could the potential impact be?
7 Signs of Asset MISmanagement
1. Time spent searching for missing assets
If you don’t have adequate asset management procedures in place, it is far easier for tools and equipment to be misplaced, lost, or even stolen. If an item isn’t where it’s supposed to be, yet more time can be spent off-task as workers who should be doing something more useful are forced to spend time searching for it (or waiting for someone else to turn up with a tool or piece equipment needed to complete the task at hand).
Tagging assets using techniques such as barcodes, Radio Frequency Identification technology (RFID) and Bluetooth (BLE) scanning can help ensure that you know where your assets are at any given time, allowing workers to access tools and equipment when they need it. Tagging assets can also help prevent theft and, if you do become a victim of crime, it can play a vital part in identifying any recovered items.
2. Time spent off-task
Your workers will typically check assets in or out during the start of a shift or sometimes — depending on the circumstances — at the beginning and end of a particular job. Doing this manually can be a laborious process, especially if you have a queue of people waiting to access the same record books or sheets.
But it’s not just waiting that can keep the crew off-task. Workers are the most cost-effective and efficient when they’re executing tasks they are qualified for, skilled in, and paid for. It might not seem like much time as a proportion of any given day, but it all adds up. Indeed, even a few minutes per worker per day can represent a considerable amount of lost productivity over the course of a job, project, or an entire year.
Using asset management software can help speed up the process, reducing the time spent off-task as well as increasing accuracy.
3. A delay in the current job
All these delays soon add up and can cause substantial problems. In a warehouse or retail business, this could translate into late orders, rushed deliveries, unhappy customers and, ultimately, higher costs. On average, field crew workers spend 45 minutes per day just searching for tools and equipment, and warehouse personnel spend an average of 90 minutes a day searching. On a construction site, this could lead to a delay that impacts the entire job. Since teams are scheduled to attend work at different times, a delay from the previous shift can cause an even bigger delay with the next crew. Ensuring that personnel have access to the right assets at the right time can help keep everything running smoothly.
4. Delays transitioning to a new job
Delays in finishing one job can obviously lead to a delay in starting the next, but a lack of a clear and effective asset and tool management system can lead to further postponements, even if the schedule is otherwise clear. This is because most jobs have different requirements and time can be lost ensuring that you have the right tools and assets in place for the new project. If you need to order in any new tools or equipment, doing this well ahead of time is preferred over waiting until the last minute.
5. Increased labor costs and overtime
Any delay in a job will usually lead to a corresponding rise in labor costs. This applies to any additional hours required to complete the job, but there may be other expenses involved. Failing to meet a deadline can lead to other problems such as contract penalties, reputational damage, and the previously mentioned delays in transitioning to or even being able to accept other subsequent jobs.
In a bid to stick to important schedules it is not uncommon to crank up the overtime amongst existing workers; this can lead to a sharp and disproportionate spike in labour costs and expenses. It might also be deemed necessary to take on additional temporary staff. The cost per hour for temporary workers can be relatively high and may involve other costs such as agency fees, as well as the need to provide requisite safety and job-specific training.
6. Uncertainty about renting or buying
Sometimes it might make sense to own your assets outright, but at other times renting vehicles, tools, and equipment might be more cost-effective. This is generally the case when the asset is particularly expensive but is only likely to see limited usage. Even if buying the asset would be the best option in the long run, cash flow issues could mean that this is not always possible. Maintenance and storage issues can also be factors for bulky or high-maintenance machinery, and an asset management system can help you come to the right decision on whether to rent or buy your assets. If you do rent, a good software can help you keep track of return dates and asset locations with alerts and notifications.
7. Increased production costs
Sourcing new tools or pieces of equipment in a hurry can be more expensive as you might have to rely on suppliers you would not ordinarily use due to location and availability. Choose items that are currently in stock rather than ordering in and pay for express delivery options. Missing assets might simply have been misplaced or not booked in and you could end up with unnecessary duplicates.
Asset management can also help you keep track of maintenance and repair issues. Proper maintenance is almost always more cost-effective than repairing an item. In turn, repair can often be a better option than replacement and an asset management system can help you keep on top of all your maintenance and repair schedules.
The above should demonstrate what to look out for when it comes to the management of your company’s assets and equipment. Pay attention to these tips to avoid asset mismanagement to keep on top of costs and productivity.
If you find yourself in any of these situations and want take-home techniques in asset management for your construction firm, download our free ebook, An Expert Guide to the Benefits of Tool and Equipment Tracking.