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Construction Asset Management Beginners Guide

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Any organization that handles construction assets needs to ensure that it has proper asset management practices in place. Managing your assets will be key to your continued success, whether for an internal department for a major company, an independent contractor or an equipment rental company.

A lot goes into developing the right management practices and ensuring that all important areas are addressed. This simple guide will give you an overview of what those areas are and what you need to do to deal with them effectively.

What Areas Does Construction Asset Management Include?

Overall, construction asset management includes two primary categories. The first is asset procurement — the acquisition of new assets when they’re needed. The second is asset tracking — monitoring maintenance and replacement needs and acting accordingly.

Within these two categories are a wide range of individual tasks that you’ll need to perform at different stages of any asset’s life cycle. By fulfilling those tasks, you ensure that you get the highest value from all construction equipment and vehicles.

How Can I Approach Asset Procurement?

Asset procurement is the first step in any piece of equipment’s life cycle. You’ll need to acquire new equipment to meet the continuous and emerging needs of your organization. Translating those needs into procurement can be a challenging task.

First, you’ll need to judge whether a specific need justifies the acquisition of new assets. A cost-benefit analysis can help here by breaking down the direct benefits of the acquisition compared with the cost of the new equipment.

The specifics of the acquisition also play a major role. Are you purchasing from a reputable company? And are you sure that you’re purchasing the right piece of equipment for these specific needs? Assessing these questions before purchases are made is vital to ensuring that new assets don’t become a liability instead.

How Can I Monitor and Maintain Construction Assets?

Procurement is just the first step, and there are many more to follow. Once new equipment has been purchased, it needs to be monitored and maintained for the duration of its useful life.

Monitoring is incredibly important when dealing with construction assets. Vehicles and large equipment can be expensive, and the nature of job sites often leaves them unsecured. Theft is one of the most prominent risks to any construction asset.

A variety of monitoring solutions can be put in place. In most cases, asset tracking is a justified expense. Devices that use GPS and other technologies can allow you to track the location of your assets very accurately.

Another major threat to the value of your construction assets is maintenance. Poorly maintained machines can lose value quickly as they require more extensive repairs and end their useful life earlier. Every piece of equipment should have a carefully planned preventive maintenance schedule and regular inspections.

How Do I Go About Upgrading and Renewing Assets?

Eventually, every asset will reach a point in its lifecycle when it’s time to consider either upgrading or renewing the asset. This occurrence can be caused by the degradation of the performance of the equipment itself or changing job site needs requiring additional performance.

Assessing the need for an upgrade or renewal is similar to the process of evaluating a new purchase. The upgrade will bring certain benefits to the company but also carries a cost. The same level of attention given to new purchases should be paid to upgrades.

How Can I Handle Asset Disposal and Replacement?

No construction asset lasts forever. At some point, the construction asset will be of no value to the company — either due to a lack of performance or its purpose becoming obsolete. As organizations change over time, they can often find themselves with unnecessary equipment.

If some piece of equipment has reached the end of its useful life but still serves a vital purpose for the company, a replacement will be needed. While it’s tempting to immediately go with the same model or a newer upgrade, this is a good time to reevaluate the precise needs of the company.

During the time that the asset has been used, the chances are that you’ve learned a thing or two about what it can and can’t do. Choosing a different type of equipment or a model from a different manufacturer could be a prudent choice to address any shortcomings of the original equipment.

In most cases, asset disposal will allow for some cost recovery. At the very least, most construction equipment contains significant scrap material that carries value. In other cases, the equipment could still be performing well enough to be sold as used equipment to another company.

What Important Asset Management Principles Should I Know?

Asset management is an ongoing process that you can handle more effectively by adopting certain principles. These simple tips can help make your asset management experience go much more smoothly and deliver better results:

Be Proactive Instead of Reactive

Modern asset management isn’t a task that should only be handled when something goes wrong. Instead, you should plan ahead for maintenance and replacements so that additional costs don’t come as a surprise.

Keep Detailed Records

In asset management, you rely on accurate records to make the right decisions. You should maintain detailed records regarding purchases, maintenance, and more. This work will let you better plan your overall asset management strategy.

Commit to Continuous Improvement

Like in other industries, a continuous improvement approach can do wonders for asset management. You should always be updating your asset management practices with the best methods in the industry. By doing so, you can increase the efficiency and cost-effectiveness of your asset management practices.

Bringing Everything Together

It can be a challenge to bring all of these principles together into a cohesive asset management approach. However, there are many tools available for you to do so. 

There is a wide variety of asset tracking software and services available today that can provide automation and improve accuracy. With the right tools, you can meet all of the challenges of construction asset management.

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