Most construction firms have multiple projects going on simultaneously, each with its own assets – such as machinery and equipment – and cash flow. This complexity can make overall management challenging if you don’t have the right systems, tools and processes in place.
We’ll explore five crucial tips for asset management that every construction firm can use, as well as asset management mistakes to avoid at all costs.
Asset management tips for construction businesses
Asset management is crucial for growing your construction firm. Here’s what you need to know about managing assets for your construction business.
1. Get your executives and senior management on the same page.
Communication is critical in the construction industry. A cross-functional organizational framework is one of the easiest ways to ensure effective communication. This structure is counterintuitive to traditional hierarchies, but can help to solidify team collaboration and workplace performance.
Construction company leadership must have high-value, meaningful information to make decisions. Clear, accurate communication is vital when dealing with employees, clients, and third-party vendors, as well as when handling mission-critical tasks like budget planning, reporting, accounts payable and receivable, and income forecasting.
2. Define the software, equipment and assets you have and need.
Choosing the right inventory and software resources to execute builds is equally essential. For these reasons, effective construction managers identify their company’s goals and needs before beginning the hiring process or selecting enterprise software.
Unnecessary equipment losses can mean exorbitant expenses, and choosing the wrong software leads to unnecessary and costly problems. Select software resources carefully to ensure they meet all your company’s needs and integrate well with the company’s current data framework. The software you choose must conform to your current legacy systems.
Did you know? Workplace safety is crucial in the construction industry. Owners must guard against construction injuries to protect employees.
3. Use big data technology for optimal inventory management.
Tools like handheld scanners and RFID tags can help you identify and correct inaccuracies quickly. After all, accurate information is vital for any successful asset management program.
Before choosing software or equipment, you must develop and implement equipment monitoring and evaluation procedures. Once you’ve implemented a new asset management system, it’s necessary to continually evaluate and monitor the chosen software system to ensure it’s working properly and conforming to established management procedures. This includes developing mechanisms for identifying and correcting data inaccuracies.
4. Review your assets quarterly.
Periodic reviews are essential to any enterprise’s successful operation. It’s a good rule of thumb to conduct these analyses quarterly. You’ll find and fix problems during these reviews and discover opportunities for improvement.
One key concern for construction managers is how long assets will last. After identifying manufacturers’ suggested equipment lifespans, compare how the goods perform onsite. This requires programming asset management systems to capture the appropriate information throughout various product lifecycle stages.
5. Hire a financial or accounting professional to manage specifics.
Trained and qualified financial staff members are crucial to ensure your company’s solvency and success. Ensure you hire a CPA with specific construction expertise and invest in employee training to ensure new hires understand their roles.
Qualified financial professionals will help you create long-term value that far outweighs the potential dangers of mismanaging assets. Financial analysts are passionate about numbers and can help you monitor and manage equipment in an organized and methodical manner using the best accounting and invoice-generating software.
Many of these professionals have a bachelor’s degree and skills in financial services, valuation, financial modeling and other critical talents. They analyze data for trends to help managers make informed decisions, help executives monitor and balance project budgets, and make recommendations regarding future spending.
Because of the critical role financial analysts play in construction, it’s crucial to ensure they have enough experience in the field.
Did you know? Working with construction industry professionals – including vendors, employees and independent contractors – will keep projects on track without problems.
Asset management mistakes to avoid
Avoid the following mistakes to ensure your construction business remains profitable and in good standing.
- Not reading the construction contract. When you don’t read the contract, you may miss critical details that could cost you money. The contract outlines terms and conditions and is worth thousands, if not millions, of dollars. Read the fine print to fully understand where you might be on the hook for something you otherwise wouldn’t worry about.
- Failing to use estimating software. If you aren’t using one of the best construction estimating software solutions, you’re likely ballparking costs and estimates. This can result in underbidding a project, costing you dearly in terms of money and client satisfaction. Estimating software should be part of your standard professional profile to determine project costs precisely while factoring in overhead and profit.
- Allowing haphazard supply chain deliveries. You need materials and supplies to build projects. But you don’t need all of them at once, nor do you want to be waiting for things to arrive when you’re ready to complete a portion of the project. Organize your supply deliveries so they arrive when needed.
Asset management and your construction business’ success
Asset management is essential for any company. Monitoring and tracking equipment allocation is more complex than it first appears, but knowing the best way to manage assets – both small and large – is essential if you want to keep enterprises and projects running smoothly.
While asset management and equipment monitoring solutions reduce costs, other considerations include cash flow reconciliation, maintenance, liability and logistics. For example, in-depth product analyses can help you decide whether to rent or purchase necessary equipment.
With careful consideration, savvy managers can leverage the latest technologies to execute successful projects and ensure long-term enterprise sustainability as they build their construction businesses.
Kimberlee Leonard contributed to the reporting and writing in this article.