Understanding Construction Asset Management: Definition, Best Practices and Examples 

Construction asset management is a vast concept encompassing a variety of practices – each carrying its own importance. Over the years, it has evolved significantly and paved path for the construction companies to better manage their assets.

Construction companies rely heavily on effective construction asset management to optimize asset use. It not only helps them achieve a higher level of productivity but also, strategically manage all kinds of construction equipment for efficiency. 

This article takes you through the concept of construction asset management, why it is important and how you can establish a strong asset control implementing it.

What is construction asset management?

Construction asset management is a systematic approach to tracking, monitoring and managing construction equipment to fulfill operational needs. It involves procuring, maintaining, utilizing and disposing off equipment in the most optimal manner. Smooth handling of assets helps forecast construction needs better, and determine the asset management plan to be implemented to achieve efficiency. 

Construction has a myriad of assets, including heavy machinery, tools and handheld equipment, vehicles, building raw materials etc., and these assets and inventory items need to be organized properly to conduct the construction activities efficiently. 

Construction asset management does not only revolve around managing assets, but optimizing their use and maximizing the associated ROI. It involves following a few basic steps, including:

1. Acquisition: Assessing organizational needs, and procuring construction equipment following a set procedure.
2. Categorization and storage: Dividing assets into meaningful categories for quick retrieval at the time of checkout, maintenance and reservations. 
3. Maximizing utilization: Utilizing the assets to their full potential by analyzing data based on asset performance.
4. Disposal: Disposing off assets on a timely basis – after they have been fully utilized – to avoid excessive costs. 

Types of assets in construction

The construction industry uses a variety of assets depending on their needs and operations. Assets typically fall into the categories of fixed assets, and non-fixed assets. 

The following table provides examples of the assets used extensively in the construction industry: 

By effectively managing these diverse range of assets, construction companies can optimize their functions and ensure they are on the way to achieving their goals. 

Real-life example of smooth construction asset management

Organizations can invest in construction asset management software to better manage their assets, and keep detailed records for tracking. Such platforms make it easier to achieve optimal asset utilization depending on the platform’s features and capabilities. 

AX Construction reports having achieved complete visibility into its construction asset landscape – encompassing almost 2000 tools and heavy equipment – after using a construction asset management software. With the company’s gradual expansion, the IT team knew they needed to shift from manual tracking through spreadsheets to an automated solution that enabled them to get visibility of their tools across various job-sites. 

Now, the company tracks a variety of assets, delivers quality projects in compliance with the safety standards and experiences less frequent equipment failures on site. This has led to an overall increase in its efficiency and been on the path to be recognized as the most organized company in Malta. 

Benefits of smooth construction equipment asset management 

While dealing with challenges related to asset management can be difficult for construction asset managers, they can always pre-plan for contingencies. That’s where construction asset management comes into play! It enables companies to stay well-prepared by managing every aspect of their assets accurately. 

Whether you are a construction asset manager, or an asset custodian, here’s how asset management in construction can help optimize your daily operations: 

1. Optimal asset utilization

Three critical asset utilization types that any construction company should take into consideration include:

• Operational utilization: Ensuring an asset is not sitting idly and being used consistently across various tasks, while not being over or under utilized. 
• Lifecycle utilization: Tracking how effectively an asset is used throughout its lifecycle (from procurement to disposal) to derive maximum utility from it. 
• Maintenance utilization: Keeping count of the number of times an asset is sent for servicing to optimize repair and maintenance costs and prevent unnecessary downtime. 

With a construction asset plan in place, you can keep track of these critical metrics, while maximizing the return on your assets. You can monitor your assets throughout their life, the investment involved, the number of maintenance sessions they require, depreciation and whether they have the potential to be used in the future. 

2. Streamlined inventory management 

Construction activities are heavily dependent upon a consistent availability of inventory items stored in the warehouse. Ineffective warehouse management can lead to delays in construction projects, and in turn, unhappy customers. You can easily avoid this by creating an asset inventory repository in your asset management system. 

Streamline the equipment procurement and management process by assessing your operational needs, and ordering the right equipment in the right quantity. Set up vendor details and purchase orders in your system, so the procurement details can be tracked. Likewise, use barcodes to tag every inventory item in the warehouse, and scan their barcodes at the time of check-in/checkout to enable tracking. This way, you will not only excel in asset inventory management, but develop a strong inventory control. 

3. Regulatory compliance 

Strictly following regulatory rules with regards to assets saves construction companies millions of dollars. As per a report, non-compliance due to missing and inaccurate data, and rework can cost the construction industry around $177 billion. More serious compliance issues not only puts the reputation of construction companies at stake, but hampers their productivity and makes them prone to lawsuits. 

By conducting regular asset audits, your company can ensure that its assets are in the best possible shape and condition. You can highlight if the physical count of assets on jobsites matches with that in the system, and flag any issues. You can also attach inspection reports with each asset, safety audit reports and training manuals to ensure safe asset use. 

Assets can be tracked to make sure they are being used at the right location and in line with the compliance guidelines. 

4. Enhanced safety 

You can schedule regular maintenance sessions for your construction assets to check their performance and functionality. This includes conducting inspections and sending the assets for maintenance when needed. Maintenance records can be stored in the asset management system you are using for transparency and accountability. 

You can send and receive alerts regarding upcoming maintenance. This way, you never miss out on significant maintenance sessions, and are on track to ensuring your assets are in the best possible condition. 

Construction asset management process

The process of managing your construction equipment involves following a couple of basic steps. With the right strategy, and a forward-looking approach, you can automate the process and provide a safe working environment to the employees. Here are the steps:

1. Asset management planning

Manage your assets strategically by creating an elaborate asset management plan about where, how and in what capacity your construction equipment will be used. Set clear objectives pertaining to asset use so you know exactly how the equipment is to be used. Ensure that the objectives you set for assets are in line with your overall organizational goals, so you can optimize the operations.

2. Asset Acquisition

Acquire assets that best fulfill your construction needs. This includes conducting a thorough research to assess if you require additional assets for work or not. You can also look at your asset management plan first to ensure you are following the correct procurement procedures. 

Assess the available budget so the purchase is within the budgetary constraints. Keep records of the purchases in your asset management system for record keeping purposes. 

3. Deployment

Deploy the purchased asset across a relevant job-site for testing purposes. Evaluate the need for the equipment first, and then decide where it can be deployed the most efficiently. Assign labels to your asset and update it in the system so it can be easily tracked. 

Conduct a trial run on the asset to ensure it is safe to use and won’t cause any injury on site. To prevent any legal and compliance issues, run checks on the asset and check for necessary repairs and maintenance. 

4. Data analysis

After an asset has been deployed, you can assess its performance to ensure it is operating in an optimal manner. This includes generating detailed reports on asset utilization and assessing the performance metrics for evaluation. Reports can be presented to the stakeholders, like project managers, and engineers, to justify the use of special construction equipment. For instance, contractors can use reports to monitor the progress of an ongoing project by checking if the inventory levels are correct and the project’s asset needs are being met. 

Contractors depend upon detailed asset reports to allocate resources better and prevent underutilization and overutilization. This way the equipment’s performance can be analyzed to prevent any mishaps. 

Best practices for implementing construction management strategies

The key to optimized operations is strategy and a satisfied workforce. You achieve this when you can rely on your assets completely without the fear of any mishap. Here’s how you can implement strong construction management strategies to optimize your operations:

1. Set clear goals

Objectives serve as the foundation for planning, managing and maintaining construction assets. Setting clear and concise objectives determines how you manage your onsite assets and operations. This includes setting goals that are SMART: Specific, Measurable, Achievable, Realistic and Time-bound. With goals set in place, its easier to track your performance better. 

2. Utilize asset management system

Its always wise to adopt an asset management system to optimally manage assets. You can assign tags and categories to construction assets to sort them according to use. Such a system enables managers to leverage construction asset tracking by tracking assets and inventory across multiple locations. 

For instance, you can track inventory levels to ensure you meet the thresholds to conduct  construction activities. This way, you can avoid excessive costs associated with overstocking or understocking, and set reorder levels to keep meeting the demand. 

3. Centralize database

Asset management can never be complete without construction management. Asset repository serves as the foundation for a construction asset management solution. It enables managers to centralize data into an easily accessible database. The database usually contains all the essential details pertaining to an asset, including asset name, identification number, model number, purchase date, depreciation etc. The database provides a greater financial control over your construction assets as you remain aware of the associated costs. 

4. Standardize management practices

Standardizing asset management practices across various jobsites enables construction companies to protect their assets from misuse. This way, managers can ensure uniformity and transparency in how assets are managed. 

You can standardize the asset management practices by deciding on the guidelines that need to be followed across jobsites, including:

1. Asset management policies: Deciding on the Dos and Don’ts of asset management, and defining the intent, scope, and principles associated with the use of each asset. 
2. Standard Operating Procedures: Defining standardized procedures to cater to all aspects of an asset’s life – from procurement to disposal. 

Standardizing the practices makes it easier to mitigate risks by following set guidelines for asset procurement, deployment, maintenance and disposal. Additionally, you can also achieve regulatory compliance by establishing a strong control over asset management processes. 

5. Cost analysis

Analyzing everyday costs is fundamental to making asset-related decisions. This includes assessing what your budget is and whether you afford to acquire a system that can help optimize your asset management. 

Based on your budget, you can find the most optimal means of conducting construction asset management. You can make critical decisions about system acquisition, asset procurement and regular maintenance. This way, you will have a breakdown of the potential costs associated with assets, and how the budget is to be allocated for each construction site.

How do AI and construction asset management go hand-in-hand

With AI being the new way forward, its integration with asset management systems will enable construction companies to improve the efficiency of their operations. AI can be used to create detailed asset registers, and assess usage patterns to forecast future needs. This includes AI sifting through large amounts of data to analyze what construction sites require certain assets the most. Similarly, with the power of AI, construction managers can assess the future costs associated with managing these assets, location-wise, based on current trends. 

Automating inventory procurement is another area where construction companies can utilize the capabilities of AI. Managers can set reorder levels, and everytime an inventory item falls below the threshold, AI will detect and automatically place orders for inventory replenishment.

AI chatbots are also a quick way to search for items in the repository and provide quick access to asset information. For instance, providing maintenance schedules, inventory levels and details about any ongoing construction projects. 

Simplifying construction asset tracking

Construction is a vast industry that hinges upon careful management of assets for safety and compliance. Without a system in place, it can be difficult for companies to streamline their workflows for enhanced construction tracking. 

As a construction manager, you can considerably improve your productivity and reduce energy spent on handling assets by simply automating the same tasks. An asset management system enables you to adopt a more data-driven approach toward standardizing your construction activities. Use such powerful tools today to never miss out on progress again!