Asset management is a crucial yet overlooked aspect of a construction business, as it involves various assets such as trucks, heavy equipment, and machines to build infrastructure or buildings. Poor asset management can cause huge losses for construction companies, so specific methods are required to manage company’s assets. The following are five asset management strategies that you can implement in your construction business.
1. Choose a Winning Asset Management Team
As a construction business owner, it is certainly difficult for you to monitor and manage every aspect of your business by yourself. You certainly need the help of a team in each department, especially the asset management department that requires distinct supervision. Thus, you need to find reliable and professional people who are very knowledgeable about the asset management.
For small-scale construction businesses, one or two people may be sufficient to be responsible for assets. While for large-scale construction businesses, a dedicated team is needed to manage machines, equipment, and fleets used for operations. Make sure that the team members are familiar with the asset management system that your company uses.
2. Know the Lifespan of Each of Your Assets
By understanding the lifespan of your assets, you will be able to estimate when you should replace your old assets with the new ones. You do not need to wait until your machines, equipment, or fleets are damaged, because you know how long they last.
Knowing the life cycle of your assets can also help you make purchases more wisely. For example, when you are going to buy heavy equipment, you can choose one that is more durable so that it can be used longer.
It is also important to calculate your asset depreciation periodically. Know the value of your fixed assets for sure so that you can understand the total value of your overall business, pay taxes appropriately, and avoid using assets too long.
3. Know the Profitability of Your Assets
You also need to know the profitability ratio that you gain from the usage of your assets. This will help you find out which assets generate profits and which ones are not profitable for your business.
For example, you have spent a large amount of capital and maintenance costs on a truck, but it does not function properly. Knowing the fact that your truck does not provide profitability for your business, you might want to sell it or replace it with a new one that works better. Profitability can be easily measured using asset management software.
4. Evaluate the Condition of Your Assets Quarterly
Make sure your asset management team evaluates the asset conditions at least once every three months. This will help your team identify the issues that happen to your assets earlier and avoid various damage through periodic maintenance.
With asset management software, inspection, maintenance, and reparation can be scheduled automatically so that various problems can be detected and damage can be prevented earlier. This will certainly help extend the life cycle of your assets.
Also read the related article: Fixed Assets & Depreciation | Accounting Principles
5. Use the Right Asset Management Software
Almost every successful construction company has implemented software to manage their assets. However, randomly choosing a asset management system without analyzing your business requirements is impetuous. Therefore, make sure that you really understand what your business really needs first.
After summarizing your business requirements, make sure that the asset management system you choose meets the unique needs of your business. EQUIP Asset Management Software by HashMicro is one of a few software systems that is adjustable to meet the needs of each business, including the construction business. This system helps automate depreciation calculations, profitability analysis, as well as inspection, maintenance, and reparation scheduling.
With EQUIP Asset Management Software, you can even log the fuel usage and mileage of your company’s fleets. This will make it easier for you to understand the condition of your fleets while knowing their profitability ratio. This system can also be integrated with EQUIP accounting system for more accurate bookkeeping.