7 Key Tool and Equipment Management Metric to Track (with formulas)

If you invest in resourcing projects with the best tools and equipment on the market, you likely want to know where they are, if they are missing, and if you're getting maximum usage and ROI from those assets.

That’s where asset management comes in: track, assign, transfer, and maintain your assets efficiently to get projects done and get the highest utilization and ROI.  Sounds simple, right? The problem is when contractors start actively managing their tools and equipment, they often struggle to understand which metrics to track. Well don't worry, we're here to help!

After partnering with thousands of construction businesses over the years, we’ve broken down the top asset management metrics you should be tracking and how to start calculating them today.

Top 7 Metrics to Track for Construction Tools and Equipment

The asset metrics contractors should track depend on your operational goals. To get started, here are the most common metrics construction businesses are tracking today:

1. Utilization Rate

The utilization rate tells you how often you use your assets and whether certain tools are just collecting dust in the warehouse or sitting unused on jobsites. When you know your utilization rate, your team can:

• Avoid over- and under-stocking inventory
• Identify assets that are under-utilized
• Reduce idle time for tools and equipment on jobsites

How to calculate tool and equipment utilization?

To measure asset utilization, you should look at:

• Time used:  the amount of time an asset was actively in use on the jobsite
• Total time available: the amount of time an asset was available on the job site

2. Downtime Percentage

Downtime for tools and equipment tells you what percentage of time your asset is not in use due to issues such as maintenance and repairs. When machines are unavailable for too long, they can end up costing you more than you make from them. Understanding downtime for your high-value assets helps contractors:

• Identify workflow inefficiencies
• Better plan for tool and equipment utilization

How to calculate tool and equipment downtime?

To measure downtime, you should look at:

• Time not used:  the amount of time an asset has not been actively used
• Total available time: the amount of time an asset was available on the job site

3. Loss Rate

It’s common to find that tools and equipment “walked off the jobsite” at the end of a project. However, this norm has hidden costs linked to decreased productivity, increased labor costs, and delayed project delivery.  The loss rate helps you measure how often assets are lost, misplaced, or stolen. With this information, you can:

• Decide which assets should be tracked more automatically via  GPS or BLE trackers
• Understand the costs associated with replacements
• Prevent project delays by keeping inventory fully stocked

How to calculate tool and equipment loss rates?

To measure the loss rate, you should look at:

• Lost items:  the number of assets lost, misplaced, or stolen
• Scheduled maintenance time: the planned time period the asset should have been unused due to maintenance

4. Useful Life

Tools and equipment depreciate in value over time. The useful life of an asset is how much time an object will remain in profitable use. This isn't the same as the actual life of an asset. Useful life measures how long it takes until it financially makes sense to replace an asset instead of repairing it. Understanding useful life helps contractors: 

• Decide whether they should complete major repairs on an older piece of equipment
• Plan for future investments
• Improve maintenance schedules
• Improve financial forecasting

How to calculate the useful life of tools and equipment?

To measure useful life, you should look at:

• Asset cost:  the amount of money used to purchase an asset
• Salvage value: the value of an asset at the end of its life. For example: this could be the cost of selling or scrapping an asset.
• Annual depreciation: the yearly loss in asset value

5. Return on Investment (ROI)

The best way to determine the ROI of assets is to job cost them and compare the billable hours to the amount you pay each month, including loan payments, maintenance, and repairs, storage if applicable, and any other costs directly associated with that asset. This information will tell you if you are making money off the assets you own or if they're costing you more than they're bringing in. This can inform you of billing rates for these assets and/or future decisions about renting versus purchasing assets.

How to calculate tool and equipment ROI?

To measure maintenance costs, you should look at:

• Net profit:  the total amount of money made from tools and equipment (monthly or annually)
• Total investment: the total amount of money paid to purchase and maintain the assets (monthly or annually)

6. Inventory Turnover Rate

Tools and equipment aren’t a one-time purchase. Over time, assets get worn out or misplaced. The inventory turnover rate tells you how often your assets are replaced or cycled out of use. This information helps contractors:

• Indicate issues with tool lifespans or security
• See if inventory is overstocked or underutilized

How to calculate the inventory turnover rate?

To measure the inventory turnover rate, you should look at:

• Total tools:  the total number of tools in your inventory
• Tools replaced: the total number of tools replaced

7. Tool and Equipment Location Accuracy

Assets move between multiple job sites and warehouses every day. And it’s your team’s job to make sure those assets are at the right place at the right time so your crew can get the job done. With location accuracy, you can know how often your tools are correctly located at the right jobsite. This information allows you to:

• Reduce time spent searching for tools
• Prevent loss
• Improve operational efficiency

How to calculate location accuracy

To measure tool and equipment location accuracy, you should look at:

• Total tools located correctly:  the total number of tools in your inventory at the correct location
• Total tools: the total number of tools in your inventory

How to Track Tool and Equipment Management Performance

As you probably realized, it is not very practical to track this information and calculate these metrics manually. You really really need an asset management system that stores and summarizes this data for you. For example, here are some of the reports that come pre-configured with AlignOps:

Explore AlignOps' Reporting Capabilities

The platform you choose should also allow you to schedule reports so you can frequently monitor your asset performance without the hassle of setting reminders and doing the math yourself.

Start Monitoring Your Tools and Equipment with AlignOps

Although you do need a digital system, managing your assets doesn’t have to be complicated. If you want to centralize your asset management, platforms like AlignOps give contractors visibility and control over asset operations, meaning there's no need to calculate asset metrics by hand. 

To learn more about how AlignOps helps contractors streamline asset management, book a demo with our team today!