For some keeping track of a few tools on a simple job at home is a daunting task—just where did those pliers go? Therefore, it’s difficult to imagine being responsible for tool inventories of a large electrical contracting company.

Computer-based programs to develop databases for tools and equipment have been available for years and offer significant benefits over manual methods. Many electrical contractors take advantage of tool-management technology.

“Electrical contractors make up about 50 percent of our business,” said Darryl Maggard, QuickPen International. “I talk to electrical contractors every day. According to our records and surveys, about two-thirds of electrical contractors with annual revenues over $5 million use some form of computerized tool- management system.”

Don Kafka, founder and chief executive officer of ToolWatch, said although familiarity with tool management systems has increased recently, many contractors still do not understand how valuable they can be to a company’s bottom line.

Maggard and Kafka discuss features and benefits of current asset-management/tool-tracking technology.

ELECTRICAL CONTRACTOR (EC): What are the benefits of computer-based tool tracking and management systems?

QuickPen International, Darryl Maggard: “Computerized systems provide instantaneous and accurate information about the physical resources contractors issue to the field every day. Where they are, who they are assigned to, what condition they are in, and when they will be available for reassignment. Some systems provide information, like asset utilization, identity, lost or stolen inventory, and calculate usage charges. A good asset management system can increase revenues by converting the tool crib from a cost center into a profit center.”

ToolWatch, Don Kafka: “Asset-management systems bring improved warehouse efficiency, and those that employ bar code labels and laser scanning, or RFID [radio frequency identification] tags and readers, significantly reduce costly human errors.

“They provide improved tool and equipment retention by enabling a company to know the location of every physical asset and the individual responsible for each item. Organizations that employ such systems routinely see dramatic increases in tool retention, with 96 percent retention rates quite common.

“Management systems excel at ensuring the right resources are in the right place at the right time, thereby increasing employee efficiency in the field while improving resource utilization. In addition, they provide information that allows employees to make better purchasing decisions, combine orders, and effectively track regulatory compliance.“

EC: What does your company’s system include?

QuickPen’s DM: “AllTrak 2008 is a complete system that includes asset and consumable tracking and management, capability of managing multiple branches or distribution centers, asset costing and billing, management of rental tools, service and maintenance scheduling, mobile data collection and transmission, customized reports, and optional asset reports.”

ToolWatch’s DK: “The main component of ToolWatch Enterprise is the powerful database system that allows companies to track and manage their tools, equipment and materials. Because the system stores vital asset information in a remote centralized database, authorized users can easily access current tool information any time they need.

EC: How do asset management systems work?

QuickPen’s DM: “Most systems like ours utilize barcode scanning and mobile computing technologies, enabling tool-crib managers to issue, track, and manage tools and equipment assigned to field personnel and jobs. The information on the mobile scanners can then be transmitted back to the database by batch, wireless, or cellular methods. The database then can pinpoint exact location, utilization, condition and future availability of the inventory. This provides the organization a complete and accurate analysis of the physical resources, such as stock levels, resupply needs, service and certification requirements, tool billing, asset life cycle, and return on investment.”

ToolWatch’s DK: “All relevant tools, equipment and materials are labeled with a unique identifier, which can be a barcode label, radio frequency identification chip, GPS device or forensic tracking liquid. Combining asset and materials data into one, easily accessible, centralized database allows these systems to provide detailed information every department needs to ensure that all physical construction resources—not just tools and equipment—yield the maximum value possible. Unlike tool-tracking programs and modules developed by accounting software companies, which have emerged from a financial perspective and mainly focus on ‘after-the-fact’ asset data, construction resource management systems fully address today’s complex resource management challenges and place useful software and devices into the hands of the people who need them most: the warehouse, shop and field personnel.

EC: Are asset-management programs practical for all sizes of contractors? Are they affordable for small contractors?

QuickPen’s DM: “I believe that all contractors with more than $20,000 invested in tools and equipment should have some computerized method of tracking their inventory. Every contractor should also evaluate their individual needs and goals and then find a system that works for them and their budget. In today’s marketplace, there is a tracking system for nearly every budget. The biggest pitfall to avoid is trying to save a few dollars by developing a program. Don’t try to reinvent the wheel—find a professional system that suits your needs.

“Implementation is the key to any successful installation. When contractors buy accounting programs, they plan an implementation phase. They should do the same for their asset-tracking and management systems. There are many variables involved in the calculation of implementation cost which depends on the contractor’s circumstances and human resources. A good vendor will supply customers with a generic implementation plan or help the customer develop one customized to their needs. Once implemented, a good program should do about 90 percent of the work with little attention to upkeep and maintenance.”

ToolWatch’s DK: “Systems that are hosted remotely and offered on a per-user basis allow the greatest flexibility for contractors of all sizes. These systems provide a wide array of features and let a company increase its use of the construction resource management system as it grows. Because they don’t require the capital investment or substantial IT support of internally-hosted systems, even small contractors can reap the rewards of tool-management systems.

“A subscription-based system that allows you to select the number and access levels of various users gives companies a great deal of flexibility in the cost of using such a system. Generally, software companies will also allow clients to pay for only the features they need, further reducing the expenditure to begin using such a system.

“After initial installation and assets are labeled and entered into the system, it is very easy to maintain a tracking program. If employees are consistent about scanning each item when it is assigned or returned, the system will remain up to date.”

EC: What are common reasons contractors resist using asset-management programs, and how do you respond to them?

QuickPen’s DM: “Denial—they don’t want to face the reality of the problem and think they can account for tool and equipment losses in their bids. Risks—believing the cost of purchase and implementation of a system is too high and the risk of failure is greater than the potential rewards. Reorganization of their processes—some believe that changing the way they track their tools and equipment will change their business processes, which in turn will be met with a great deal of employee resistance.”

ToolWatch’s DK: “Contractors often don’t recognize the dramatic positive impact these systems can have on their business. They see construction resource management systems as an extra, not an integral system their company needs to succeed.

“In the competitive world of construction, contractors need to consider every option to give their company an edge. Automating the management of critical business assets such as tools, equipment and materials can help save money, reduce loss, and keep projects on schedule and on budget, which will make their company stand out from a company still managing construction assets by hand.”

GRIFFIN, a construction and tools writer from Oklahoma City, can be reached at up-front@cox.net.