How to calculate the true cost of tool ownership

Hidden costs are everywhere in a construction business. From downtime to administration, repairs and more - it’s easy to lose sight of how much money you are actually spending on a day-to-day basis throughout the business. 

The toolpark is a major culprit for hidden spending, and when it comes to maximising value within your business, these unaccounted costs can make a huge difference. 

Within every toolpark, there are a range of direct costs and indirect costs. Direct costs refer to the tangible spend on tools that are easy to quantify in financial terms. Things like purchase price, repairs and calibrations are fixed costs that can be easily tracked and recorded. 

Indirect costs, however, are far more difficult to quantify because they are measured in time. Dust cleaning, for example, doesn’t take long - but if several workers are doing this every day, the hours soon rack up. While this may seem insignificant, there are lots of indirect costs like this associated with tool ownership, which can hugely increase the costs within your toolpark. 

To get the most value out of your toolpark, it’s essential to understand the true costs associated with tool ownership.

 

 

Purchase price
The up-front costs of purchasing each tool

Batteries
Replacement and backup batteries for cordless tools

Repairs
Any costs associated with repairing tools

Chargers
Chargers have a short life-span and often need replacing

Back-up tools
Procuring and renting back-up tools

Calibrations
Costs associated with configuring tools

 

Procurement
Time taken to decide on and purchase tools

Health and safety claims
Costs associated when tools cause damage or injury

Administration work
All the time spent on office, warehouse and site administration

Corded tools preparation
Unfurling and reeling cords before and after work

Tool breakdowns 
Reporting tools as broken and organising replacements

Time spent on hiring
All of the administrative costs spent on hiring

Dust cleaning
Clearing away dust after work

Downtime 
Time lost when workers are unable to work

WHAT YOUR TOOLPARK IS REALLY COSTING YOU

Let’s look at an example of how small indirect costs can add up.

If a construction worker is paid £10 per hour, and spends 10 minutes morning and night preparing corded tools, this is a cost of £3.33 a day. Here’s how that cost can quickly spiral: 

£3.33 a day x 10 workers on site x 260 (the average number of working days a year) = £8,658 a year on preparing cords for one site.

This figure is just for one indirect cost  - as others are brought in, then the true cost of your toolpark can quickly spiral.

why these costs matter

Understanding all the costs associated with your tools is essential in understanding the true value of your toolpark. Without this information, it’s impossible to know how profitable your business truly is, meaning you could be losing money on everyday jobs. 

At Hilti, our productivity experts have helped thousands of Hilti customers to streamline their toolparks and optimise the way their assets are managed. By identifying the areas of waste in your business, and the hidden costs throughout your toolpark, we can help you to make changes that will improve productivity while reducing your costs.

 

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