lDTK*C1 II

1 OTMC FILE COPY I3R AZ' CONSTRUCTION TOOL MANAGENTI;(V) byI LflLn" lDTK*C1 ELECTEIIII* SJuly 19907p 7IN,,jEngineering and ManagementJHSchool of Civil Engineering-Purdue UniversitySWest Lafayette, Indiana 47907 Divsin o CnstucioICONSTRUCTION TOOL MANAGEMENTA Special Research ProblemPresented toThe Faculty of the ConstructionEngineering ard Management ProgramPurdue UniversityIbyl Cannon L. MorseI In Partial Fulfillmentof the Requirements for the Degree ofMaster of Science in Civil EngineeringJuly 1990* Approved:Professor Bob McCullouchFaculty Advisor/Date/1/Professor Luh-Maan Changi Member, Reading CommitteeiProfessr Dke HalpinDirector, C] kyrogramIIII]/ ABSTRACT-Contractors utilize tools and equipment daily onconstruction projects. Managing large pieces of equipmentsuch as cranes and graders is essential to assure thesuccessful completion of the project. Hand tools and minorequipment can play an equally important role during theI project's construction This paper examines the current procedures of hand tooland minor equipment management being implemented bycontractors.

2 Additionally, a guide for a tool managementsystem will be developed for use by a large contractor withnumerous projects acruss the United States. Techniques suchas tool procurement, storage, issue, inventory, disposal,and distribution will be presented and ForNTIS GRA&IDTIC TAB 0 UnannouncedJustifieationDistribution/Ava ilability CodesAvel land/4orDist SpeoalIACKNOWLEDGMENTSThis research was supported by a grant from comments and suggestions from Mr. Reed W. Nielsen,Bechtel's Manager of Construction Technologies, have TABLE OF CONTENTSI. Background .. 1II. Project Description .. Statement of the Problem .. Objectives .. Methodology .. 4I III. Surveys .. Initial Letter Survey .. Telephone Survey .. 5IV. Survey Results .. Construction Company Survey .. Purchasing Procedures .. Tool and Equipment Leasing .. Project Costs .. Tool Storage and Issue Policy .. Tool Loss .. Tool Disposal and Replacement Tool Distribution .. Tool Depreciation.

3 Tool Tracking Systems .. Innovative Tool Management .. 185 Summary .. 19V. Recommendations .. Procurement Plan .. Project Costs .. Storage and Issue Methods .. Minimize Loss .. Tool Disposal and Replacement .. Distribution of Tools and Minor Depreciation .. Tool Tracking Systems .. Summary .. 32VI. Conclusions .. 33 VII. References .. 35 III iiiI3 A. Letter Sent to Contractors .. 36B. List of Contractors Participating in the C. Survey Questionnaire .. 42D. List of Contractors Responses .. 451 i. Small Tools Purchasing Procedures .. 92. Percentage of Costs Devoted to Tools .. 113. Average Project Size .. 124. Tool Loss Rate .. 13iIIIIIIIiI3 ivIBACKGROUNDE quipment management is a necessary part of5 construction operations. Selecting the proper equipment toperform a task is a major responsibility for the the need, procurement analysis, establishingmaintenance procedures, historical records, and value3 analysis are the steps to good equipment management(Grothaus, 1982).

4 Whether the equipment is large, such as a scraper, or a3 small power tool, the contractor must assure that it isavailable when required. Managers must have the right toolsand equipment to complete a construction activity. Theycannot neglect the fact that construction equipment is usedby small crews whose main objective is completingconstruction on time and on budget. It has been proposedthat equipment has but one fundamental purpose: To5 facilitate the construction process (Vorster and Sears,1987). The goal of equipment management should be toI maximize profits instead of minimizing equipment , when profits are not an issue, such as a governmentagency like the Navy, minimizing costs is a reality and must3 be construction equipment is discussed, large pieces3 such as bulldozers and cranes often come to mind. However,11II hand tools and small equipment are just as important to theconstruction process as any large piece of equipment. Acontractor must establish procedures for hand tools and3 minor tool management techniques should addresstopics including procurement methods, tool storage, issue3 and inventory, tool loss control and distribution betweenprojects.

5 Tracking of tools and equipment utilizing3 computers is an essential component for many of today'scontractors. Innovative areas such as bar coding tool issueI procedures have been accomplished (Bell and McCullouch,1 1988).Books, journals and articles are plentiful on the topic3 of construction equipment management. However, research hasbeen minimal on management methods for hand tools and minorI equipment. Construction companies must be skilled in thisi area in order to remain competitive. A tool that isrequired for a Job, but not available, can delay a project3 and render a crew inactive. Contractors must manage toolssuch as drills, saws, water pumps and generators in an3 effective PROJECT Statement of the ProblemThis study focuses on the methods that constructioncontractors utilize to manage hand tools and minor equipmentvalued at under $1500. Several key points of toolmanagement will be studied in detail. These include:3 procedures for procurement or lease, warehousing and btoragemethods, issuing tools on construction projects, inventoryI procedures, tool disposal and replacement policies and how3 tools are distributed and redistributed to Large contractors having projects at numerous locationsthroughout the United States must be able to economicallyI manage large equipment, such as cranes and scrapers, andsmall equipment, such as impact hammers and power firms need to skillfully plan and execute theirpolicies in order to have a successfull tool ObjectivesThe objective of this study is twofold.

6 One is to* analyze the current methods of tool and minor equipmentmanagement that are being employed by construction3 contractors. The second objective is to develop guidelines13II for an efficient system of tool management that may be usedby a large contractor with many projects scatteredthroughout the United States. The results of the firstobjective will be used to develop the second achieve these objectives, construction contractorswere contacted to discuss their current practices of tool5 and minor equipment management. Several topics pertainingto their management policy were covered during the3 that have successful tool and equipmentmanagement policies will form the foundation for therecommended system for a large contractor with many projectslocated across the MethodologyThis study is an independent research project in* partial fulfillment of the requirement for a Master ofScience in Civil Engineering at Purdue University. It wascompleted through a written and telephone survey ofconstruction contractors to ascertain their tool and minorI equipment policies.

7 A review of books and journal articles,5 while limited, was conducted to determine procedures thatfacilitate effective tool and minor equipment management* CHAPTER IIISURVEYSU Initial Letter SurveyA letter outlining tool and minor equipment managementwas sent to 37 contractors on February 1, 1990. Thesecontractors were selected on the basis of the volume of workthey performed and the fact that most have construction3 projects scattered across various portions of the UnitedStates. A point of contact and their telephone number wassolicited from each firm. The letter is shown in Appendix3 of the thirty-seven firms responded to the3letter. This response produced a 57% return. A list of thefirms who responded is provided in Appendix Telephone SurveyA telephone survey was conducted from the 21 firms thati responded to the initial letter survey. This surveyemployed a questionnarie which was developed to cover theI many facets of construction tool and minor equipmentg management.

8 Each of the point of contacts were asked thesame questions. Each question will be stated and discussed3 first question is "What are your purchasing3i procedures for small tools ( hand operated and smallIII equipment)?". This question provides insight on the type of3 procedures and suppliers that contractors 2 asks "Do you lease hand tools or minorI equipment? If so, what type of tools and equipment areg leased? How has this been cost effective?". Even thoughthe tools and minor equipment pertaining to this study are3 relatively inexpensive, leasing is a reality in theconstruction Question 3 is "What percentage of project costs aredevoted to tools and minor equipment?". Various types ofconstruction (building, commercial, government, industrial,3 etc.) will result in different cost percentages being usedfor tool and minor Questions 4 and 5 concern tool storage and issueprocedures on a construction project. Question 4 is "Aretool storage/warehousing policies used on each project?

9 I What is the project size? What type of inventory methodsare being utilized?". Question 5 asks "How are tools issued3 at the project site? How is accountability built into theissue process?".U Question 6 concerns the loss rate of tools. Losing3 tools by either misplacement, theft or other reasons is acommon problem on construction projects. The question asks3 "What is the percentage of tool loss rate? What type oftools are most susceptible?".36I3 The next three questions pertain to tool/minor3 equipment disposal and replacement strategy that contractorsemploy. Question 7 asks "How do you determine when toolsI are to be disposed?". Question 8 is "How is tool disposalperformed: sell, auction, given away, ". Question 9asks "What type of tool replacement strategy do you5 employ?".It is important that contractors distribute tools andI minor equipment to other projects whenever the project iscompleted or when there is no longer a need for their 10 asks "How are tools distributed to other to5 other projects and what is the policy for doing so?

10 ".Taxes are a concern for all businesses, andconstruction companies are no exception. Whether or nottools are depreciated, or considered a project expense, is aIfactor that must be addressed. Question 11 is "How are3 tools depreciated for tax purposes?".Since most contractors utilize computers in one form oranother, techniques used to track tools and minor equipmenthave become faster and more accurate. Question 12 pertainsI to this and asks "Are any of the following methods being3 utilized: A. Tool Numbering System; B. Tool Databse System;or C. Bar Coding?".3 In today's competitive atmosphere innovation can be thedifference between winning and losing a constructionI project. Question 13 deals with this aspect and asks "What*7I3 type of innovative tool management methods or procedures areI being accomplished by your firm? Why?".The survey questionnaire is shown in Appendix CHAPTER IV3 SURVEY RESULTS1 Construction Company Survey* The 21 construction companies who responded to theinitial letter survey formed the basis for further , a telephone survey of the firms was conductedto analyze current methods of tool and minor equipmentI Purchasing Procedures3 Table 1 was developed utilizing thp data received fromquestion number one.