How to calculate the true cost of tool ownership

Hidden costs are everywhere in a construction business. From downtime to administration and repairs, it’s easy to lose sight of how much money you're actually spending on a day-to-day basis. Tool parks in particular are notorious for hidden costs, and when it comes to maximising value within your business, these unaccounted costs can make a huge difference. 

Within every tool park, there are a range of direct 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're 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 tool park. 

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

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Purchase price
The up-front costs of purchasing each tool

Replacement and backup batteries for cordless tools

Any costs associated with repairing tools

Chargers have a short life-span and often need replacing

Back-up tools
Procuring and renting back-up tools

Costs associated with configuring tools


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

Time lost when workers are unable to work


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, the true cost of your tool park can quickly spiral.

why these costs matter

Knowing all the costs associated with your tools is essential in understanding the true value of your tool park. Without this information, it’s impossible to know how profitable your business truly is.

At Hilti, our productivity experts have helped thousands of businesses streamline their tool parks and optimise the way their assets are managed. By identifying the areas of waste in your business, and the hidden costs throughout your tool park, we can help you to make changes that will improve productivity whilst saving you money.

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