Whether it’s building skyscrapers, creating new neighbourhoods, or improving roads and bridges, construction companies need smart money plans to get everything they need and make their projects happen. What strategies make construction asset finance beneficial for businesses?
The Salesforce Tower in San Francisco was completed in 2018 at a construction cost of $1.1 billion. Developed by Boston Properties and Hines, the project was made feasible through a significant construction loan secured by a consortium of banks. The strategy, called the construction asset finance, enables developers to maintain cash flow and bring visionary buildings to life without depleting their resources.
The financial structuring for the development of Salesforce Tower leveraged the anticipated value of the tower to manage the substantial costs of large-scale construction and became the lifeline for ambitious urban developments.
This article looks at the concept of construction asset finance in detail, exploring why it’s important, how it works, and how it helps shape our cities and towns.
What is a construction asset?
Construction asset finance refers to the financial mechanisms used by businesses to acquire assets related to construction. Whether you’re involved in public works, private development, or self-funded building projects, construction asset finance provides the necessary access to these assets
Construction projects include all the things a construction company needs to get the job done, like equipment, machines, trucks, and more. Construction asset finance helps businesses get access to the things they need.
What does asset financing include?
Asset financing means getting money to buy things your business needs to work. These things can be different depending on what your company does. But usually, they include:
- Machines and Tools: Stuff like machines, vehicles, computers, and special tools for making things or providing services.
- Vehicles: This covers buying vehicles for business, like trucks or vans used for moving things around.
- Buildings and Land: Money for buying or building places where your business operates, like offices, warehouses, or stores.
- Technology: Buying computers, software, and other tech stuff to help your business run better.
- Furniture and Things for the Office: Getting desks, chairs, and other things needed to set up a workspace.
- Making Things: If your business makes stuff, this can include getting buildings or equipment for creating products.
- Construction Tools: Getting money to buy equipment, vehicles, materials, and other stuff needed for building projects.
Asset financing covers many different physical things that businesses need to work well in lots of other industries. It helps companies to get, improve, or grow their stuff while keeping money safe and managing money flow well.
Benefits of construction financing
Construction financing offers several benefits to both businesses and individuals involved in construction projects:
- Regular updates to your technology can lead to cost savings and improved productivity throughout your business. We provide a cost-efficient option compared to traditional bank funding, with competitive rates.
- A personalized finance plan will help your construction business. It lets you use the newest technology without spending your own money, and regular payments make it easier to plan your budget and understand your finances.
- Growing: With financing, construction companies can do bigger projects, expand their businesses, or invest in new technology, which helps them grow and compete better.
- Managing Projects: Having enough money means projects can run smoothly without delays because everything needed is available when it’s needed.
5 asset management strategies for construction companies
Here are five important strategies for managing your resources better to make things work smoothly:
- Use special software
Managing resources like equipment can get really hard, but using special software can help a lot. This software can track where each thing is, let workers sign in and out, and do many other tasks that would be too much work to do manually.
- Keep track of how long your things last
Things like equipment only last for a while, so you need to keep track of how long they work. This helps you know when you need to get new equipment. It also helps to prevent accidents caused by old equipment breaking down.
- Assign someone to take care of each thing
By giving one person the job of looking after each thing, it’s easier to keep track of everything. For example, if a team of workers regularly uses a big machine, you could ask one of them to check how much fuel it has, do maintenance, and keep track of how long it’s used.
- Check on your things regularly
As the boss, it’s up to you to make sure everything is working as it should. So, you should regularly check that your things are being taken care of and that they’re getting old at the rate you expect.
- Make changes if needed
If you’re keeping a close eye on your things and checking them regularly, you’ll notice if anything needs to change. Maybe your equipment is getting old faster than you thought, or perhaps it’s getting lost too often. Either way, you can make changes to fix the problem and make things work better.
Construction asset finance helps construction companies succeed in a busy and challenging industry. By knowing how it works, using its advantages, and using customised plans, businesses can reach their goals, grow, and do well in the always-changing construction world.
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