Finding your iceberg
Asset management needs a disciplined approach to maximise value and minimise liabilities across a portfolio of assets. A fit-for-purpose asset management strategy should link into an organisation’s strategic objectives. This will include creation or acquisition of appropriate assets in the first place, how best to utilise and support them and the adoption of optimal renewal or disposal actions, along with the ongoing management of any residual liability.
To do asset management effectively, organisations need to combine a holistic view of assets, their condition and lifecycle, with a detailed understanding of each asset, its performance, failure rates, maintenance schedules and demand requirements.
We work with a range of complex asset owners and operators, often with significant variance in the quality, condition and age of assets across a portfolio. Without the right systems, strategies and approaches to manage and control these assets organisations are in danger of ‘freezing’ the true value of their assets rather than enabling value and optimising cost.
The Institute of Asset Management defines Asset Management as
The systematic and co-ordinated activities and practices through which an organisation optimally and sustainably manages its assets and asset systems, their associated performance, risks and expenditures over their life cycles for the purposes of achieving its organisational strategic plan.
That’s quite a mouthful. I prefer the simpler explanation from ISO 55000:2014 (becoming a common standard on asset management) which states “the coordinated activity of an organisation to realise value from assets.” Clearly the shape and size of your asset ‘iceberg’ depends on the complexity, scale and geographical reach of your business and customers.
It may apply to tangible assets such as buildings and equipment or to intangible assets such as human capital, intellectual property and financial assets. Regardless, we find that more and more people are understanding that Asset Management is not so much about ‘doing things to assets’ but about delivering value to customers through the effective use of assets.
Sizing your iceberg
All organisations will have assets and asset systems of different complexity and criticality that may in turn shape the Asset Management practices to be applied. Within an asset portfolio, best practice typically focuses on the ‘core systems’, normally assets that sit at the highest end of the criticality scale within an asset portfolio.
Diverse, geographically distributed, networked and diverse types of assets can generate their own information management and people management challenges. They may require a different resource profile to inspect, maintain and quality assure.
The broader business environment can also shape an effective asset strategy and determine the management lifecycle of assets. For example regulated utilities infrastructure, installed and maintained over a longer lifecycle will require a different application of best practice to short cycle high turnover assets.
Asset management should be seen as ‘the whole is greater than the sum of the parts’...the overall picture needs to be one of holistic insight, process integration, cultural engagement and optimisation of all aspects of asset management. The Institute of Asset Management
Adopting a best practice asset management approach can enable significant benefits. In future blogs we'll talk about what you can do next but in the meantime why not have a read of some of the other content on this site.