The principles of asset management are universally applicable across all asset categories, from passive assets such as buildings and infrastructure, to static assets like land, and active assets including mechanical, electrical, electronic, mobile equipment, or software. While the techniques, practices, and lifespans vary for each asset type, the overarching principles remain constant across the board.
For most organizations, even those managing a diverse range of assets, these fundamental principles provide a unified framework. This allows senior management to evaluate the relative value of different activities or services, applying a consistent approach to decision-making. An asset management system must be capable of delivering the required outcomes at every stage of an asset’s lifecycle, ensuring optimal performance and longevity.
Core Asset Management Principles:
“Value Added/Level of Service”
Assets exist primarily to facilitate the delivery of services or products that stakeholders deem valuable. For each consumer or stakeholder, there exists a baseline service level, beneath which a service loses its perceived value.
“Life Cycle”
Every asset undergoes a distinct lifecycle, with identifiable phases. A thorough understanding of this lifecycle enables more adept asset management practices.
“Failure”
Time, usage, and the operating environment work to break down all assets; failure occurs when an asset cannot do what is required by the user in its operating environment.
“Failure Modes”
Not all asset failures result in the same consequences. Some have minimal impact, while others can trigger significant operational disruptions.
“Probability”
Assets of identical age do not necessarily fail concurrently. The likelihood of failure varies, influenced by multiple factors including usage and condition.
“Consequence”
Not all asset failures result in the same consequences. Some have minimal impact, while others can trigger significant operational disruptions.
“Total Cost of Ownership”
There exists an ideal investment threshold across an asset’s lifecycle. Striking a balance between performance and cost, this threshold ensures an optimal level of service while mitigating risks.
Importance of Asset Classification
A granular classification is essential for effective asset management. It allows organizations to tailor their strategies and resources to specific asset types, ensuring optimal performance and cost-efficiency.
Key Classification Factors
- Criticality: Assess the asset’s importance to the organization’s operations.
- Value: Determine the asset’s financial worth and potential revenue generation.
- Risk: Evaluate the potential risks associated with the asset, including failures, security breaches, and environmental hazards.
- Life Expectancy: Estimate the asset’s useful life and plan for its replacement or decommissioning.
The challenge is to apply these principles systematically within a complex organization – through an asset management program.
NEXGEN Asset Management: Your Partner in Implementation
NEXGEN Asset Management software provides the support you need to implement your asset management program. Including asset inventory, work orders, inspections, preventive maintenance, seamless GIS integration and management reporting. NEXGEN also manages your Asset Management Processes including risk-based capital improvement, predictive maintenance, asset lifecycle planning, and condition assessments that automatically update asset useful life. In other words, one solution is to meet both needs.
Explore similar posts.
