The existence of maintenance liabilities, the fragmentation of stages of asset life-cycle, the dynamic nature of funding and changes in demand profiles are symptomatic of the many challenges that make the management of asset portfolios difficult. Management?s goal is to successfully address these issues.
Asset management mean different things to different people and is described a framework method or process, discipline or tool. The term ?asset management? is liberally applied in relation to funds management, building maintenance and property development.
Strategic asset management, in the context of this article, is a discipline. The aim of the practitioners is to improve our capability to derive value from the assets we use. The focus is not purely the technical aspects of maintenance. It extends to interrogating investment decisions and future asset-related commitments m by the organisation.
There are 3 primary goals of strategic asset management:
According to the New South Wales Treasury, the basic asset lifecycle model contains four phases:
Decisions made in one phase of the asset lifecycle influence asset performance in subsequent phases. Traditionally, responsibility for assets has been spread across a number of different roles. Typically, we see:
The differentiation between roles and phases increase?s the possibility of inefficiency, conflicting objectives, lack of coordination and missed opportunities.
Management has been described as an activity that enables organisations to be effective and to avoid wasted effort and resources. The survival and success of organisation is heavily dependent on management?s ability to plan and control. Systems theory is increasingly being used as a means of examining management systems and identifying the mechanisms of planning and control. A systems approach can be used to provide holistic view of assets within the organisation. It allows us to explore the relationships arising through the life cycle of the asset. An examination of the relationships within a systems life cycle model shows that the interaction between an asset and its organisation substantially economic. It operates through cashflows. In order optimise performance of our assets we should be aiming to plan and control the costs within the entire system, particularly to:
There are logical flows in the way the asset system performs. The performance of an asset throughout its life can be clearly und stood in financial terms or economic performance. The greater knowledge of the likely cost profiles arising over time, the greater our management ability becomes. Also, our knowledge grows as we witness performance, and can benchmark against those profiles.
Financial modelling is the key to establishment of cost profiles. The primary economic modelling tools utilised in the management of assets are discounted cashflows and lifecycle costing analysis. Database lifecycle costing models provide the flexibility to enable us to examine asset costs in an anatomical manner, such as by element, space or functional group. Strategic opportunities become evident by isolating individual cost items and by observing the nature of these costs over time.
Having the ability to plan and control is dependent on information available to managers. Assets, for the most part, are complex. Consequently the scale of data required and subsequent information generated to support the management of assets also tends be complex. Information technology has been fundamental in supporting the role of the asset manager, demonstrating that IT capabilities and applications are extremely beneficial. The costs and cultural changes associated with implementing appropriate strategies are seen by many to be excessive. Clarifying asset information requirements is an important step in avoiding overspending on software.
With good information we can make smarter decisions. With improved decision-making capability we stand a better chance of maintaining the level of performance required to support the organisation in its delivery of service. The value of an asset to an organisation is largely determined by the degree to which that asset supports the organisational objectives. For most organisations the services provided to its customers are strongly supported by their fixed infrastructure assets. Effective asset management would achieve results in the following area
The preferred balance of performance/cost/risk is dependant the strategic motives of the organisation. An understanding of these strategic motives is an important qualification for an asset manager. By applying financial modelling capability it is possible to simulate various performance/cost/risk scenarios until an acceptable balance is found. The decisions taken to achieve the balance determine the strategy.
Strategic asset management is a discipline capable of generating solutions to the challenges associated with the management of an asset portfolio. Its successful application is supported by:
By combining engineering knowledge, economic theory, commercial business practice and information technology, strategic asset management provides a source of tactical strategy development for asset owners.
Facility management organisations can benefit by applying the very same principles to the development of service products for their clients.