Asset
management is essentially the study and implementation of maximizing
the benefit of the assets that you own. If you are able to maximize
the benefits of the assets that you own then you will usually be able
to gain a competitive advantage over your competitors. That is why it
is essential to spend resources geared towards managing your assets
in order to get a competitive advantage.
Typically
when managing the assets that you own it will require looking at the
total life-cycle of the assets in your inventory. The total
life-cycle includes the steps undertaken in procurement right through
to distribution of the resources that your company produces.
For
example, the majority of physical assets require maintenance
throughout their design life. In the construction industry roads,
bridges and buildings require maintenance. The health industry
facilities require maintenance to optimize their performance. And in
the financial industry accounts require management to again optimize
their performance.
If such
maintenance is not undertaken then the design life of the assets will
usually end prematurely. That means you probably will not get the
full benefit of the resources that you are trying to manage. Likewise
this will come at an additional cost because you will have to
purchase a particular piece of equipment before it would otherwise
need to be purchased.
If too
many resources are utilized during the design life of the asset then
you are not maximizing the efficiency of those resources. The reason
for this is that if you spend too many hours inspecting and
maintaining your assets then these resources won't be used elsewhere
within your organization.
However
if you under-utilize the management of the maintenance resources then
your assets are likely to fail before their theoretical design life.
Ultimately there is a sweet spot whereby the time and money you spend
on asset management balances the design and operational life of the
assets that you are wanting to protect.
That is
why it is critical to understand the science behind asset management.
There are a number of asset management systems available however a
great deal of them are dependent on the industry that you operate
within. Likewise a lot of the processes are dependent upon the actual
size of your organization.
In the
first instance with managing your assets, it is important to
undertake an inventory of the current assets under your control. For
example if you were a municipality who wanted to undertake a road
asset management plan then you would undertake an inventory of the
total number of miles of gravel roads, sealed roads and highways
under your control. If the existing data is not currently available
then this can become a major part of the initial asset management
plan that you are wanting to undertake.
The next
step in the management process of these assets is to then determine
the total cost of maintaining those assets. In the above example you
would determine the labor and plant costs of managing those assets.
After this, you then determine the total design life of an asset. For
example, a sealed road may have a total design life of 20-30 years
before it needs to be re-constructed.
Utilizing
all of these figures you can then determine the capital cost of
replacement, the design life of the asset and the annual maintenance
cost of maintaining the asset. From there management can then
determine the optimum benefit-cost ratio over the total design life
to maximize the resources in the protection and maintenance of the
asset.
This
asset management structure can then be used across multiple
industries. For example, in the financial sector you can determine
the total management cost of analyzing and maintaining a particular
portfolio of stocks. Then you can compare this against the projected
return on the portfolio over a given time-frame based on particular
indicators. From there management can determine the total life
cost-benefit ratio to project whether the management of the asset is
worthwhile.
As you
can see there are a number of factors that need to be taken into
consideration when performing asset management. Firstly it is
important to take an inventory of the current assets in your
portfolio. Next is to determine the maintenance costs of maintaining
those particular assets over a fixed period of time. From there it is
possible to determine the net positive cost-benefit ratio of
providing maintenance and management of those assets.
However
given a fixed design life of a particular asset it is critical to
determine the correct asset management plan in order to maximize your
resources. If you place too many resources into the maintenance of
your existing assets it comes at an additional cost. If you don't
place enough resources into maintaining your existing assets then the
assets will most likely fail before their projected design life. As
you can see there is a critical benefit-cost ratio that is critical
to follow when designing an asset management plan.