Frequently asked questions
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Why is asset management important?
Water, Transportation, and Communication's infrastructure in the United States are in desperate need of an overhaul and with cost going up so rapidly, it is crucial to utilize a systematic process that will help achieve the ultimate goals of providing the level of service that customers have come to expect. Unfortunately, deteriorating infrastructure, limited budgets, restricted flexibility in rates, increasing regulatory demands and the ever-increasing expectations by the customers, utilities are left to find mechanism that will bring success. Innovations in technology, public policy, and funding are the need of the hour.
What are the objectives of asset management?
Asset management objectives vary depending on what industry or type of business an organization is in. Regardless of industry, however, they can be achieved through careful and strategic planning. Here are the common goals achieved using an asset management program:
Identify and eliminate wasting assets
Asset management helps minimize losses by rapidly identifying wasting assets across the organization and eliminating them. “Wasting assets” refers to items that decline in value and performance over time due to their limited lifespan. An example of wasting assets can be water infrastructure, computer equipment, machinery, vehicles, or any asset that is vital to business operations.
Improve asset utilization
Asset management enables organizations to determine the state or condition of assets. This valuable insight helps them make business decisions that will improve the utilization and allocation of assets which, in turn, will further extend their lifespan and speed up business processes.
Maximize return on investment
When the two goals above are achieved, this ultimately results in a maximized return on investment. Companies or organizations are able to save on costs that typically go into repairs and repurchasing of assets.
How to develop a strategic asset management program?
A strategic asset management plan describes the specific activities, resources, and scheduling required to meet the asset management objectives of the company or organization. Below are some of the key elements that should be taken under consideration when creating a strategic asset management plan:
Set levels of service
Level of service most frequently serves as the mission and vision of an organization. By setting levels of service, the services that assets provide are measured by its safety, reliability, quality, availability/accessibility, responsiveness, cost, sustainability and environmental effects. This allows organizations to determine the value of each asset and the operating, maintenance, and renewal activities that will keep it in good condition.
Collect information
In this step, all assets owned by the organization should be accounted for. This entails gathering information such as total count, location, value, date acquired, and expected life cycle. It is also important to calculate the life-cycle costs of each asset. This information will be helpful when determining which assets need attention or removal.
Specify how assets will be managed and operated
Understanding an asset’s lifecycle and lifecycle management is a key process for an asset management plan. This step summarizes the planned actions that will enable assets to meet the desired levels of service in a sustainable way. The following subsections should be determined in the strategic asset management plan:
Background Information – provides asset information such as age, size, capacity, performance, current condition and value.
Risk Management Plan – Identifies the risks that might affect the delivery of service, goals or objectives impacted by the risk, risk identification process, risk assessment, and risk mitigation plans.
Operating Plan – Provides defined operating procedures to meet the required service levels.
Equipment Maintenance Plan – Outlines the defined maintenance strategies and methods, and forecasts of planned maintenance costs.
Disposal Plan – Identifies the activities associated with the disposal of decommissioned assets. It also includes forecasts of cash flow of income/expenditures from asset disposal.
Establish a long-term financial strategy
This step summarizes all the financial requirements of the activities mentioned in the previous steps. A long-term financial strategy should include historical and future budgeted capital and operating expenditures and determine funding sources.
Create an improvement plan
An improvement plan should provide improvement initiatives, responsibilities, resources, and timeframes. Having an improvement plan can help the organization monitor and control asset management activities to ensure that good asset management practices are applied and that the overall process stays on track.
Create a communication plan
Communication plans are just as important to the success of the entire process as any of the previous elements. A great communication plan will be the line of communication between stakeholders to provide transparency of the business