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12.0 Asset management objectives

12.1 The need of asset management objective is clearly stated in PAS 55-1 from the Institute of Asset Management, United Kingdom and the statement is shown below:

“The organization shall establish and maintain documented asset management objectives at relevant function and level within the organization. The objectives shall derived from and consistent with the asset management strategy.”

12.2 It is very clear that emphasis is on a single asset management objective throughout the organization and the organization shall disseminate or establish asset management objectives to all staff at various levels in the organization. No single unit/sections in an organization shall have an objective deviating from the main objectives. This is necessary if any asset management policies, strategies or operational tasks need effective executions.

12.3 In realizing the asset management objectives, the organization shall consider:

a. Legal, regulatory and statutory requirements
b. Technological advancements
c. Financial, operational and business requirements
d. Related risk in asset management
e. Views for appropriate stakeholders

12.4 The above requirements are important so that the objectives developed are always relevant and in the context of the organizational business environment. In this respect, every activity and data gathering will be streamlined throughout the organization resulting in a shared vision, improved and effective information and decision-making. As such, the organization shall be able to meet service delivery objectives efficiently and effectively.

12.5 As a result, the organization would be able to plan, formulate and implement strategies and, lastly measure its performance. It is also important that a communication plan be established so that the objectives can be communicated effectively to its stakeholder, customers, users, key suppliers and so forth ensuring formulating of a set of reasonable objectives and successful delivery of service.

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Fundamentals of Asset Management - continuation

11.0 Asset stakeholders

11.1 Stakeholders are person, group, or organization that has direct or indirect interest in the asset. In infrastructure assets, the person, group, or organization who used the asset are basically the stakeholders of the asset and their quality of life will be determined and influenced by the asset. On the other hand, the government or the person that funds and owns the asset is the key stakeholder of the asset.

11.2 It is good practice to involve in the planning for new asset, those who are concerned directly or will be affected by the asset. Their inputs are important to successful delivery and the benefits realization of the asset. This is what we call good governance of the asset.

11.3 In this respect, the organization who manage the asset, service providers and the construction community have roles to play and hence, be responsible to achieve the asset’s objective(s). They have the responsibility to create and manage the asset. Each of the organization, service providers and the construction community has different roles and responsibility in the asset life cycle. Their actions are inter-related and have considerable effect on each other when realizing the asset. They must instill good governance in order to have an asset that fulfills its objectives.

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1o.0 User expectations

1o.1 When assets are constructed or installed, these assets are meant to be used or utilized. As such, the asset must be able to continuously provide services to the community. Subsequently, asset owners will derive benefits from the assets whilst the public or the users of the assets will enjoy a better environment and quality of life.

10.2 On the other hand, a user of the asset does not expect much from the asset used but when they relate it to quality, quantity, availability, safety and responsiveness, questions will be raised by the user when there is a drop in the level of service of the asset. Hence, the organization must act accordingly to the questions raised as it has an impact on its organization’s service delivery. Though it is impossible to have zero gripe from users, efforts must be made to minimize any discomfort to the users thus minimizing complaints from users.

10.3 To do this, organizations must take a proactive stand and constantly thrive to understand user expectations through regular interaction with users. By having regular interactions, the level of satisfaction can be determined. There are various methods to implement the assessment or survey and the most common method is by street, online or a general survey. Nevertheless, focus groups may be employed at an earlier stage before implementation to gauge the fulfillment of the asset objective.

10.4 Examples of user expectations are:

1o.5 From the above table, user’s expectations relates to the amount of money the user have contributed through statutory taxation to the government or the local authority. As such, user will expect value for money. Likewise, the organization also expects the asset to function as specified in order to realize the organization service delivery within whatever constraints or limitations the organization has. To match the two (2) expectations, the logical thing to do is by giving the asset a service level, hence satisfying both the organization and the user.

10.6 By assessing the condition and performance of the asset in conjunction with periodic and customary customer satisfaction surveys, CSS in short, the organization will be able to gauge the achieved service level of the asset and appropriate the amount of funds to asset if the achieved asset’s service level is lower than the stated service level. If gaps arise between the actual and and the intended service of the asset, measures must be taken such as renewal to ensure that the asset will continue to deliver its sevice during it functional life.

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Asset management fundamentals - continuation

9.0 Asset life cycle

9.1 We do sometimes just fix the asset after it breaks down because it is the easiest way to maintain assets. It might be the right strategy but it is the best option and relative easy to undertake. In doing so, the cost of maintenance might not be justified and there is no value for money. There is also high probability that the cost is more than expected and the maintenance is sometime “overdone” and repeatable. Nevertheless, without proper planning, design and construction or acquisition, the asset may cease to have value to the organization. By doing this, the asset has become a liability and a burden to the organization. With asset management, these practices are things of the past as asset management starts from the inception of the asset until the end of the asset life, which is the life cycle of an asset and giving prominence to the operation and maintenance of the asset. Asset life cycle does not start from the day it is operating or maintained, but it starts from its inception and asset life cycle is an important element in asset management. Control starts from the inception stage, making its way up to end that is the disposal. Some would say that we must design to maintain rather than design to build which is easier.

9.2 Any asset would have a typical and simplistic life cycle, that is:

a. Initiation

Initiation involves such activities as planning and designing. This is the most crucial activity for it involves monetary decision such as is the type of funding, the benefits that can be derived, cost of the asset, the operational and maintenance cost, and most of all, the value of the asset at disposal. This stage is actually a major business decision for an organization.

b. Procure or acquire

This stage will usually involve activities such as constructing the asset, installation, or even buying an asset. Construction or installation activities will also involve sub-activities such as supervision of the works including formulating and implementing procurement strategies.

c. Operate and maintain

Once we acquire or complete the construction/installation of an asset, we need to maintain and operate the asset. The life span of an asset is the longest at this stage, which is usually at the range of 90% of the life cycle period and 80% of the whole life cost of the asset. At this stage, the asset is vulnerable to the lack of maintenance resulting in a low disposal value.

d. Dispose or renew

As the asset reaches its lifespan, an organization must make a decision whether to dispose or making a complete renewal of the asset. If the asset is disposed, the organization will have to start to plan for a new asset, if the need arises.

9.3 For infrastructure assets, a more comprehensive and detailed life cycle must be developed to reflect the actual activities an stages of the asset such as buildings or roads. The figures below llustrate typical examples:

9.4 Briefly, every activity that is pre-requisite to materialize an asset (no matter what asset it is) is detail out in sequence in order to manage and control the output of each activity including measuring the outcome of each activity. In this context, the output of each activity must reflect back the asset intended objective. If the asset does not meet its objective, the asset’s specification needs reviewing, amendment or even a total revamp, to ensure the asset’s objective is met in all the activities. This is the importance of an asset life cycle. The life cycle ensures reviews and allows immediate amendments or modifications to its specification before any preceding activities to proceed.

9.5 The above statement is in line with the previously stated asset definition, that is:

a. An item/physical component/facility that have a distinct value to the organization; and/or

b. An item/physical component/facility that enable services to be provided

In order for the asset to give service well within the designated objective, we must manage and control the activities at its infancy that is during the inception phase and up to its disposal or renewal or even upgrade.

9.6 At the end of the day, whatever asset that is constructed or installed, the asset is what the organization wants in order for the organization to realize its service delivery.

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Asset Management Fundamentals

4.0 Asset regisrty

4.1 These are a few questions that an organization need to ask or answer about their assets:

a. What assets are owned or owned by others
b. When the assets are acquired;
c. When the last date repaired?
d. Why the assets are acquired;
e. Where the assets are (that is the location of assets);
f. Who is the custodian of the assets
g. How the assets are maintained;
h. How much is the cost of acquisition and maintenance of the assets

4.2 If the organization has all the answers for the above questions, the organization has a good asset registration system, which is a pre-requisite to a good management system.

4.3 If the organization is able to only a few of the questions, it is high time now to start registering all the assets acquire, owned or leased by the organization. The asset register must be able to answer the basic questions whilst a more advance asset register will be able to do analysis and data drilling. The assets to be registered must comply with the two (2) requirements listed below or whatever the organization policy.

4.4 Once we have done the asset register, the organization now has a complete picture of the organizational assets. It is easier to say than doing it, but the task is needed before anything else.

4.5 Earlier, we have defined an asset as:

a. An item/physical component/facility that have a distinct value to the organization; and/or

b. An item/physical component/facility that enable services to be provided

4.6 1.1 The above criteria are the basis of an asset register. When setting up an asset registry, we must also realize that assets have generic or similar characteristics between other assets in the organization. As we know that physical assets deteriorates with time through normal wear and tear or even technology changes, these factors must be incorporated in the asset registry especially on its designed or intended life.

4.7 Usually, an asset has these generic, familiar and typical characteristics, that is:

a. Design life;

Design life is the period from acquisition to a time determined by the designer, which the asset expected to work or function within the specified design parameters.

b. Economic life;

Economic life is the period from acquisition to a time when the asset becomes a burden or too costly to operate and maintain the asset to a particular level of service (that is ceases to be the lowest cost alternatives in delivering its service)

c. Functional life;

Functional life is the period from acquisition to a time when the asset ceases to perform the function specified

d. Operation and Maintenance regime;

Operation and maintenance regime are planned activities necessary to retain the assets as near to its original condition or function. The planned activities includes operating the asset, doing repair works, and so forth. Maintenance may come as planned maintenance, routine maintenance or even breakdown maintenance

e. Service provided or its function;

The service provided is meant by the performance or function expected from the asset during its life span and characterize by either quality, quantity, availability or safety. The service provided always relates or links to the strategic objectives of the organization.

f. Dynamic or passive assets;

Asset is ether a dynamic or a passive asset. Dynamic assets have moving parts while passive assets have none.

4.8 To relate the design, economic and the functional life of an asset, the figure below explain in a graphical form the relationship between those three (3) live spans.

Fig. 4.8 – relationship between design life, economic life and functional life


4.9 Once we have known our assets and an asset registry, we can go to the next fundamental that is role and responsibility.