A description of the foundations of Asset Management
This is a series of informative articles on physical Asset Management. These articles are intended to inspire and motivate and at the same time and remove the mystique that often surrounds the science and art of physical asset management!
To be clear, asset management is not maintenance rebadged! As a discipline, asset management seeks to align all the activities and resources expended on physical assets, to deliver the required business outputs and outcomes.
And what are “all those activities”? In summary, these include all the technical and financial decisions made throughout the asset life cycle – see the figure below.
And importantly, based on the costs curve documented in that figure, it is clear that most of the key decisions should be made during the Acquisition phase of life cycle. To do otherwise, is to “walk backwards into the future” – don’t be surprised at how much things cost! The worst part of that, is that after the asset is acquired there is often not a lot that can be done, it’s too late! Much of your Whole of Life costs are now locked in!
Asset Management is not just about cost though, it is also about reward (both financial and otherwise) and very importantly about providing assurance to the business, that the desired business outcomes can and will be achieved – through the use of the physical assets of the business.
In short, asset management is all about assuring the business that the physical assets are and will remain both “Fit for Purpose” and “Safe to Use”.
The Core Themes of Asset Management
The core themes that support asset management are described in the figure below.
As a result, it should be very clear by now that the discipline of asset management is not a technical exercise! To be effective and deliver business needs, Asset Management must integrate a number of disciplines, including financials, safety, environmental, people management and so on.
Much of the discussion in this article and those to follow support this theme.
So please read on ….
What is a model?
Models are a graphical representation of (often) a number of ideas. Those models are developed to support people gain the necessary understanding of those ideas.
The Asset Management Council has developed a number of such models for the purpose of explaining:
- The “Why” of asset management;
- The “What” of asset management; and
- The “How” of asset management.
See the figure below.
The Asset Management Council’s AMBoK provides a framework of models to describe asset management. Those models, see the figure above, represent the:
- Tactical; and
- Operational levels of asset management.
What do they do?
The three models combine to form a comprehensive asset management framework as a reference for asset management professionals and organisations.
The Asset Management Concept Model
As the title suggests, the Asset Management Concept Model documents the conceptual basis of asset management.
The intent is to serve as a conceptual framework in which the foundational elements of asset management can be identified, documented and then subsequently, be implemented.
The asset management Concept Model consists of four key Principles, connected by a set of processes within which a Plan, Do, Check, Act continual improvement process is implemented.
These are encased by a “stakeholder circle” of trust. Stakeholders are conceptually represented as an encompassing and influencing all asset management activities
The Four Asset Management Principles
There are four Principles that work in tandem to deliver asset management:
- Value. Assets exist to provide value to the organization and its stakeholders
- Alignment: Asset management translates organisational objectives into technical and financial decisions, plans and activities.
- Assurance: Asset management gives assurance that assets will fulfill their required purpose
- Leadership: Leadership and workplace culture are determinants of realization of value.
If any one of these principles are missing, the organisation will most likely see a reduction in value that the assets provide.
To have any value of themselves, all of these principles must be implemented within the organisations management system – in this case called – the Asset Management System.
So, to recap, the Asset Management Council’s Concept Model consists of the four Principles of asset management being Value, Alignment, Assurance and Leadership.
Those Principles are supported by a set of processes contained within an encompassing stakeholder circle of trust. The processes themselves implement a Plan Do Check Act continual improvement approach.
Next: The Asset Management System Model