What is Asset Management?

What is AM Blog

“Modern society is reliant on physical assets in order to function effectively.

Managing those assets so they can provide the right products and services now, and into the future, is a core part of the discipline known as Asset Management.

But assets can be made almost anything – a brand, a license, a right of way, a group of companies, opportunities – anything in which you invest to achieve your purpose.”

First of all, what is an asset?

An asset is an item, thing or entity that has potential or actual value to an organization. 

What is asset management?

“The coordinated activity of an organisation to realise value from (the use of) assets.”

Or if you prefer

“The life cycle management of physical assets to achieve the stated outputs of the enterprise”.

The Principles that support Asset Management

The Principles of asset management (called “Fundamentals” in ISO 55000) are contained in the Figure below – the Asset Management Council’s “Asset Management Concept Model.

There are four Principles that work in tandem to deliver asset management:

  1. Value. Assets exist to provide value to the organization and its stakeholders
  2. Alignment: Asset management translates organisational objectives into technical and financial decisions, plans and activities.
  3. Assurance: Asset management gives assurance that assets will fulfil their required purpose
  4. 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 vale 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.

What is an ISO:55001 Asset Management System?

ISO:55001 is the international reference standard that documents the requirements for an Asset Management System.  The ISE:5500X suite of standards, published in 2014, contains:

  • ISO 55000 Asset management – Overview, principles and terminology;
  • ISO 55001 Asset management – Management systems – Requirements; and
  • ISO 55002 Asset management – Management systems – Guidelines for the application of ISO 55001.

ISO 55001 is the worldwide standard/benchmark for any organization seeking to demonstrate a high level of professionalism in the whole of life management of its physical assets.

A central concept of ISO 55000 is the application of a management system.  This “asset management system” aims to deliver assets that are and remain both “Fit for Purpose” and “Safe to Use” for the life of the asset.

It is important to note, that an ISO 55000 asset management system:

  • Consists of the policies, practices, processes, business rules, procedures etc. that provide covenants and direction to the asset management function in a business
  • Is a system of policies, practices, processes, business rules, procedures that work together to help the organization accomplish its objectives, namely the asset management system:
    • Provides a documented foundation for the decisions and processes through which the business manages asset acquisition, maintenance, operations, improvement and disposal
    • Defines roles and responsibilities associated with the above decisions.
    • Uses policies and standards to co-ordinate activities so that business can deliver its goals.
    • Provides a consistent, deliberate practice required to manage physical assets efficiently.
  • Can use software, but is not wholly a software tool

Developing an asset management system (AMS)

Developing an ISO 55001 compliant asset management system should not labour-intensive.

There are industry proven frameworks, standards and models available that can facilitate and expedite the development process.  In that context, we will refer to the Asset Management Council’s AMBoK.

The Benefits of an asset management system (AMS) include:

  • Formalizes asset management providing:
    • Repeatability and consistency of business outcome/outputs; and
    • Assurance that business needs will be met.
  • Provides structure to asset management activities (concept exploration, design, operation, maintenance, improvement and disposal)
  • Establishes roles and responsibilities and decision rights for each asset management activity
  • Provides an approved and documented set of risk based, data driven analytical processes to support decision making
  • Expedites ISO 55000 alignment or certification

What does an Asset Management System look like?

See the Figure below, from the AM Council’s AMBoK.  An Asset Management System consists of the following elements:

  • Stakeholders
  • Leadership and Culture
  • Asset Management Objectives
  • AM Processes
  • Roles and Responsibilities’
  • Competency and Engagement
  • Decision making
  • Risk and
  • Performance Monitoring and Improvement

The artefacts (documents) from the Asset Management System (based upon ISO 55001 requirements) include:

  • An Asset Management Policy;
  • A Strategic Asset Management Plan; and
  • Asset Management Plan(s).

The purpose of each of the above is documented in the figures below.

Summary

  • Physical assets exist to enable businesses accomplish its objectives.
  • An ISO 55000 asset management system provides structure, a methodology and processes that assure organizations deliver on their objectives.

Leave a reply