This informal CPD article, ‘What is Asset Management?’ was provided by Asset Wisdom Experts, an online learning platform to train the next generation of Asset Managers.
Learning objectives
After reading this article, learners should be able to:
- Define asset management using ISO 55000 terminology.
- Recognise different types of organisational assets.
- Understand the role of people and leadership in asset management delivery.
- Identify key organizational benefits of asset management.
Asset management is defined in ISO 55000:2014 as:
“the co-ordinated activities of an organisation to realise value from assets”.
Effective asset management requires an understanding of which assets are necessary for this, and involves integrated thinking and aligning various techniques, like objective setting, strategy development, decision-making and operational excellence.
Do you know what assets you have?
Not everyone appreciates what assets they actually own, both individually and organisationally. However, in both cases, time and money is spent gathering information about each of the assets which is not necessarily utilised to its best advantage.
Assets are not just objects!
Assets may include physical infrastructure, information, intellectual property, financial resources and human capability. The Global Forum on Maintenance and Asset Management (GFMAM) describes asset management as applying to all assets that contribute to organisational value delivery (GFMAM, 2014).
Many believe that organisational assets consist only of buildings and equipment – this is certainly not the case. Assets are not just objects; they are those things that have value, or potential value, to an organisation. They could be a brand, intellectual property or physical objects. Assets rarely operate alone; they are frequently connected in what is called an ‘asset system’, where several assets work together for a particular purpose.
The term ‘asset portfolio’ is used to describe all the assets owned or managed by an organisation, such as Housing Associations, water or road network, or all the sites and facilities owned by a manufacturing company. Portfolios are typically broken down into asset groups, where groups have similar functions or physical characteristics.
People are assets
Successful asset management depends on organisational capability. The Institute of Asset Management (IAM) identifies competence and culture as critical enables of effective asset management implementation (IAM Anatomy, Version 3). The organisation needs to ensure that people are capable as effective asset management involves everyone understanding not just their roles and responsibilities, but also why their contributions are needed. Asset Management is not a function; it is a multidisciplinary organisational activity breaking down silos and promotes team working. Capable people are better informed and motivated, which leads to greater engagement and contributes to the success of the organisation. Identifying focused capability needs and embedding an enduring competency development programme are key to the successful delivery of asset management.
In addition to ensuring staff capability is addressed, as well as benefiting the organisation, good asset management will bring benefits to staff on a personal level. These benefits include such things as:
- a clear understanding of their roles and contributions to the delivery of the organisation’s objectives
- better cross-departmental collaboration through effective two-way communication
- improved information and support to help them do their job, and
a less reactive workload as asset reliability improves, and co-ordinated planning becomes more effective.
Leadership
So, we have said that good asset management requires competent people doing the right task, the right way, what about Leadership? This is critically important to set and maintain a clear direction for staff, and to ensure that the words and the actions match up. Leadership commitment is essential for effective asset management. ISO 55000 highlights the importance of top management in establishing asset management policy, aligning objectives and ensuring integration across organisational functions (ISO 2014).
What are the benefits of Asset Management?
Organisations adopting structured asset management frameworks report improvements in lifecycle costs control, risk management and service performance (UK Infrastructure Client Group, 2016). There are many benefits that Asset Management can bring to organisations, here are some examples:
- improved financial performance
- better asset investment decisions
- more robust risk management
- improved services and outputs
- enhanced reputation
- improved organisational sustainability
- improved efficiency and effectiveness
- better motivated staff
- opens new career opportunities
Reflective Learning Questions
Consider the following:
- Does your organisation clearly understand which assets contribute most to value delivery?
- How well aligned are asset decisions with organisational objectives?
- What role does leadership play in supporting asset management capability in your organisation?
We hope this article was helpful. For more information from Asset Wisdom Experts, please visit their CPD Member Directory page. Alternatively, you can go to the CPD Industry Hubs for more articles, courses and events relevant to your Continuing Professional Development requirements.
References
ISO (2014). ISO 55000: Asset Management – Overview, principles and terminology. International Organisation for Standardisation.
Institute of Asset Management (2015). Asset Management – an Anatomy (Version 3).
Global Forum on Maintenance and Asset Management (2014). Asset Management Landscape.
UK Infrastructure Client Group (2015). Enabling Better Infrastructure Performance.
Institute of Asset Management. The Big Picture
