Why Coordination & Value Are Key to Good Asset Management
Humankind has been managing assets since the invention of the first tools. However, the techniques have evolved in line with the complexity of the assets managed, and the criticality of the functions performed by the assets.
Nevertheless, it was only in the 1980s that a profound change happened, largely prompted by significant failures. In the United Kingdom, several major accidents on oil platforms and in the rail system triggered new thinking around how to manage assets. At the same time, Australian and New Zealand authorities were facing increasing dissatisfaction with the cost, reliability, and levels of service for much of their infrastructure which challenged them to develop a new asset management model. In the following 20 years, asset management evolved rapidly to become a well-established discipline with its own standards.
Why Asset Management?
The painful experiences in the UK, Australia, and New Zealand demonstrated that a management system was necessary to help balance the costs, performance, and risks of asset-intensive organizations. In most cases, assets have very long lifecycles—often longer than the engineers and operators that design, build, and operate the assets. This presents a unique challenge, where decisions made by one generation of engineers and managers affect the operation of assets long after these people have retired. It’s therefore important to make cost, performance, and risk decisions with the full lifecycle of the assets in mind.
Many assets are used to deliver essential services, such as supplying water, electricity, gas, and transportation. The companies delivering these services are often monopolies, regulated by government to protect the interest of the public. In the UK and Australia, regulators were quick to understand that good asset management would result in better value for all stakeholders, while honoring constraints such as minimum levels of service, acceptable risks and costs, etc. Regulators in these countries became major advocates of better asset management, which explains why specific industries and countries took an early lead in modern asset management.
Key Concepts: Coordination & Value
The official definition of asset management from the ISO 55000 standard is quite simple: it’s the coordinated activity of an organization to realize value from assets. The word “coordinated” is key: asset management should be cross-functional, as it requires many departments and teams within an organization to collaborate in a coordinated system. The goal is to break down silos and ensure everybody in the organization understands the overall objectives and works together to achieve these objectives as efficiently and effectively as possible.
The word “value” is also important and is defined by more than just financial results. For most organizations, the concept of value requires a good understanding of the various stakeholders—both external and internal—and what these stakeholders care about. This knowledge is captured in a value framework, to help an organization create clarity, make better decisions, easily defend those decisions, and ultimately drive decision making.
Download this brochure to learn how a value-based decision-making approach helps organizations predict asset sustainment needs, optimize investment portfolios, and manage performance to maximize value—in alignment with the ISO 55000 asset management standard.
Stay tuned for my next article where we’ll explore the key components of an asset management system and why it matters.
Learn more about how Copperleaf’s solutions support the implementation of ISO 55001.