How to Manage Capital Assets, Based on Processes Used By Stanford
Stanford is one of the largest research facilities in the United States. And because the federal government and other granting agencies sponsor funding for Stanford research equipment, the university’s processes for capital asset management are visible to the public. This provides an opportunity for asset managers to replicate the processes Stanford uses to manage and maintain millions of dollars of fixed assets.
The purpose of this article is not to show you how to implement the same processes as Stanford. (Chances are your assets are very different than those managed by Stanford.) Instead, its purpose is to give you ideas about how you can improve asset management operations by seeing how best practices are implemented within a world class organization.
Create a mission statement for your asset management team
Stanford’s Property Management Office (PMO) is primarily responsible for managing assets that cost $5,000 or more, have a useful life of more than one year, and are standalone items (not permanently affixed to a building). These are considered capital assets. The PMO also has a world class collection of published documents, processes, and responsibilities. If a department manager at Stanford needs to acquire, fabricate, or dispose of a capital asset, they can find all processes and forms on the PMO’s website.
To help people understand what the office is responsible for, the PMO has a mission statement that clarifies the office’s responsibilities:
The PMO’s mission statement is front and center on the department’s homepage. In under a minute, any member of the university can understand what the PMO does and if its services are needed. Creating a mission statement like this and distributing it throughout the organization is important for any asset management team.
Define capital assets and create documentation
Defining capital assets is important for more than just tax purposes. When you know which asset is a capital asset, you know which asset to prioritize maintenance for. You can easily add priority levels to individual work orders in your PM schedule and prevent unscheduled downtime for vital equipment.
Another benefit of defining capital assets is alignment among people within the organization. For instance, when people within the organization are aligned on what capital assets are, they can exercise the correct process for acquiring, maintaining, and retiring those types of assets. This cuts down on time spent by administrators who must edit and re-submit forms on behalf of people within the organization.
To inform people about what the expected useful life of capital assets are, the PMO makes a breadth of documentation available to the public. This documentation provides everything that the university’s staff needs to acquire new equipment.
To understand what good documentation looks like, check out these two resources:
Track capital assets with barcodes and software
Barcodes and QR codes
The easiest way to track assets is to use asset management software and attach a barcode or QR code to every asset. When a QR code is attached to an asset, anyone with access to the software can use their smartphone to scan the asset and view its operational status, maintenance history, uptime percentage, PM schedule, and other information. They can also create a work request for the piece of equipment if something is wrong. Instead of going to a computer to submit a work request, they can submit a work request using a mobile app on their smartphone.
Stanford uses a computerized maintenance management system (CMMS) to track assets. With a CMMS in place, you can manage incoming work requests for specific assets, assign work orders to technicians to maintain those assets, inform everyone within the organization about active lockout/tagouts, and track costs and downtime.
For assets that are not always moving but may change locations temporarily or permanently, you can implement a process similar to the process implemented by Stanford. Stanford’s process states: “If the duration of the [asset] move is less than thirty days, the move is considered temporary. Location changes lasting thirty days or longer are considered permanent. For permanent location changes, Stanford’s property management database must be updated to reflect the new location.”
Document the lifecycle of assets
Stanford has a well-documented asset lifecycle for assets that are used for research purposes. However, documenting a similar process for assets that are not for research purposes — forklifts, molding injection machines, HVACs, boilers, etc — is also necessary. Start by creating a bulleted list of steps that fall under each phase of the lifecycle (see list below), then elaborate on those steps and reference supporting documentation. Stanford does this here.
Here is the asset lifecycle used by Stanford for equipment that’s acquired for research purposes:
- Identify and budget equipment needs
- Use the correct expenditure type
- Check for asset availability prior to purchase
- Place tag and overlays on the asset
- Enter the asset in the asset management system
- Use, maintain, and store the property
- Inventory the property
- Remove tag
- Dispose: re-utilize, transfer, scrap, sell
Optimize your asset management processes
Whether you’re a university like Stanford or a different type of organization entirely, the processes and documentation used by Stanford offer a solid framework for improving asset management. Better organization will lead to better communication, and better communication will lead to fewer safety risks, greater utility, and higher uptime.