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Answered January 24 2020
Asset management is how organizations achieve the most value from their assets. An asset manager evaluates costs and potential risks against the potential benefits a company could realize from an asset.
Asset management is becoming a staple term in the world of maintenance and reliability. It has come a long way from being used solely by financial institutions in describing how risks are being managed for investment portfolios. Nowadays, asset management instantly leads to topics like equipment availability, reliability, maintenance, and so much more. But the question remains – what is the definition of asset management? And, more than that, how do I implement it?
Before we go any further, we need to agree with what we are referring to as an “asset”. An asset is defined as any tangible or intangible item that has potential or actual value to the company.
Value can be positive or negative, usually expressed in material, monetary, or assessed worth. Moreover, value can include an assessment of risks, liabilities, and depreciation.
Tangible assets, also known as physical assets, include buildings, equipment, machinery, tools, and inventory. On the other hand, examples of intangible assets are information systems, intellectual property, and leases or agreements.
Now that we have defined an asset and have identified several examples, we can take a closer look at what it means to manage them. Remember that assets have potential or actual value – value that can either be beneficial or detrimental to the objectives of the organization.
Asset management is the systematic approach of organizations to realize value from their assets. This methodical process typically considers costs and potential causes of risks and weighs them against gains and opportunities. The ultimate goal is to obtain benefits from the assets to achieve the goals set by the company.
The management process is continual and spans the whole life cycle of an asset. This would include identifying strategies, planning, evaluating and executing plans.
As more focus goes into ensuring reliability and safety of equipment systems, the focus on asset management became inevitable. However, with multiple interpretations and execution levels, different organizations have varying levels of success in implementing asset management procedures. Thus, there needs to be concrete documents that objectively define the framework for asset management. Examples of these documents are shown below:
Initiated by the Institute of Asset Management (IAM), the British Standards Institution’s Publicly Available Specification 55 (BSI PAS 55) was first introduced in 2004 to consolidate specifications that define strong asset management. After being updated and published in 2008, it has since been used as a global standard for asset management, particularly for physical assets.
This document comes in two parts – 1) BPI PAS 55:2008 Part 1 outlines a checklist of the requirements that need to be in place for asset management, while 2) BPI PAS 55:2008 Part 2 serves as a guide to achieving these requirements.
The Asset Management Council of Australia provides a technical product that is the Asset Management Body of Knowledge (AMBoK). This document provides a set of principles that influence an organization’s asset systems – output focus, capabilities, level assurance, and learning organization. Furthermore, the AMBoK develops several models that aim to describe how it works.
ISO 55000 is a series of international standards that describe the principles for managing all kinds of assets. The three-part series is made up of the following documents:1. ISO 55000:2014 – Overview, principles, and terminology2. ISO 55001:2014 – Management systems – Requirements3. ISO 55002:2018 Guidelines for the application of ISO 55001
These documents provide the framework that needs to be in place to more effectively manage an organization’s assets. These standards were created with a high-level outlook, involving multiple organizations from various industries. It is not exactly a step-by-step procedure to manage assets, rather, it is a guide on the pre-requisites towards more effective asset management.
The ISO 55000 was created with the intent to be relevant across a broader audience. After all, it is the recognized international standard in asset management. A look into the origins of ISO 55000 will help us appreciate how it compares with other existing standards.
Since being introduced in 2004, BSI PAS 55 has continued to gain traction with a growing number of organizations. Increased acceptance from the asset management community has inspired enhancements to the existing document. Thus, the ISO PC 251 emerged – a team of asset management organizations from a total of 31 participating countries.
The BSI PAS 55 was a remarkable effort in consolidating best practices from industry leaders. Over a 10-year period, 49 organizations in 10 different countries contributed to the document that paved the way for an international standard. ISO 55000 further enhances this body of knowledge by involving hundreds of organizations - across multiple industries.
A practical example that shows the shift from the BSI PAS 55 standard to the ISO 55000 standard is in the type of assets being referred to. ISO 55000 now considers any type of asset that has actual or potential value to the company. Its predecessor, BSI PAS 55, clearly covers physical or tangible assets only. These subtle but significant additions have corresponding impacts on the holistic asset management program.
An asset management system is a set of components within an organization that establishes policies, objectives, and processes to effectively achieve the most value from assets. In other words, it is a systematic process that enables an organization to achieve its goals in obtaining actual and potential value from its assets.
There are four main sections within ISO 55001 that describe the major elements of an asset management system. Aside from these four main components, ISO 55001 and ISO 55002 further include other clauses that can be considered as additional parts to support the asset management system. The following list below enumerates these elements:
A company’s asset management policy lays out the foundation on how asset management will be carried out. It demonstrates the commitment of the organization towards a common purpose. As with other company documents, the asset management policy should undergo a review process regularly, with updates being performed as needed.
Typical examples of policies would include provisions to specify decision-making criteria and statements that express long-term goals and objectives. Other examples of provisions that would appear on the policy are applicable laws and legislation, stakeholder requirements, and continuous improvement standards.
The asset management policy is a relatively short document – one to two pages would be more than enough. This document is short and simple for a reason. They are not intended to contain specific details that you might find on a procedure manual. Instead, the policy statement provides general principles that the company strives to go by in terms of asset management.
Identifying the objectives of an asset management system is essential in taking the first steps to reach the desired outcome. Setting these goals and milestones within the company, more specifically within asset management, forms the execution plans that will be needed after.
ISO 55002 requires asset management objectives to be SMART – specific, measurable, achievable, realistic, and time-bound. Keeping in mind this simple, yet effective, mnemonic sets you up towards objectives that actually matter.
Setting objectives within your organization don't always follow the same process. Remember that your asset management system would be comprised of various types of subsystems and other elements. A physical asset, for example, might have specific objectives relating to asset condition, health, and operating costs. The whole asset management system, on the other hand, would consider more general objectives, such as total customer satisfaction, cost of ownership, or environmental costs.
The strategic asset management plan (SAMP) is also commonly referred to as the asset management strategy. ISO 55000 provides a thorough definition of asset management strategy: “documented information that specifies how organizational objectives are to be converted into asset management objectives, the approach for developing asset management plans, and the role of the asset management system in supporting the achievement of the asset management objectives”.
The SAMP is basically a way to bridge the asset management objectives with the overall organizational objectives. It paves the way for more detailed planning steps to then achieve asset management objectives.
The development of the organizational plan and the asset management strategy should be a two-way process. For example, results from asset management activities influence how organizational objectives are formed. This is an iterative process, allowing both the plan and the strategy to evolve together.
ISO 55002 points out some important tips in developing the SAMP. Organizations are expected to involve stakeholders. The expectations and needs of the stakeholders must be assessed accordingly. General activities should also be identified and regularly reviewed, especially those activities that are required beyond the planning timeframe. Lastly, processes to objectively establish decision-making criteria should be properly documented.
Think of the asset management plan as a more detailed map to achieving the asset management goals of an organization. This document includes information on the specific activities, resources, and timelines that assets would undergo. This plan aims to work towards achieving the previously set objectives.
Creating an asset management plan starts with identifying who is responsible for developing and implementing the document itself. It is also important to consider the users of the document, ensuring that the written information is communicated clearly.
Asset management plans should be documented in a way that makes sense to the organization. Some might opt to have a single document that is applicable to the whole organization. Others might find it more appropriate to have multiple plans broken down according to their respective departments.
The main elements of an asset management system can be summarized to be policy, objectives, strategy, and plan. However, there are a lot of other implicit tools that are pre-requisites to develop one or more of the major elements. Think of these other supporting elements, such as smaller building blocks, that together comprise a larger component of the system.
The ISO series does a really good job of breaking down large concepts into smaller clauses. The asset management plan, for example, covers a broad range of activities. To ensure that no key concepts are missed, standards that are specific on operation, performance evaluation, and risk assessment are included.
Examples of supporting elements that are part of the management system are:- Consideration of support required (i.e. resources, competencies, etc.)- Operational planning and implementation of required activities- Performance evaluation- Evaluation of the levels of risk
ISO 55000 implementation starts with getting the top management on board. Once the leadership team agrees, stakeholders and relevant internal teams are then involved as well. You can expect the roadmap towards ISO 55001 implementation to take the following steps:
Before moving towards implementing ISO 55000, it helps to first get an idea of the current state of your organization. This baseline would give you an understanding of how closely your current processes relate to international standards. Knowing where your organization fits in with international standards will help you determine the amount of work needed to be put in, to move to the implementation phase.
After establishing a baseline of your current operations, you can then move towards developing your asset management system. Earlier, we’ve covered the main parts of the asset management system. These are 1) asset management policy, 2) asset management objectives, 3) strategic asset management plan, and 4) asset management plan.
Other supporting elements that are pre-requisites to these four major components also need to be established. Details on the activities and processes that will be part of the asset management plan, for example, should be documented accordingly.
It will be beneficial to the organization to involve the right people in this process. Expect that some activities within this step will be done on top of the usual operations. This can cause a significant amount of additional work that would need to be efficiently planned out.
The gap between where you are and where you want to be in terms of the management will be continually evolving. A well-timed gap assessment can mean a huge difference in the amount of insight to be gained.
A gap assessment can be performed before, during, or shortly after the development of an asset management system. Think of this process to be similar to the first step – assessing your organization’s readiness. Except this time, the intent is to gear up towards bridging the gaps, instead of merely establishing a baseline.
The actions you take on this step are equally, if not more important, than the previous step. In this phase, you should be able to identify concrete actions to improve your asset management system.
After all the hard work you’ve done brainstorming and planning, it’s time to put the system up for a test drive. With all processes in place, you can now proceed with implementation and evaluation procedures.
There will be points that you could not have seen coming while in the planning stages. That’s why you cannot let your guard down just yet while in this phase. Take this time during initial operations to continue learning and fine-tuning along the way.
At this point, with the proper culture and attitude, you would want to continue finding ways of improving your processes. Certification becomes an option, especially after building the confidence that you have built processes that adhere to the principles of proper asset management. While compliance with the standard is key, there may also be benefits in taking it further and being ISO certified.
Certification can be a useful tool, particularly in situations wherein you want to build credibility with your customers. It is worth noting, however, that ISO itself would not be the certifying body to grant your certification. Though it may sound counter-intuitive, ISO does not perform certification. They develop standards and documentation, but they do not issue certificates and are not involved in the certification process.
The certification process is handled by a separate entity – a certification body. In order to be ISO 55000 certified, you must choose a certification body that uses the ISO’s Committee on Conformity Assessment (CASCO) standard. After selecting a body, you can expect a series of audits that you will need to pass in order to be granted an ISO certified status.
Recertification audits are usually performed every three years. In that sense, you can think of your certificate to be valid for around three years.
This does not mean that you’ll only get audited once every three years. ISO audits come in different forms and are routinely done throughout the year:
A follow-up audit will be performed to ensure that minor nonconformities in the initial checks have been addressed. This would typically be performed within a year from the initial certification.
To ensure continual improvement, annual surveillance audits will also be performed. Think of these as checkpoints that will help you more easily achieve a recertified status.
This audit is similar to the initial certification audit that would have granted you your certified status. This is an in-depth review performed every three years that looks at your processes and how they comply with the international standard.
Asset management is a philosophy that any conceivable organization can benefit from. More than realizing instant rewards, it promotes a culture that leverages assets through increasing value and managing risks. An international standard, such as ISO 55000, provides a framework that companies across various industries can use as a guide to implement an effective strategy.
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