Assets & The Active Life Cycle

Assets & The Active Life Cycle

Assets are defined as follows: “An asset is an item, thing or entity that has potential or actual value to an organization”. Based on ISO 55000, 55001 & 55002 asset management is described as “coordinated activity of an organization to realize value from assets”. Consecutively, this is broader than physical assets which bring a significant target and focus for more companies.

Asset Management comprises of opportunities, balancing of costs and threats against the desired level of performance of assets, which is essential for the greatest return on investment and to attain the main objectives of the organization. One of the main objectives is minimizing the overall life cost of assets which can be affected by other indicators such as business continuity or risk during the decision making process

In addition to traditional asset management KPIs, such as RAV and availability level, there are three concepts which should be considered in the implementation of asset management in accordance with ISO 55000.

See below:

1. Total Cost of Ownership

Total Cost of Ownership is an analysis that must take into account all costs related to ownership and operation of an asset. ISO 55000 encourages companies to observe the costs of a life cycle perspective, including, for example, purchase, installation, operation, maintenance and others.

There are four key stages of the asset lifecycle:

Planning: This stage establishes and verifies asset requirements and their potential to meet service delivery needs. Throughout all stages of planning, it is crucial to make sure that the ongoing development adds value to the organization.
Acquisition: The acquisition planning includes activities involved in purchasing an asset with the aim of ensuring cost effective acquisition. This covers activities such as designing and procuring an asset. Appropriate application of these activities guarantees that the asset is fit for use. The organization should decide whether the asset will be perpetually bought or built.
Operation and Maintenance: The plan of asset management should have a high focus on asset maintenance issues, especially during their life cycle.
Disposal: When an asset reaches its end of a useful life, it can be treated as a surplus, or otherwise is considered as an underperforming asset.

2. Risk management to protect assets and business

ISO 55000 states that each decision must be based on a risk assessment. Therefore, it is essential to have a risk management strategy to evaluate possible paths considering the consequences of the incidents and the probability of occurring.

3. Continuous optimization

Another important principle of ISO 55000 is its continuous optimization, which needs to be evaluated from time to time, according to the evolution of the business, according to the market.

Asset management

Assets have been managed and maintained professionally by managers for decades. Nevertheless, economic and financial developments of recent years alert that what we have been doing in the past will not be satisfactory to deal with challenges in the future.

Assets exist for provide value for the organization and parties concerned;
Asset Management transforms intention strategic in tasks, decisions, activities technical and financial resources;
Asset Management provides assurance that the assets will comply and play your function.