Overview

Asset creation and acquisition is closely aligned with the Strategic Asset Planning, Capital Validation and Business Risk Evaluation phases.

Asset creation is providing or improving an asset where the outlay can reasonably be expected to provide benefits beyond the year of the outlay.

The main reasons for creating an asset are to:

• Satisfy or improve a level of service
• Provide for new demand from customers
• Provide a commercial return.

This phase covers the development of new assets and the renewal of older assets.

Renewal extends asset life and/or improves service standards.

The reason why this process is so critical is that it offers the greatest opportunity in the asset's life cycle to significantly reduce costs.

Once an asset is built, the organization has the full cost of ownership for the rest of its life.

We can, of course, optimize the operating costs, but we can't alter the basic costs relating to the capital invested, its depreciation (or consumption) and the operations and maintenance required.

Therefore, it is obvious that if we build the wrong asset, at the wrong time, in the wrong configuration with the wrong level of redundancy, we have to carry most of those costs for the rest of its life.

This is shown below:

 

There should be a full project evaluation for major capital expenditure on an asset.

Life cycle costs including the true depreciation of the asset (to allocate the cost of the asset in current dollars to current users) should be identified with:

• The option for using second-hand mechanical and electrical assets
• Raising the utilization levels of existing assets to overcome the need for a new service.

All information for owning and operating the asset should be handed over to the organization when the asset is commissioned, such that it can be readily input into the asset management system.

The following questions need to be asked when working through the asset creation phase:

• Has the need for a new asset service been determined and has the full project evaluation process been followed, including non-asset solutions?
• What is the quality of service required?
• How long is the service requirement?
• Can the service be provided by:
  • A new asset?
  • A second hand asset or
  • An enhancement or augmentation of an existing asset?
• What is the acquisition/supply strategy? Are the key asset deliverables clearly defined?
• Has life cycle acquisition envelope (specifications) been considered for the asset?
• Has maintainability been assessed?
• Have effective operations been assessed?
• Have the following aspects been considered:
  • Final design documentation?
  • Tender of day labor?
  • Tender assessments?
  • Contract administration?
  • Construction supervision/oversight?
  • Commissioning and handover procedures?
• Have commissioning tests been completed and has a life cycle condition monitoring program been set up?
• Have all the necessary asset management systems been implemented?
• What did the asset cost to acquire/create?
• Has all the documentation that records relevant details on the asset been collected?