Advanced Asset Management

Advanced life cycle asset management needs to include the following functional activities:

• Knowledge of existing levels of service
• Knowledge of existing assets, i.e. physical details
• Knowledge of performance of assets (reliability etc.)
• Knowledge of physical condition
• Knowledge of current utilization and ultimate capacity
• Ability to predict demand for service from customers for:
  • Capacity
  • Quality
  • Reliability/availability
  • Future customer expectations (environmental etc.)
• Ability to predict failure mode (or effective life) of the assets with respect to:
  • Capacity of system
  • Efficiency and new technology (reduced operating costs)
  • Obsolescence (cannot be maintained)
  • End of physical life (mortality)
  • Lack of utilization (non-core asset)
  • Level of service (reliability, demands, expectations)
  • Cost of service (renewal and maintenance)
• Ability to identify the critical assets to the business of service delivery including threat and vulnerability using FMECA and Risk Management to:
  • Identify risk of failure
  • Quantify the risk cost
  • Evaluate the acceptable risk level
  • Undertake risk control measures
• Ability to analyze alternative treatment options to overcome failures and threats. Analysis should be based on a true cost/benefit economic evaluation (risks to and needs of the organization), and should consider the following options:
  • Do nothing
  • Create new asset
  • Augment existing assets
  • Operate assets differently
  • Maintain assets differently assets
  • Rehabilitate existing assets
  • Replace existing assets
  • Dispose of existing assets
  • Manage demand/levels of service changes, etc.
  • Manage asset failures
• Rationalizing works to suit the available budget (customer expectations for cost of service) for the current planning (or budget) period
• Maintaining this model as a dynamic process to continuously develop and revise strategic planning objectives for each asset to suit business objectives
• Developing maintenance, operations and renewal plans to suit the revised objectives for each asset and the works program
• Optimizing operations and maintenance activities continuously
• Reviewing and revising asset management plans at suitable intervals.

The other key principles applicable to advanced asset management are:

• Every asset needs to be considered as an individual asset. Like assets are not alike, they are only similar.
• Assets don't often fail as a whole, usually only components fail and so there is a need to be able to viably rectify such component failures viably.

The principles, concepts and processes of advanced asset management are identical for all assets (mechanical, electrical, civil, static, passive and dynamic). It is only the techniques and practices that differ.

A Business Mission Statement for assets could be:

"To plan, create, acquire, maintain, operate, rehabilitate, replace and dispose of the organization's assets in the most cost effective manner whilst providing an acceptable level of service for present and future generations."

This is quite idealistic. A more pragmatic view would be:

"To provide the highest possible service for the least possible cost having due regard for inter-generational equity."

As part of the holistic approach to advanced asset management, risk management has in the past mainly focused on high consequence, low probability events. There is now an increasing emphasis on events related to low consequence, high probability events, e.g. maintenance items, driven largely by the stakeholders who are concerned with immediate return on their assets.

The corporate governance emphasis on the triple bottom line objectives, i.e., economic, social and environmental, is bringing a new approach to risk management, taking the overall business risk exposure as the measure.