• Novice
  • Aware
  • Competent

Key Elements

This topic has a brief overview and covers:

A total asset management plan (TAMP) should contain a number of key elements, as follows:

  • A total life cycle approach from asset needs identification to asset disposal.
  • Comprehensive planning, from long-term strategic planning aspects through to short-term operations and maintenance plans.
  • The total aspects of asset management involving effectiveness, efficiency and economic viability (in a full business sense) of delivering the level of service required for the lowest possible cost.

Effectiveness involves consideration of the following appropriate:

  • Processes being used in managing the life cycle of the assets
  • Information and support systems used to assist these processes
  • Data or information on which decisions are made.

From an efficiency viewpoint, we may need to consider:

  • Staff productivity
  • The use of the most efficient tactics, techniques and procedures
  • The efficiency with which these tactics are supported by equipment and information systems.

This holistic approach is very complex and can involve detailed assessments of a wide range of issues, such as the:

  • Process of evaluating tenders
  • Appropriateness of design standards
  • Effectiveness of procedures used in maintenance activities.

As a TAMP endeavors to present the current status and future direction of an organization or facility, it will be subjected to close scrutiny at a variety of levels. This issue cannot be under-estimated when preparing TAMP.

Current Levels and/or Standards of Service

The first step is to assess the standards of service or target service levels upon which the asset management plan is to be based.

These are of course the current standards of service and represent the targets by which short term goals will be set, however, at a later stage the organization will need to judge or perceive changing expectations for these standards of service, and amend the TAMP accordingly.

Consideration also needs to be given to the:

  • Level of service that has been notified to customers
  • Internal procedures, activities and policies that are used to try to obtain the published levels of service
  • Accuracy and sensitivity of the organization's ability to predict future demands for the service.

Knowledge of Existing Assets

The TAMP should reflect the extent of knowledge the organization has on its existing operational assets, including accuracy and level of detail. The relevance and usefulness of the TAMP will be directly related to these issues.

In particular, the following are critical:

  • Physical detail of the assets and whether this is contained in hardcopy, electronic asset registers or on plans and records. Consideration should also be given to the degree or detail of this information in a hierarchical asset level sense. The greater the level of detail (down to but not beyond maintainable component level) the greater the relevance of the TAMP
  • General condition of each asset and its key components should be known
  • Current capacity or general potential to deliver service should be identified and existing levels of utilization need to be known
  • Current performance of the asset should be known in general terms to ensure that the necessary reliability or availability is being achieved.

Projected Demands for Assets’ Service

Current utilization figures will indicate the current usage of each asset, however it is important to then predict the future demands for service in terms of:

  • Basic increases in the demand for the service:
    • Growth in population
    • Growth in unit demand
    • Growth in traffic
    • Variation in traffic type etc.
  • Any expected change in unit demand, such as:
    • Electricity demand per head of population
    • Average number of vehicle trips increasing, etc.
  • Projected changes in customer expectations that are likely to impact on standards of service:
    • Higher water quality standards
    • Less fluctuation in voltage in the electrical distribution system etc.

Under this heading it is important to be able to predict all the likely changes that are going to impact on service delivery in the future.

Triple Bottom Line Reporting

Sustainable Development

Sustainable development meets the needs of the present without endangering the needs of future generations. It addresses potential conflict between preserving and enhancing the environment and the impact of development. An agency’s service delivery and asset management should contribute to sustainable development.

Agencies should have the tools required to ensure that service delivery and asset management decisions avoid the risk of environmental damage and support economic, ecological, social and cultural sustainability.

Triple Bottom Line

The triple bottom line balances the economic, social and environmental implications of business decisions and provides tools for the measurement of each. Agencies have always practiced triple bottom line in that the social and environmental outcomes of its business activities have been considered along with the economic consequences.


This shows how asset management decisions should be supported by using triple bottom line processes and tools. This involves being clear about the agency’s purpose and taking into consideration the needs of all affected including the public, local community interest groups, private sector industry, employees and other State and Federal governments. A goal of Triple Bottom Line is Sustainable Development.

Failure Mode Prediction

For the purposes of these typical asset management plans, the approach is to analyze the typical modes of failure, namely:


This is where the demand for the service exceeds the capacity of the existing asset or network of assets.


This is predominantly a maintenance related issue where the asset is unable to perform reliably and deliver the level of service required.

Physical mortality (age)

Under this mode of failure the asset has reached the end of its physical life and cannot be expected to deliver the level of service required.

Cost of service delivery

In this instance the cost of the asset far exceeds the return derived and therefore consideration should be given to either the disposal of the asset or the reduction in cost.

In some cases investments can be justified on the amount of money that could be saved by the installation of a new asset. For example the installation of a new PLC type control system may result in substantial energy and operational cost savings. Even though the existing assets are operating effectively, their efficiency is the mode of failure.

A key element of this part of the TAMP preparation is the accuracy of the failure prediction, especially with regard to its timing or the probability of that failure.

Optimized Renewal Decision Making

The TAMP needs to reflect and incorporate the activities undertaken to ensure the continued provision of the required level of service.

Care must be taken to ensure the appropriateness of the options chosen, and of the processes undertaken in that evaluation.

The intent of this element of the asset management plan is to ensure the most appropriate option is chosen for the organization to meet its current business objectives.

This may involve the disposal or rationalization of assets to reduce costs to a level which customers can afford, or choosing the lowest possible life cycle cost option to continue to provide the required level of service at the lowest possible cost. Organizations in temporary cash flow problems may require to defer expenditure for a short term.

It is important that the organization consider all types of activities or ways in which the level of service can be continued, including non-asset related activities such as demand management plans to reduce the demand for the asset.

In particular, the organization should consider the following options.

Asset related options

Do nothing

Do nothing — the zero budget option — drop all maintenance and renewal.

Status quo

Complete only emergency repairs. Continue with the current operations and maintenance plans.

Create new asset

Self explanatory (generally related to increased demands).

Replace existing asset

Generally related to assets with continuing current level of service.

Augment/enhance existing asset

Take asset to better than original condition/performance.

Rehabilitate (overhaul) existing asset

Return to as new condition. Related to reliability/performance failures.

Operate differently

For example, reduce pressure, extend life.

Maintain differently (more or less or none)

Additional maintenance with improved performance/reliability and possibly extends life.

Dispose/rationalize of asset

Provide service through alternative sources.

Non-asset related options

Manage the Predicted Failures

  • Reduce demand for service
  • Slow rate of growth.

High cost asset services

  • Reduce demand for service
  • Slow rate of growth.

Improve asset management support systems

  • Reduce unproductive time
  • Improve response time.

Reduce the likelihood of failure and improve response

  • Training/manuals/expert support systems.

In assessing each of these options the organization should assess the following key financial benefits derived through:

  • Reduced operational costs
  • Reduced maintenance costs
  • Increased effective life or value of the asset
  • Increased level of service provided to customers
  • Increased income through improved production or reduced loss of production
  • Reduced business risk exposure with current business risk being expressed as the consequences of the failure, in both direct and indirect terms multiplied by the probability of that failure.

The key elements for the accuracy of the plan are:

  • Consideration of all relevant options
  • Assessment of all potential benefits
  • Determination of realistic time frames
  • Acceptable objectivity of all cost factors, especially:
    • Maintenance costs
    • Operational costs
  • The consequences of failure expressed in economic terms for both the direct costs of repair and the indirect costs of ancillary aspects of the failure (societal cost)
  • The costs of the renewal option being evaluated and the accuracy of these costs
  • The accuracy of the cost estimates for both new works and major rehabilitation or replacement
  • The discounted cash flow used to assess the various options and timeframes and the accuracy with which the optimal strategy was determined.

Strategic work plans

The works program including both renewal and new augmentation works can then be ranked on the basis of cost benefit to the business of the organization.

This should mean that the organization has determined the best:

  • Technical option
  • Financial option.

These should be structured to suit the organization's planning horizons which should relate to the following:


Year 1
Years 1,2,3,4,5
Years 6-10
Long term
Years 10-20
Over 20 years.

Rationalization of the Plan

This strategic planning should present a clear picture of the "level of service" and "the cost of service".

The organization should equate this to their customers' ability to pay and willingness to pay. This aspect should be verified by customer expectation surveys as used to determine their original levels of service, needs or expectations.

Income options

Other sources of income should also be considered, for example:

  • Developer levies
  • User pays — demand management (annual), demand management (peak), demand management (off peak)
  • Improve utilization — rationalize assets to suit capacity required or justified
  • Trade waste agreements for industrial discharges
  • Charges for miscellaneous services.

Strategy rationalization should then be carried out.

Final strategy adoption

This will be dependent on the:

  • Long term strategic planning implications for service and costs (20 years)
  • Immediate short term detailed plans (5 -10 years)
  • Attitude of the customers.

The organization needs to adopt the current strategy (should be reviewed annually and revised thoroughly every 5 years).

The organization should then have a:

  • Mission
  • Set of objectives
  • Set of enabling strategies that need to be completed to achieve these objectives
  • Set of actual tasks or activities to carry out these enabling strategies.

Throughout the strategy plan the organization need to operate and maintain the assets to give the performance or level off service required from the assets.

The Role Optimized Renewal Decision Making Plays in TAMP

Optimized Renewal Decision Making (ORDM) techniques can be used to assist in decisions relating to:

  • Components
  • Assets
  • Facilities
  • Systems.

The key to developing good System Plans is to ensure that we have appropriate optimized strategies for individual assets or their components.

If we know the best answer for all components then we know the best answer for the assets. If we know the answer for all assets then we can determine the correct answer (ORDM) for the facility. If we know the answers for each facility then we can determine the correct plan for the asset system as a whole.

Success lies in the aggregation of component or asset strategies up to facility strategies and then system strategies.

It is only when we have the right answers for the individual components and assets that we can develop the best life extension strategy for the asset or facility.


By knowing the optimal renewal treatment and the timing of that work we can plot the optimized future cash flow for the life extension of the individual components, the sum of which represents the cash flow for the asset or facility as a whole.


Armed with this information the overall system or corporate group can look at appropriate strategies for the system or the business as a whole and develop the corporate plan.

This may result in the facility being renewed (replaced) or even disposed of as part of the bigger overall corporate strategy.

This information can then be fed back to individual facility plans where the ORDM analysis for individual assets can be reviewed knowing that the facility need only reach a 35 year life cycle or timeframe.

The new (revised) ORDM can then be included in the current TAMP together with the renewal decision and cash flows etc.

This information "feed up" or "feed forward" and strategy "feedback" process works at all levels in an organization.

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