Asset Management - An Anatomy v2 PDF

Asset Management – an anatomy
Version 2 July 2014
©
Copyright The Institute of Asset Management 2014. All rights reserved www.theIAM.org
An Anatomy of Asset Management Issue 2 July 2014

1 INTRODUCTION 1
Contents
2 WHAT DOES ‘ASSET MANAGEMENT’ MEAN? 5
3 CONCEPTS AND PRINCIPLES 7
4 THE SCOPE OF ASSET MANAGEMENT 15
Anatomy = the study of the structure or internal workings of something
5 SUBJECTS GROUPS AND DESCRIPTIONS 18
for the purpose of examining and analysing its parts 5.1 STRATEGY & PLANNING 18
5.1.1 Asset Management Policy 20
This document is published by the Institute of Asset Management 5.1.2 Asset Management Strategy & Objectives 20
5.1.3 Demand Analysis 22
for the benefit of our Members and the general public 5.1.4 Strategic Planning 22
5.1.5 Asset Management Planning 23
5.2 ASSET MANAGEMENT DECISION-MAKING 25
You are welcome to use this document for personal study or to educate and inform other members of your 5.2.1 Capital Investment Decision-Making 26
organisation – however, please do not use it for commercial gain, copy it in its entirety or make electronic copies. 5.2.2 Operations & Maintenance Decision-Making 27
5.2.3 Life Cycle Value Realisation 29
Please ask each person who wants a copy to download it individually – free of charge – from our website 5.2.4 Resourcing Strategy 31
5.2.5 Shutdowns & Outage Strategy 33
www.theIAM.org/AMA. The IAM will inform you when this document is amended and when any new
5.3 LIFE CYCLE ACTIVITIES 35
companion documents are available. If you copy any part of it please acknowledge the source and do not crop
5.3.1 Technical Standards & Legislation 36
or remove our branding. 5.3.2 Asset Creation & Acquisition 37
5.3.3 Systems Engineering 37
This document was first issued in 2011 and this 2014 version has been aligned with other IAM Projects, the 5.3.4 Configuration Management 39
GFMAM Landscape vs 2 and the ISO 55000 series of standards. However, this process is always ongoing and we 5.3.5 Maintenance Delivery 40
5.3.6 Reliability Engineering 41
welcome responses to this document as part of our commitment to continuous improvement.
5.3.7 Asset Operations 43
5.3.8 Resource Management 43
5.3.9 Shutdown & Outage Management 44
Copyright (c) The Institute of Asset Management Ltd 2014, all rights reserved. 5.3.10 Fault & Incident Response 45
5.3.11 Asset Decommissioning and Disposal 45
Disclaimer: The IAM and their agents, servants or contractors do not accept any liability for any losses arising under or in 5.4 ASSET INFORMATION 47
connection with this information. This limit on liability applies to all and any claims in contract, tort (including negligence), 5.4.1 Asset Information Strategy 49
misrepresentation (excluding fraudulent misrepresentation), breach of statutory duty or otherwise. This limit on liability does 5.4.2 Asset Information Standards 50
not exclude or restrict liability where prohibited by the law nor does it supersede the express terms of any related agreements. 5.4.3 Asset Information Systems 50
5.4.4 Data & Information Management 51
All copyright and other intellectual property rights arising in any information contained within this document are, 5.5 ORGANISATION AND PEOPLE 52
unless otherwise stated, owned by The Institute of Asset Management Ltd or other companies in The Institute of Asset 5.5.1 Procurement & Supply Chain Management 53
Management Ltd group of companies. No part of this publication may be reproduced in any material form (including 5.5.2 Asset Management Leadership 54
photocopying and restoring in any medium or electronic means and whether or not transiently or incidentally) without the 5.5.3 Organisational Structure 55
written permission of The Institute of Asset Management Ltd.
5.5.4 Organisational Culture 55
5.5.5 Competence Management 56
5.6 RISK & REVIEW 57
5.6.1 Risk Assessment and Management 58
Publishing and copyright information 5.6.2 Contingency Planning & Resilience Analysis 59
This document is published by the Institute of Asset Management www.theIAM.org 5.6.3 Sustainable Development 61
The IAM copyright notice displayed in this document indicates the date of last revision and issue 5.6.4 Management of Change 62
5.6.5 Assets Performance & Health Monitoring 62
Amendment Number Date Comments
5.6.6 Asset Management System Monitoring 63
5.6.7 Management Review, Audit & Assurance 64
2 July 2014 Finalising for print and correcting typographical errors
5.6.8 Asset Costing & Valuation 64
5.6.9 Stakeholder Engagement 66
6 DEFINITIONS 67
i © Copyright The Institute of Asset Management 2014. All rights reserved. i iii
An Anatomy of Asset Management Issue 2 July 2014 An Anatomy of Asset Management Issue 2 July 2014
Foreword
The Institute of Asset Management (IAM) is a not-for-profit Learned Society. It is owned and controlled by our
Voting Members i.e. those competent professionals who choose to participate in our work. We are committed to
remaining independent from commercial and trade associations. We exist to advance the science, practice and
discipline of Asset Management for the public benefit. Our priorities are to promote and enable the generation and
application of knowledge, training and good practice, and to help individuals become demonstrably competent.
The discipline of Asset Management is neither owned nor controlled by the IAM. However, as an institute we invest
time and effort to develop thinking and generate knowledge, tools and services to support anyone interested in
this young and emerging discipline. This Anatomy is part of that work and will be updated and improved from time
to time. We invite you to register with us to ensure you have access to the latest version of this or other related
documents.
Expertise in the discipline of Asset Management is increasingly important for many organisations. Such expertise
draws from all functions within an organisation: from business, financial and management of human resources as
well as, technical, engineering, operations and maintenance management. It is particularly challenging, therefore,
to gain a good understanding across the whole breadth of the knowledge base; this breadth is, of course, part of
its appeal. A core purpose of this document is to provide a platform of common language describing the principles
of Asset management thus supporting organisations and individuals’ introduction to extensive subject that is Asset
Management. You may have a particular interest in the value to be gained by any organisation or business that
chooses to apply Asset Management properly.
Given the relative youth and breadth of the topic, it is inevitable that people will come to Asset Management
having already demonstrated competence in a profession, such as engineering or finance, and may have specialist
expertise in a field such as maintenance or auditing. The IAM welcomes people from any discipline and encourages
your participation to help achieve a true cross-sector perspective.
As part of our strategy to collect, develop, collate and make available knowledge, services, products and events
relating to Asset Management, the IAM will be releasing a series of documents to expand on each Subject covered
in this Anatomy. Eventually there will be Subject Specific Guidelines (SSGs) covering all of the 39 Subjects of Asset
Management that are described in this Anatomy document. These will not be textbooks or course material but
should act as reference documents for professionals working in this field. The IAM encourages members to share
their experiences, and to make available case study examples. SSGs will include case study examples relevant to
specific topics.
If you want to get involved in IAM activities and projects you may like to look at - and contribute to - the IAM
Knowledge Centre at http://theiam.org/wiki/Main_Page, or discuss relevant topics on LinkedIn, where there is an
official IAM Group at www.linkedin.com/groups?about=&gid=965657.
iii © Copyright The Institute of Asset Management 2014. All rights reserved. © Copyright The Institute of Asset Management 2014. All rights reserved. iv
1. Introduction
This book offers readers an appreciation of Asset The benefits of good Asset Management
Management: what it is, what it can help you achieve; The IAM promotes the benefits of Asset Management
the scope of the discipline (including what is not to the Boardrooms of asset intensive businesses, as we
included!) and a description of the fundamental concepts believe it is more relevant than ever to help companies
and philosophy. and governments come to terms with the economic

realities we are facing.
Many excellent textbooks exist and more are emerging
in this subject area, along with training courses and How many organisations can answer the following
qualifications. These will be essential for people intending questions?
Anatomy = the study of the structure or internal workings of something to learn - and become expert in - Asset Management.
for the purpose of examining and analysing its parts This document is not a textbook, training course or a list • ●Do you understand the risk profile associated with
of techniques and tools, but provides a high-level view your asset portfolio and how this will change over
of the discipline and is a source of reference for anyone time?
seeking to understand it.
• ●Can you demonstrate the business consequences of
If you are intrigued by these ideas, or want to reducing - or increasing - your capital investment or
achieve the benefits available to your organisation or maintenance budgets by 10% over the next five years?
business, you may wish to learn more. In fact you
may already have a desire to start implementing an • ●Can you justify your planned asset expenditures to
Asset Management approach in your organisation. external stakeholders?
Beware! This is not an overnight transformation or
recipe for instant success. It is an approach; a way of • ●Can you easily identify which investment projects to
thinking; a transformation of organisational alignment defer when there are funding or cash flow constraints?
and culture that may even be seen as a threat to
existing departments and structures. The potential • ●Do you have the appropriate asset data and
benefits are significant but the implementation requires information to support your Asset Management
commitment over a sustained period. decision-making?
The IAM is aware that Asset Management is a young • ●Do you know if your people have the right
discipline for many industry sectors and, as we develop competences and capabilities to manage your assets?
the knowledge base, the descriptions in this document
will need to be updated from time to time. If you have • ●Do you know which Asset Management activities to
downloaded this document from the IAM website, we outsource?
shall tell you when a new version is available. If you
have been forwarded a copy by a colleague, we would As organisations are coming under increasing pressure
encourage you to download a fresh copy to ensure you to deliver more for less, it is imperative that these types
receive the latest version. of questions can be answered. Organisations that
have developed their capabilities in Asset Management
We would appreciate your feedback, including any to a relatively high level of maturity can answer these
suggestions on how to improve the usefulness or questions with a high degree of confidence. This helps
readability of this document. enormously when dealing with shareholders, regulators,
v © Copyright The Institute of Asset Management 2014. All rights reserved. © Copyright The Institute of Asset Management 2014. All rights reserved. 1
customers, investors or politicians who do not have the the workforce, a breaking down of inter-departmental document, but the degree to which they might need system for assets’ but it does not explain how it
time or the skills to understand the long-term implications barriers and a collective, well-motivated commitment to deep or specialist knowledge will depend on the job or should be done, and it needs some interpretation and
of the decisions they make. Where these decisions delivering better value-for-money. Asset Management task they perform. knowledge to use effectively. This is quite deliberate,
impact on assets, asset performance, risk or net value evidently stimulates healthy grassroots creativity and and ensures that the standard can be applied and add
realisation, it is the Asset Management communities’ innovation as well as providing the necessary top-down Again, like medicine, each Subject can to some extent value across many types of organisations while not
responsibility to articulate these implications and the alignment of priorities and resource targeting. be approached and learned independently. But, also like constraining the solution. It provides a very powerful
adoption of a holistic Asset Management approach is medicine, Asset Management is a holistic discipline and is framework and is an invaluable checklist for good
essential to enable this. For further information on these benefits, please look for only achieved by consideration of the complete scope as practice.
the relevant case studies on the IAM website. described by these 39 subjects.
The prize for getting it right is certainly very big. The Sections of this Book
available case studies and increasing hard evidence The Anatomy of Asset Management Management System Standards This document is set out in several sections and
demonstrate; a mix of higher performance levels; lower To use a medical analogy, no self-respecting doctor If you are familiar with ISO 55001:2014, you will be we recommend that you read Sections 2, 3 and 4
costs; greater consistency; increased confidence and is ignorant of basic anatomy. They expect to have aware that this specification itemises 24 clauses specifying sequentially. However the individual descriptions of
credibility; happier customers; staff and regulators and a working knowledge of the whole body as well as 71 ‘shall statements’ for an Asset Management System. the 39 subjects in Section 5 can be used as a reference
more sustainable outcomes. Organisations from a wide developing deeper knowledge and expertise in a chosen This sometimes leads to confusion, because 39 Subjects as you wish.
range of industries are reporting significant gains in specialty. However it is also true that no single person are described here!
business performance, while simultaneously controlling can realistically seek or claim to be an expert in every The Subjects are organised in six Subject Groups,
costs, risks and long term capability. medical speciality. It is important to understand that the 39 Subjects which correspond to our conceptual model. The
describe the body of Asset Management knowledge model, the Subject Groups and the individual
Perhaps even more importantly, organisations that have In the same way we would expect everybody in Asset as a whole, whereas ISO 55001 (and PAS 55) specify Subjects have evolved since the first version of the
been evolving their Asset Management approach over Management to have a working knowledge of the 39 the requirements for an organisation’s management Anatomy was published in 2011 through considerable
several years report a significant re-engagement of Subjects of Asset Management described in this Anatomy system - to direct, control and continually refine Asset international discussion and consensus about the best
Management. The 39 Subjects are aligned with framework in which to organise Asset Management
the Asset Management Landscape vs 2, published knowledge and debate.
by the Global Forum on Maintenance and Asset
Management (GMFAM), which was developed by the Depending on the nature of your business, you may
global Asset Management community to define the well find that some subjects cover topics that you do not
scope of the discipline. see as relevant to you. The Anatomy is intended to be
suitable for every business that manages assets – from
Please note, therefore, that familiarity with the the smallest enterprise to large international utilities. We
management system standard alone does not constitute would encourage you to explore the entire Subject area
knowledge and competence across the whole discipline – you may find that there are useful ideas and concepts
of Asset Management! that will help your business.
For anyone wanting to master the discipline, knowledge Although the Subjects can be described individually, they
of the ISO 55000 series is important but not the whole should be not considered as discrete, independent topics.
picture - you really need to learn the whole discipline as Their interrelationship and interaction is what makes
represented by the 39 Subjects, albeit to different levels Asset Management such a powerful discipline. The
and degrees depending upon your area of responsibility contribution they make as a whole to an organisation’s
or operational environment. capabilities are an extremely important aspect of Asset
Management. The jigsaw puzzle only makes sense (and
Essentially the ISO 55000 series of documents will tell generates maximum value) when all the pieces are joined
you what is required to be in place for a ‘management up to reveal the bigger picture.
2 © Copyright The Institute of Asset Management 2014. All rights reserved. © Copyright The Institute of Asset Management 2014. All rights reserved. 3
2. What does ‘Asset

Management’ mean?
(“A rose by any other name…” William Shakespeare, Romeo and Juliet)
As the discipline matures, more and more people • Strategic Asset Management.
understand that Asset Management is not so much • Property Asset Management.
about ‘doing things to assets’ but about using assets • Facilities Asset Management.
to deliver value and achieve the organisation’s explicit • Integrated Asset Management.
purposes. So, if Asset Management does not mean • and many others.
managing the assets, what does it mean?
Great efforts have been made to find a better title What are the differences? What do we find in
– without success! However, once understood, the common? In short, what are the underlying ‘Asset
term ‘Asset Management’ is exactly right for what Management’ bits, irrespective the assets we are
we seek to do. It converts the fundamental aims of trying to manage? In most cases, the qualifying
the organisation into the practical implications for adjectives don’t help at all – they try to make a special
choosing, acquiring (or creating), utilising (operating) case for something that is inherently consistent,
and looking after (maintaining) appropriate assets to whatever the type or nature of the ‘assets’. If you
deliver those aims. And it does so while seeking the scratch beneath the surface, there are a set of clear,
best total value approach (the optimal combination of generic requirements for applying the label “Asset
costs, risks, performance and sustainability). Management” appropriately:
Asset Management gathers together the knowledge In our opinion, good Asset Management
and tools an organisation needs to use its assets to
achieve its purpose. Moreover these techniques and • is strategic (aligned with the organisational strategy);
processes allow such an organisation to demonstrate • should be ‘enterprise’ wide (avoiding silos);
that it is managing its assets optimally – often of • applies to asset owners, managers and those
great interest to many stakeholders, whether owners, with delegated management responsibilities (e.g.
customers, regulators, neighbours or the general outsourced asset responsibilities);
public. • has to balance costs, risks and performance on
different timescales;
A web search for “Asset Management” reveals not • applies to both tangible or physical and intangible
only a predominance of financial services but also a assets; and
confusing range of flavours and variants. There are • applies to public, private and not-for-profit
many qualifying adjectives attached to the front of the organisations.
term Asset Management - we find:
Fortunately the development of the ISO 55000 series
• Enterprise Asset Management, has enabled the international expert community to
• Infrastructure Asset Management, converge on the simplest term: “Asset Management”,
• Physical Asset Management, plain and unadorned! ISO 55000:2014 defines Asset
Management as: “the coordinated activity of an

organization to realise value from assets”; and an
organisation to choose how to manage those
assets to derive best value, and ‘value’ will take different
3. Concepts and Principles
asset is an “item, thing or entity that has potential forms to different organisations (including, for example, Where modern concepts of Asset 2. The North Sea oil & gas industry adopted the
or actual value to an organization”. the ‘minimisation of risk or liabilities’). These concepts Management have come from term “Asset Management” in the era following
are explored in the next section. However, it is not Asset Management is not new, people and the Piper Alpha disaster and the oil price crash of
These may seem like very general definitions. This the purpose of this document to repeat all the details; organisations have been managing assets for the late 1980’s. Radical change was needed and it
is intentional, as the thinking is common to the use reference should be made to the relevant publications if thousands of years. What has changed, however, was discovered that the creation of small, dynamic,
of assets, in whatever form they take. It is up to the further clarity is needed. is the cumulative recognition of what good Asset multi-disciplined teams managing each oil platform
Management involves, the optimising of cost, risks, (the ‘asset’) with a full Life Cycle view, unleashes
performance, resources and benefits over the whole great creativity and massive improvements in
asset life - within any absolute constraints. performance, safety and productivity.
These insights have three primary origins: 3. Meanwhile, in Australia and New Zealand, the
public sector faced a ‘perfect storm’ of falling
1. The financial services sector has been using the levels of service, escalating costs and poor
term for over 100 years to describe the juggling planning. The public outcry forced a corresponding
act of ‘optimising’ risk, yield (performance), short radical re-think, and the establishment of much
and long term security from a mixed portfolio of better strategic planning, prioritisation and value-
cash, stocks & shares and other investments. for-money thinking.
The lessons learnt from these widely different needs to work as a whole - and be more than just the Value will also often involve a mix of tangible and So, to maximise value (various aspects of performance
environments have been remarkable similar, with ‘sum of the parts’. intangible benefits or risks – in which case quantification in relation to expenditure, risks etc) it is essential that we
significant convergence of conclusions. Now the or scaling methods will be needed for the intangible understand both the inputs, costs and risks at discrete
message is spreading. Over the last 20 years it has Underpinning concepts elements (such as reputation, customer satisfaction, intervention and asset unit levels (at various stages in
been penetrating the electrical and water utilities, To recognise and understand the features above, it is employee morale or environmental responsibility). their individual asset Life Cycles), and the higher, systems
road and rail transport systems, mining, process and essential to clarify some underlying concepts: integration levels of benefits or performance realisation,
manufacturing industries at an accelerating rate. All Assets themselves have different levels of granularity again considering different timescales and horizons. This
are realising that there are great opportunities in a more • ● how Asset Management realises ‘value’ from assets – some organisations identify individual equipment is why other organisations define their ‘assets’ at higher
joined-up approach to management of assets. • ● what is meant by ‘Life Cycle activities’, items as discrete assets, towards which investment, levels (such as whole networks, infrastructure systems or
• ● what we mean by ‘optimal’ and maintenance, spares or other activities are directed. productive units) – it enables a full value-for-money picture
Distinguishing characteristics of good • ● what is a ‘management system’? However such units generally yield functional of the Life Cycle activities (inputs) and total performance
asset management • ● what is ‘alignment’ (or ‘line of sight’) performance and value only in a systems context – benefits. However such systems-level asset management
In a discipline as broad as Asset Management, it the network, production line, infrastructure facility or may have reduced precision and agility in determining
can be difficult to pin down the vital individual elements Assets and Value other larger entity. what is really worth doing, where, when and why.
that make the total picture work effectively. Using a Assets are things that have actual or potential value,
medical analogy, an assembly of limbs, organs, muscles and Asset Management achieves the realisation of
and nerves does not adequately describe the whole that value. However, what constitutes ‘value’ will
person. Nevertheless, there are some observable obviously depend on your viewpoint. An investor
attributes of good Asset Management (in contrast to seeks good profit or capital growth, a customer
“merely managing assets”), captured in management wants high standards of performance at low cost, a
standards such as the ISO 55000 series and PAS 55: regulator looks for assurance, efficiency and long-term Typical priorities & ‘values’
sustainability. Value can be realised in the buy-&-
Corporate/
• Multi-disciplinary: asset management crosses sell (capital value) sense, or in the asset utilisation
Keeping stakeholders happy Organization
departmental and disciplinary boundaries and is (performance value) sense. It can even be seen as a Management
focused on creating or increasing ‘value’ - whether negative – if, for example, the ‘asset’ is a liability (a
this be tangible or intangible, financial or non- risk, responsibility or debt), in which case the value
Portfolio return on investment
financial. realisation objectives would be to control or minimise compliance & sustainability Manage Asset Portfolio
N
IO
• Systematic: applied consistently and sustainably this liability.
IS E
AT
M LU
through an effective management system
TI VA
• Systems-oriented: looking at assets in their systems Value must reflect the mix of stakeholders and their Systems performance,
Manage Asset Systems
OP
cost & risk optimization
context, again to realise value expectations, and the best way of satisfying these
• Risk-based: consideration of risks and liabilities is potentially competing expectations with available
Life Cycle
IN LE
inherent in all decision-making funding and any absolute (e.g. legal) constraints.
G
ST YC
Activities: Manage individual Assets over their Life Cycles
COFE C
• Optimal: seeking the best compromise between The key concept is that it always involves trade-offs efficiency &
effectiveness
LI
conflicting objectives, such as costs, risks, between, or combinations of, the different interests
opportunities and performance over the short- and e.g. Net Present Value of short-term plus long-term
long-term. consequences rather than just today’s or tomorrow’s
• Sustainable: plans should deliver optimal asset value performance figures. Common trade-offs, and the Figure 1. Hierarchy of assets within an integrated management system
over the whole asset life, including ongoing system need to optimise the combination, exist between short
performance, environmental and other long term term and long term goals, between costs, risks and The above understanding of the value that can be derived from our assets can help us by supporting optimum
consequences. performance outcomes, between capital investment decisions, but optimisation will need to be based on the constraints of our environment at any point in time (just
• Integrated: at the heart of good Asset Management and subsequent operating costs, between asset because optimum value would be attained by investing today does not mean we will have the resources (cash flow,
lies the need to be joined-up. The total jigsaw puzzle utilisation and asset care (maintenance). competence etc) available to realise this investment today.
Life Cycle Activities replacements, modifications, obsolescence, changing

The concept of Life Cycle activities is easy to functional demands, recycling and other options need
TOTAL
understand at the lowest levels of asset ‘granularity’, to be considered, and the asset may even have a series
3500
IMPACT
Business impact (£k/yr)

such as physical equipment components. However of ‘owners’ during its ‘life’, with different objectives,
assets can only contribute value in a systems context value criteria and planning horizons. Life cycle activity
3000
– and more complex systems can have finite or infinite planning, Life Cycle costs and value realisation periods
‘life’, depending on how we choose to manage them. must be understood if short-termism and ‘false 2500 OPTIMUM RISKS OF
‘Patch and continue’ maintenance strategies, asset economies’ are to be avoided.
2000 FAILURE
1500
‘Balance point’
Dispose but not optimal
Identify Create or Utilise and and /or
1000
need Aquire Maintain
Replace 500 PREVENTIVE
ACTION COSTS
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Identify Utilise and Manage
need
Design Construct Commission
Maintain
De-commission Residual Maintenance or Life Cycle (months/years)
Liabilities
Sell Figure 3. Optimum value achieved by optimising total cost/risk/performance impact.

Identify Install & Utilise and Recycle
Select Purchase and/or
need Configure Maintain
Replace
Figure 2. Core asset Life Cycle stages and examples of variations Asset management decisions are often constrained by of ‘enablers’ that have been found, by the many
factors which mean that the ideal solution (illustrated organisations participating in the development of
in Fig 3) cannot be applied. Typical factors could be the specification to be essential to the coordination,
budgetary constraints, resources, or regulation. The efficiency and sustainability of a joined-up asset
asset manager needs to understand these constraints, management model.
Optimised Decision-making to maximise/minimise an objective function. This and optimise within them - as indicated above it may
Optimal, risk-based decision-making is also a vital usually represents the lowest combined business then be possible to put a price on the constraint which Note, however, that the term “Enterprise Asset
element underpinning successful Asset Management. impact of costs, risks and performance losses, or the may lead to it being removed or mitigated. Management” (EAM) system is sometimes used to
This involves finding the right compromise between maximisation of net value, over the Life Cycle. describe one of these enablers – the software systems
competing interests, such as asset utilisation/ An Asset Management System used to hold asset information and to facilitate
performance versus asset care (maintenance), capital It is also important to be proportionate – Asset Coordinating the many facets of asset management work planning and control, materials management,
investment cost versus operating expenditures, or Management decisions vary greatly in complexity requires a system of direction and control – a procurement etc. Care must be taken not to confuse
short-term benefits versus long-term sustainability. and criticality, so it is inappropriate to apply the ‘management system’ (which may include, but is far this with the overarching management system for
same level of sophistication to all decisions. Simple, more than, a software system). Both PAS 55 and ISO asset management.
Optimisation involves identifying the best value non-critical decisions can and should be made with 55001 provide a checklist of requirements for such a
compromise between a set of competing objectives (educated) common sense, whereas higher impact system, and cover the establishment of clear policy Diagram 4 below shows the relationship between the
or influences (within any absolute constraints or decisions, with multiple influences, options, timings or and strategic direction, specific asset management Asset Management System and the overall discipline
obligations). In practical terms Optimising involves inter-dependencies require greater systematic, multi- plans, operational controls and continual of Asset Management as descried in Section 5 of this
the adjusting inputs subject to constraints in order disciplined and auditable optimisation methods. improvement activities. They also identify a range document.
ISO 55001 sets out the requirements for a management system for assets in terms of:
Relationship between key terms
• Scope • Planning
• Normative Reference • Support
Managing the • Terms and Definitions • Operation
Organisation
Coordinated activity of an
• Context of an organisation • Performance Evaluation
organisation to realise value
from assets • Leadership • Improvement
Asset Management The requirements for the management system are summarised in Figure 5 below.
Set of inter-related or Stakeholder and organisation context

interacting elements to
establish AM Policy, AM
Asset Management
System objectives and processes to
achieve those objectives Organisational plans and
organisational objectives
Assets that are within the Asset management

scope of the asset policy
Asset Portfolio management system
Strategic asset management
plan (SAMP)
Asset management
objectives
Figure 4. Asset Management in the context of the Discipline of Asset Management.

[SOURCE: ISO 55000:2014]
Plans for developing
asset management
Asset management plans system + relevant
ISO 55001 describes a ‘management system’ for managing the asset management system. The aim is to ensure that support
assets, as illustrated in Figure 4. It sets out requirements documentation is ‘fit for purpose’ and adds value. The
for achieving good practice, but does not actually prescribe good news is that since all of the ‘management system’ Figure 5. Example
the activities – it can best be thought of as a structure to standards require quality managed documents and of key elements
ensure that the organisation achieves what it sets out do in records, it is sensible and pragmatic to put in place one set Asset management within an Asset
Implementation of asset system + relevant
a consistent and efficient manner by means of managing its of document that satisfies all needs. management plans support elements
Management
assets – essentially through controlled processes. System
ISO 55001 does not tell an organisation how well it
Philosophically the practice of asset management does needs to do Asset Management – that is a decision that Note: The grey
not require that an organisation has to put in place is dependent on the business and the operating context it highlighted box
Asset portfolio
documented business procedures, standards, policies and works within. The 39 Subjects in this Anatomy describe designates the
the like. However, for most businesses, in particular those some aspects of Asset Management that go beyond boundary of the asset
that seek to comply with ISO 55001, it is inevitable that the requirements of ISO 55001 (and PAS 55). It is up to management system.
some of this will be required, and if done well it normally each organisation to decide how much or how little of
brings great benefit. ISO 55001 does require some rigour the capabilities described in this Anatomy is important to Performance evaluation and improvements [SOURCE: ISO
in management of the documents and records that form them. 55000:2014]
4. The Scope of Asset Management

Alignment within the management is needed, not just how to do it. Such alignment People ‘do’ Asset Management opportunities to optimise what is spent, and when, in
system brings obvious advantages of prioritisation and The understanding of the principles of Asset relation to the risks, obligations and liabilities incurred
The backbone to a good management system coordination of purpose, but it also helps to stimulate Management has developed significantly over the last and the value obtained.
for assets is the clear connectivity between the creativity and innovation: staff who understand what decade and a number of approaches, standards and
organisation strategic plan (commonly called the is important (and why) can often identify new and models have been developed across the world. It is The 39 Subjects and 6 Subject Groups
business plan) and the on-the-ground daily activities better ways of achieving these goals. becoming increasingly necessary to align these various The IAM has been working with international partners
(through all of the relevant connecting layers) of approaches and to develop a global view, in particular within the Global Forum on Maintenance and Asset
individual departments (planning, engineering, Alignment goes both ways, of course. It also ensures for companies that operate Asset Management Management to achieve global consensus on a
procurement, operations, maintenance, performance that senior management decisions and corporate systems in many countries. common definition of the 39 Subjects that form the
management etc). strategies are rooted in fact-based realities – the core of the Asset Management Landscape . These 39
asset capabilities, performance, opportunities and Asset Management differs, for example, from Quality Subjects form the basis of the structure of Section 5 of
We call this the alignment (or ‘line of sight’) because constraints. Feedback and continual improvement Management (e.g. ISO 9001), Lean, 6-SIGMA, Total this Anatomy documents and are expanded on within
people on the front line need to have a direct visibility are therefore key elements of an asset management Productive Maintenance and so on, although it can the IAM’s Subject Specific Guidelines.
of the reasons for their activities – why the task system – and apply at many levels (see Figure 4). incorporate such methodologies. Asset Management
is best seen as an integration framework that The 39 Asset Management Subjects are linked to
enables organisations to achieve their explicit aims 6 Subject Groups which in turn are reflected in the
in a structured way. They may choose to use any conceptual model (see Figure 6).
combination of tools and techniques to achieve these
aims, provided that they are appropriately applied and It is important to understand that these 39 subjects
deliver ‘added value’. are intended to describe the complete scope of Asset
Management. Therefore any person who intends to
It is vital to remember that people ‘do’ Asset become demonstrably competent or expert in this field
Management and therefore people, and their will need to know enough of the complete breadth of
knowledge, competence, motivation and teamwork all the subjects in addition to any deep and detailed
can make the biggest difference to good or poor expert knowledge in any one of them.
asset management - otherwise known as an ‘Asset
Management culture’. The tools and technologies may The IAM Conceptual Model
be helpful, but the engagement of the workforce, The IAM takes the view that there is no perfect model.
the clarity of leadership, and the collaboration Instead we welcome a variety of useful models either
between different departments and functions are the because they are preferred by some individuals or
real differentiators of a leading asset management because they explain a theory or practice in different
organisation. ways for different purposes.
Similarly, Asset Management is not about just The following section presents the current conceptual
managing the assets for their own sakes. Asset model used by the Institute to which all the Subjects
Management is about deriving value from the assets and Subjects Groups are aligned.
in a structured and predictable way. Even if the role
of the organisation is limited to the ‘governance’ The Conceptual Model is designed to describe the
responsibility for assets, there are plenty of overall scope of Asset Management and the high-level
groups of activity that are included within this discipline. critical issue that Asset Management is there to serve The Asset Management Subject Groups are shown in the IAM conceptual model for Asset Management below.
The Model highlights the fact that Asset Management the goals of the organisation. The essential alignment
is about the integration of these groups of activity and of Asset Management activities with an organisation’s Commercial
Customers Legislation Investors
not just the activities in isolation. It also emphasises the goals is a concept that we continue to emphasise. Environment
Organisational Strategic Plan
Scope of Asset Management

Strategy & Planning Acquire Operate
Lifecycle
Delivery
Organisation Dispose Maintain Risk &

Asset Management
& People Review
Decision-Making
Asset Information
© Copyright 2014 Institute of Asset Management (www.theIAM.org/copyright)
Figure 6. The IAM Conceptual Model
These Subject Groups are split into the following 39 Subjects.
Figure 7. The 39 Subjects of Asset Management
5. Subjects Groups and Descriptions

Each Subject Group and each of the 39 Subjects are Although these Subjects are described individually, The Strategy & Planning group contains the core • What are the future changes in legislation and
described in more detail in the following sections. they should be not considered as discrete Subjects. Asset Management activities required to develop, regulation?
These descriptions were developed by IAM members The interrelationship between the Subjects and implement and improve Asset Management within • What will the economic business environment be like in
and reviewed and edited by IAM Faculty to ensure the contribution they make as a whole to an an organisation, taking into account business and the future?
consistency across the 39 Subjects. The IAM is gradually organisation’s Asset Management capabilities are an organisational objectives and the effects of changing
publishing individual Subject Specific Guidelines as extremely important aspect of the Asset Management demand over time on the asset portfolio. An Asset It is important that the implications of these uncertainties
downloadable documents. Landscape. Management Strategy contains documented are understood in terms of likely impact on cost, risk and
information that specifies how organisational objectives level of service. This may necessitate the development
are to be converted into asset management objectives, of Asset Management Strategies for a number of
the approach for developing asset management different scenarios to reflect different assumptions around
5.1 Strategy & Planning plans, and the role of the asset management system these uncertainties.
in supporting achievement of the asset management
objectives. Asset Management Plan(s) clearly explain The majority of the Asset Management Strategy is
what the organisation plans to do with its assets to concerned with the long term strategic requirements
Commercial achieve these objectives in terms of resources and of the physical assets. It provides direction and
Environment
timescales with respect to Life Cycle activities such as guidance to enable the creation of investment and
acquisition, maintenance, operation and disposal. maintenance plans – essential to putting in place the
resources (including finance) to manage the assets
Strategy & Planning needs to consider the required consistent with achieving desired outcomes. In parallel
outputs from the assets, both now and in the future, and with the requirements of physical assets, it is necessary
the options for delivering these outputs for the optimum to consider the development of the asset management
whole life costs. In many organisations, this requires system consistent with delivery of these plans. This
consideration of an Asset Management Strategy may include the improvement of business processes to
& Objectives over long time frames, for example 50 enable, for example, increased use of condition based
years, to ensure the long-term implications of Asset maintenance. It is inevitable that these improvements
Lifecycle
Delivery Management Decision-Making are understood. It is are closely coordinated with other strategic plans for
therefore important that the Strategy & Planning ‘enablers’, these would typically include ‘information’,
Asset Management activities are integrated with the Asset Management ‘human resources’, ‘training’ etc.
& People Review
Decision-Making
Decision-Making activities.
The Strategy & Planning Group covers the following
Strategy & Planning also needs to take account of the Asset Management Subjects:
uncertainties associated with long-term planning. These
Asset Information uncertainties could include: • Asset Management Policy
• Asset Management Strategy & Objectives
• What are the future levels of demand? • Demand Analysis
• Will required levels of service change? • Strategic Planning
• Will assets deteriorate at the assumed rate? • Asset Management Planning
• How will risks change over time?
• What new technology will become available? Each of these is now described in more detail.
5.1.1. Asset Management Policy with all relevant mandatory regulations and laws, Asset Management, ensuring the justification for all (and hence the organisational strategic plan) and
The Asset Management Policy states the high level whether voluntarily or not? Asset Management activities at the ‘sharp end’ are clearly other organisational policies and strategies?
principles by which the organisation manages its assets. It • Principles and framework – is there a clearly laid out justified at all levels in the organisation. • Risk-based Approach – is the Asset Management
sets out the intentions and direction of an organisation as set of principles and a framework within which an Strategy risk-based in its approach, i.e. does it
formally expressed by its top management. It is formally effective Asset Management System can be created? The Asset Management Strategy & Objectives should prioritise activities according to the criticality of
agreed and signed off an appropriate executive officer, • Continual improvement – is the Asset Management define what the organisation intends to achieve from its the asset or Asset Management activity under
thereby demonstrating the organisation’s commitment to Policy supported by top management, effectively Asset Management activities and by when. This should consideration and the levels of risk associated with
Asset Management. communicated and reviewed regularly, with a include both: each one?
commitment to continual improvement of the Asset • Life Cycle Approach – does the Asset Management
An Asset Management Policy is the cornerstone of an Management System it defines? • The current and future demand on and condition Strategy explicitly consider the Life Cycle of the
organisation’s approach to Asset Management. As such and performance requirements of the organisation’s assets and the interdependencies between each of
it provides both the confidence that the organisation assets and how the organisation intends to deliver the Life Cycle stages?
is translating its overall organisational strategic plan Many organisations have difficulty getting the right these future requirements; • Framework – does the Asset Management Strategy
into effective Asset Management Plan(s), and provides balance for their particular circumstances. Some prefer • The current and future Asset Management set out a clear framework for the development of Asset
the start of an organisation’s ‘line of sight’, the golden a single page Asset Management Policy which can capabilities of the organisation, i.e. its processes, Management objectives and plans which includes the
thread of rationale which ultimately justifies every Asset be pinned on all their notice boards for all to see. They information, systems, people, tools, resources etc. appropriate level of optimisation, prioritisation, and
Management activity the organisation undertakes. then understandably struggle to fit all the requirements and how the organisation intends to develop its management of information?
outlined above into a single page. In reality, an Asset future capabilities to a level of maturity necessary to • Stakeholders – does the Asset Management
Alignment (or ‘line of sight’) is an essential concept for Management Policy does not need to be a single page, deliver its organisational goals. Strategy include an assessment of how stakeholders
effective Asset Management. The project manager or but should not realistically stretch to more than a few will be engaged and communicated with?
technician at the ‘sharp end’ of an organisation should well-crafted pages. The main objective should be clarity A key requirement for an effective Asset Management • Functional, performance and condition requirements
be able to trace the rationale for what he or she is doing of thought and presentation, setting out as coherently as Strategy is the inclusion of Asset Management objectives – does the Asset Management Strategy identify
upwards through a clear set of plans, objectives and possible how Asset Management will contribute to the that are Specific, Measurable, Achievable, Realistic and present and future functional, performance and
strategic statements to something in the organisational achievement of the organisational strategic plan. Time-bound (SMART). condition requirements for the assets and how the
strategic plan (i.e. the organisation’s topmost vision). organisation plans to meet these?
This requires a clear framework within which Asset Therefore the structure, length and content of the Asset The Asset Management Strategy does not have to be a • Continual improvement – is the Asset Management
Management Decision-Making is made and presented. Management Policy will vary from organisation to single document, in practice it often helps if it is presented Strategy supported by top management, effectively
The purpose of the Asset Management Policy is to set organisation, from a single document to a structured in smaller documents aligned to the organisation’s communicated, and reviewed regularly to ensure it is
this framework out. group of documents, possibly with a single page ‘Asset normal way of working. Many organisations produce still fit for purpose in meeting the Asset Management
Policy Statement’ for the notice boards. What is important separate Asset Class Strategies which define the strategies Policy and organisational strategic plan?
PAS 55 sets out a list of 11 requirements for an Asset is to make clear to anyone reading it exactly how the and objectives for the different asset classes that an
Management Policy which fall into five broad categories organisation’s Asset Management System works to organisation is responsible for but these needs to all align The biggest challenge facing any asset intensive
(in no particular order): develop and maintain alignment or ‘line of sight’. with the overarching Asset Management Strategy & organisation is creating an Asset Management Strategy
Objectives. However this is undertaken, it is important that clearly maintains the alignment initiated by the Asset
• Consistency – is the Asset Management Policy 5.1.2. Asset Management Strategy & that a coherent set of Asset Management Strategy Management Policy. Many organisations find the
consistent with the organisational strategic plan, Objectives & Objectives documents must be in place for an development and introduction of an Asset Management
other organisational policies, and in particular the An Asset Management Strategy and associated organisation to be an effective Asset Manager. PAS 55 sets Framework helps with this. Within the Asset Management
organisation’s overall approach to the management Objectives can be considered as the second stage of out a list of 12 requirements for an Asset Management Framework the structure and content of the Asset
of risk? decomposition of the organisation’s ‘line of sight’ which Strategy which fall into seven broad categories (in no Management Strategy is clearly defined, with the
• Appropriateness – is the Asset Management Policy was initiated by its Asset Management Policy. ISO particular order): relationships between documents set out in the form of
appropriate for the nature and scale of the organisation? 55000 defines this as the ‘Strategic Asset Management a top-level diagram and the development of lower level
• Compliance – is there a commitment in the Asset Plan’ or ‘SAMP’. As described under Asset Management • Consistency – is the Asset Management Strategy document templates to support the consistent generation
Management Policy for the organisation to comply Policy, alignment or ‘line of sight’ is essential to effective consistent with the Asset Management Policy of each document within the framework.
5.1.3. Demand Analysis Naturally, the level of uncertainty tends to increase the to develop work volumes, cost schedules and output Ultimately, the Strategic Planning processes should
When developing the Asset Management Strategy longer the forecast horizon and this uncertainty needs measures for different types of asset including the describe how an organisation intends to ensure that the
& Objectives, an important element to consider is the to be reflected in the Strategic Planning processes use of appropriate decision support tools. Asset Management Strategy & Objectives will be
current and forecast demand for the product or service and the resulting Asset Management Strategy & • describe how Demand Analysis and required outputs delivered through the day to day delivery plans used by
being produced and how this demand translates into Objectives. The Strategic Planning processes also are considered and modelled in the development of the organisation and how any variations between these
the outputs required from the organisation’s assets. In need to consider the capacity and capability of the the organisation’s proposed maintenance, renewal and different plans are handled.
some cases organisations will find it simple to develop a assets to deliver the forecast demand and how this may enhancement work volumes.
good understanding of future demand and take it into limit an organisation’s ability to service an increased • enable organisations to develop work volumes and 5.1.5. Asset Management Planning
consideration in their strategic plan but for others this may demand for a product or service. costs for different scenarios to reflect potential Asset Management Planning is undertaken to
be more difficult. It is therefore important to undertake changes in demand, output requirements or funding determine how assets will be managed, over a specific
a structured demand analysis before fully developing One of the main reasons to perform an analysis such as constraints. The development of different scenarios period of time, to achieve the Asset Management
the Asset Management objectives and developing the the demand analysis is to be able to forecast the return will enable organisations to more clearly articulate Objectives in accordance with the Asset
organisation’s Asset Management Plan(s). on assets or return on investments utilising a normal Net the impact of funding constraints in terms of impact Management Strategy. For example, this could be
Present Value (NPV) method based on the incremental on performance, risk and cost. to maintain current customer service and/or to improve
Demand Analysis involves a market review on the costs and revenues for each of the strategic asset • describe how confidence levels in asset information customer service or environmental service in specific
expected future demand, incorporating historic figures, investments identified. Building and optimising a NPV and unit costs will be determined and how this will areas for a given level of funding.
external data and analyses and statistical models. The model and incorporating the demand analysis allows the the impact on the confidence levels in the resulting
aim is to forecast demand for the product or service being asset manager to run different scenarios and to optimise work volumes and costs in the Asset Management An organisation’s Asset Management Planning
produced and the requirements this demand will impose the Asset Management Strategy and resulting Asset Strategy & Objectives. The use of confidence processes will produce Asset Management Plan(s) that
on the organisation’s asset portfolio. In Demand Analysis Management Plan(s). levels will help internal and external stakeholders define the activities that an organisation intends to
there are several elements that need to be considered: to understand the relative maturity of the work undertake in order to deliver these objectives. These
It may be necessary to develop different scenarios for the volumes and costs within the plan compared to the activities could include capital investment to build new
• Historical demand future demand on the organisation’s assets to reflect the criticality of the different asset groups. assets, capital investment to renew life-expired assets,
• Change in demand over time uncertainty of this future demand. This is discussed further • reflect the criticality of different asset types in the an operational maintenance regime, disposal of assets,
• Price changes over time in Strategic Planning below. approach to determining work volumes and costs and rationalisation of assets or education campaigns.
• Changes in required levels of service to ensure the level of rigour in the development of For example an Asset Management objective to reduce
• Impact on the future performance, condition and 5.1.4. Strategic Planning the Asset Management Strategy & Objectives sewer flooding of properties could be achieved by a
capability of an organisation’s assets An integrated strategic planning framework and is proportional to the criticality of the different combination of a number of activities, not limited to,
associated processes underpin and help ensure asset types. but including:
Other factors that have to be incorporated include price consistency when developing work volumes and cost
elasticity, marketing elasticity, income elasticity, and cross estimates across different asset groups. The Framework • providing protection at domestic properties e.g. by
elasticity. The elasticity identifies what the demand or and processes should: installing flood gates
price will do as a result of the factor itself. For example if • capital investment to replace sewers, overflows and
a product or service is price inelastic it means that a large • establish levels of rigour appropriate to the varying pumping stations
change in quantity of sales does not change the price criticality of the different assets hence generating • maintenance activities to remove tree roots
of the product or service. Although well understood funding requirements across the different asset • a customer education campaign to reduce disposal
as economic concepts, these can be difficult to model groups which are consistent and reflect the assets’ of unsuitable items in the sewer that can lead to
and calibrate for a given situation hence the need for potential to impact the business goals. blockages and flooding such as fats, oils, greases
careful not cursory analysis to assess not only the central • describe how asset information and renewal and nappies
prediction but the levels of uncertainty that surround and maintenance policies are used to develop an The decision about the optimum blend of activities
it. Consideration also needs to be given to the impact of organisation’s Asset Management Strategy & necessary to achieve a specific objective would be
regulatory prices controls for organisations working in a Objectives. analysed using the approaches described in the Subject
regulated sector. • provide guidance on the most appropriate method Group Asset Management Decision-Making.
Responsibilities should set out who leads each activity have timescales to describe when it will be delivered and 5.2 Asset Management Decision-Making
and which part of the organisation or its suppliers when the benefits will be achieved.
will carry out each activity. It may also specify how
decisions are made and who is responsible for Asset The Asset Management Plan(s) may also describe Commercial
Environment
Management Decision-Making. how the plan has been justified and how activities &
resources have been optimised to deliver the lowest
The resources needed to deliver each activity should whole life cost or value. The justification describes the
be identified and this may include human, financial, costs and benefits associated with delivering the Asset

physical, natural and knowledge resources. The Management objective.
plans may also specify how the plan will be funded,
for example from central government, shareholders, In addition Asset Management Plan(s) may also include
borrowing or changes to charges. information on current assets and their performance,
on stakeholders’ engagement and how the plan will be
Within the Asset Management Plan(s) each activity should approved, monitored, reviewed and updated.
Lifecycle
Delivery

Asset Management
& People Review
Decision-Making
Asset Information
The key to making good Asset Management decisions provides a stable framework to allow joined up
is acquiring appropriate knowledge and applying Asset Management Decision-Making. The Asset
this within a robust decision-making framework. An Management Policy provides the overarching
Asset Management Strategy should be in place principles which are in place to enable the Asset
which is derived from and aligned with the Asset Management Strategy & Objectives and Asset
Management Policy. Management Plan(s) to be produced and implemented.
The Asset Management Strategy would typically
Having a consistent Asset Management Policy contain the criteria to be used to optimise Asset
and Asset Management Strategy & Objectives Management Decision-Making.
Renewal Cost
Asset Knowledge is also a crucial element in Asset The Asset Management Decision-Making Group is
Management Decision-Making. Asset Knowledge made up of the following Subjects:
required about the assets can be grouped into the Routine
Mid-life Maintenance costs
following areas: • Capital Investment Decision-Making Overhaul increase towards
• Operations and Maintenance Decision-Making end of life
• Strengths and Weaknesses: Understanding the • Life Cycle Value Realisation
criticality of your assets and the condition of the • Resourcing Strategy
assets. • Shutdowns & Outage Strategy
• Opportunities: the action that can be taken to
Increasing
improve the condition of the assets, new technology Each of these is described in more detail below.
Failure Risk
or skills that can be brought into the organisation to
improve Asset Management capability. 5.2.1. Capital Investment Decision-Making Routine
Maintenance
• Threats: the risks to performance and to understand The timing and costs of new capital programmes Declining
the mitigating actions that can be put into place to have a significant impact on an organisation’s success Condition
manage these risks. but are often based on relatively simple assumptions
or historic expenditure run rates. In most sectors,
Asset Management Decision-Making is crucial at all stakeholders are making increasing demands for more
elements of the asset Life Cycle and should be made detailed justification of capital expenditure which
in a coordinated fashion to optimise whole life value the simple traditional approaches cannot deliver.
given any underlying constraints, statutory legislation When these demands are combined with inadequate
Age / Usage
or regulatory obligations. asset data and information, plus uncertainty over
asset deterioration rates and future maintenance Cost Condition Risk
Asset Management Decision-Making is typically costs the justification is difficult and requires a more
undertaken in parallel with Strategic Planning and is sophisticated approach.
key to developing optimised Asset Management Plan(s). Figure 8. Life Cycle Cost Analysis
Asset Management Decision-Making is sometimes Capital Investment Decision-Making is based on
undertaken for specific one-off decisions, for example an understanding of probable asset degradation and
to optimise a major investment scheme and the output trading-off investments (CAPEX), maintenance costs In practice, there are often external constraints that impact population view or Prior Model, can be updated using
would be included in the Asset Management Plan(s). (OPEX), risks and their probabilities in order to optimise an organisation’s ability to intervene at the optimum time sample data so a representative sample is not required.
However, for more generic decisions, for example a capital investment decision. The optimisation can (for example Technical Standards & Legislation or Bayesian statistics handle variable quality data, and the
the optimum renewal policy for assets in widespread be in terms of timing, the choice of asset or both. funding constraints) but Life Cycle cost analysis will help an models can be updated with actual degradation and
use, Asset Management Decision-Making can In order to do this effectively, the costs and risks organisation to understand the whole-life implications of costs over time.
be undertaken once and embodied in asset specific associated with an asset, and how these vary through any sub-optimal intervention in terms of increased future
policies. These policies would then be combined with time or with usage, need to be understood. Life costs and risks. 5.2.2. Operations & Maintenance Decision-
Asset Knowledge to develop work volumes and costs Cycle cost analysis is typically used to determine the Making
for the portfolio of assets within the Asset Management intervention(s) that represent the lowest Life Cycle For very long-life assets where degradation information Normally, manufacturers and equipment suppliers provide
Plan(s). The outputs from the application of these costs. The diagram below shows a simplified example is poor or very complex asset systems where there a list of maintenance and inspection tasks to be carried
policies need to be continually reviewed to ensure they of how annual costs may vary for a given asset or are interdependencies between different assets or out at recommended intervals for an asset. It is not
are in line with the assumptions made during the Asset asset system. components, statistical analysis can help with Capital uncommon for these to be adopted by the user. However,
Management Decision-Making processes. Investment Decision-Making. In many cases Bayesian being generic, these take little or no account of the
statistical tools are used. With Bayesian statistics, a operating environment of the asset in question. There
is increasing pressure to reduce operational expenditure Risk-Based Maintenance (RBM) analysis techniques can failure risks. This does not mean they are bad tools should consider and value risk exposures, sustainability
and as with Capital Investment Decision-Making, be used to enhance the RCM process to but users should be aware of the limitations of any (of asset performance, financial, social, environmental
maintenance regimes need to be justified to demonstrate optimise maintenance intervals for a cost-effective technique before applying it. For example, a standard and other impacts) and any relevant ‘intangibles’ such
the value of the maintenance spend to the organisation. level of reliability and risk. The key to a risk-based RCM process has difficulty showing that the level of as reputation, client satisfaction, staff morale etc.
approach is understanding and quantifying the reliability being achieved is actually optimal or cost-
To support informed Operations & Maintenance trade-off between the cost of undertaking effective. i.e. it may be more appropriate for a business Life Cycle Value Realisation in practice means the
Decision-Making, maintenance strategy analysis maintenance and the increasing risks associated with a to accept a lower level of reliability where the cost combination of Capital Investment Decision-Making
techniques such as Failure Mode and Effects Analysis deteriorating asset. Although it difficult to be entirely of achieving higher reliability is disproportionate. It is and Operations & Maintenance Decision-Making
(FMEA), Reliability-Centred Maintenance (RCM) and accurate in establishing this relationship, this trade-off, therefore important to carefully evaluate whether or processes to support decision making and maximise the
Risk Based Inspection (RBI) can be used. These tools and the determination of the optimum maintenance not a particular tool or methodology is appropriate to value obtained from assets over the life of the asset. The
are designed to build maintenance regimes and plans interval in terms of the lowest Total Business Impact, the task in hand before pursuing a potentially costly techniques used to achieve this are referred to as Life
appropriate for the different failure modes and the different the theoretical outcome is shown in the diagram implementation. Cycle Cost & Value Optimisation (LCC & VO), in which
consequences that result from those failures of the asset. below. the costs, risks and asset performance benefits (e.g.
5.2.3. Life Cycle Value Realisation revenues or other service outcomes) are calculated over
When developing optimised Asset Management the life of the assets or asset systems. In many cases,
Plan(s), there are many things to be considered and the performance benefits and some risk types are only
120 multiple drivers to be taken into account. Stakeholders encountered or quantifiable at the asset systems level,
Premium Paid to Premium Paid to
meet reliability target meet cost target Total are taking an increasing interest in the extent to whereas costs may be incurred more commonly at the
100 which an organisation can demonstrate that its Asset individual assets level. Life Cycle Costing is therefore often
Business
Management Plan(s) are value-maximised over an used in evaluating options relating to individual assets,
Impact appropriate time horizon. This is often the full Life whereas Value Optimisation is most easily achieved and
80
Economic
Annual Costs (£s)
Cycle, but may be constrained by contractual or other demonstrated at the asset system level and whole portfolio
Optimum factors to a shorter time frame. The “best value” plan levels (see Figure 10 below). The LCC & VO opportunities,
60 Risk Cost
40
CalculatingOptimumLife_vers1_0
Typical priorities & ‘values’

20 Direct Cost Corporate/
Keeping stakeholders happy Organization
0
Management
1 2 3 4 5 6 7 8 9 10
Portfolio return on investment
Maintenance Frequency (weeks) compliance & sustainability Manage Asset Portfolio
N
IO
IS E
AT
M LU
TI VA
Systems performance,
Figure 9. Optimising Maintenance Manage Asset Systems
OP
cost & risk optimization
These techniques can be used to develop robust A quick internet search will reveal many examples
Life Cycle
IN LE
G
ST YC
maintenance regimes in the form of maintenance standards of implementations of these techniques - some Activities: Manage individual Assets over their Life Cycles
COFE C
or specifications that can be fully justified from both a cost successful, some less so. A common mistake is the efficiency &
effectiveness
and risk perspective to internal and external stakeholders. application inappropriate levels of analysis and over-
LI
The Execution of these maintenance activities is described in confident statements that the outputs provide the
the subject Maintenance Delivery. optimal combination of maintenance cost and residual Figure 10. LCC and VO usages in the management of asset portfolio
and the methods employed to realise them, can vary in used to optimise and demonstrate delivery of value within low. This approach has taken by many utility companies strategy requires analysis of the available life extension
decisions made during different asset Life Cycle stages. It all critical Asset Management Plan(s). As well as reducing over a number of decades, due to the redundancy and options, the future needs for the asset, the costs of asset
is generally accepted that in the early phases of an asset’s overall costs and raising value, such processes improve resilience built in to the original network designs. disposal and an assessment of the costs and benefits of
life (design, creation or acquisition), the evaluation of Life risk management transparency and raise stakeholder alternative interventions.
Cycle Costs and exploring options to optimise Life Cycle confidence in the organisation’s sustainability. Where it is advantageous to do so, an alternative approach
Value have a disproportionate significance on the overall is to replace assets prior to functional failure. This is an The aim of an effective Ageing Assets Strategy should
cost of ownership of the asset. These techniques counter It should be recognised that ageing assets represent a economic decision as while a planned replacement can be to enable the identification and prediction of the
short-termism through deliberate inclusion and valuation particular challenge for asset managers. After a long involve considerable capital expenditure, the costs and end of economic life and the efficient management
of asset attributes such as reliability, maintainability and period of stable operation, new failure modes can consequential losses associated with unplanned failure of assets as they approach this phase. The
sustainability. For Example, avoiding the lowest initial cost emerge. This is particularly challenging if the transition is may be many times higher. The section on Capital implementation of such a strategy should provide
options with known problems or high costs emerging later not recognised, decisions made with the assumption of Investment Decision-Making earlier explored some asset managers with the tools they need to determine
in the asset’s life. stability and predictability may not be appropriate for this of the techniques to determine the optimum time for the most cost-effective strategy for the ageing assets
new stage of the Life Cycle. While the eventual physical planned replacement. In the highly regulated environment under their stewardship.
Capital Investment Decisions made without proper failure of an asset may be inescapable, the economic end- in which many asset owners operate, these costs are
LCC and VO processes, may not sufficiently address the of-life situation or functional failure can be missed. This is driven higher still by stringent requirements in terms of 5.2.4. Resourcing Strategy
trade-off between initial capital investment and operating particularly true when lifetimes are measured in years or service performance, safety legislation and environmental As described earlier, Asset Management Plan(s) are derived
or maintenance costs. Likewise, without a Life Cycle view, decades and the asset manager may not have seen the concerns. It is therefore important to determine from the long-term Asset Management Strategy &
individual Operations & Maintenance Decisions may asset type at the end of its life before. these costs to enable planning of cost-effective asset Objectives designed to ensure that the organisational
not consider opportunities to reduce maintenance or raise replacement. strategic objectives are achieved in a way that reflects
reliability through renewal or design modifications. The end of an asset’s economic life is generally priorities, optimises cost, risk and performance, and is
characterised by a loss of performance, increasing When faced with large numbers of critical assets sustainable. Asset Management Plan(s) need to include all
The costs incurred during different asset Life Cycle phases operating costs, falling reliability, an unacceptable increase moving towards the end of life, the planned approach significant activities related to managing asset performance
are often materially impacted by decisions made earlier in in the risk of catastrophic failure. The change may be often becomes more attractive. For example, electricity and risk, which means both capital and revenue
the Life Cycle. For example, whereas only 10-20% of the driven by external forces such as legislative changes or companies have in recent years moved towards this expenditure.
entire Life Cycle cost might be incurred during the design changing requirements but the outcome for the asset model by attempting to forecast asset performance
or create/acquire stage, over 80% of the subsequent remains the same. The key point being that the continued and plan renewal. This approach has helped to prevent To deliver these plans requires an appropriate
operating and maintenance costs (and asset performance operation of the asset is uneconomic, even though it may a large increase in failures and ensured that customer Resourcing Strategy which reflects the changes
characteristics) will typically be determined at this stage. It continue to function at an acceptable output level. The service standards have been maintained. In this in requirements over the planning horizon. The
is important to consider all phases of the Life Cycle at the development of an Ageing Assets Strategy can help to environment, the key question changes from ‘What is Resourcing Strategy considers the skills and resources
design stage of any significant investments. Life Cycle not only recognise conditions for an economic end-of-life the condition of the asset?’ to ‘When will the condition available to develop an optimal and realisable solution
costs should be modelled for different design options to situation, but also to forecast it far enough in advance to of the asset become unacceptable?’ Such forecasting which may include a mix of internal and external
understand their impact on the Life Cycle costs and the allow appropriate mitigation. techniques are a key component in the development of (contracted) services. Identifying the appropriate mix
asset Life Cycle. In addition, the costs of asset disposal an effective Ageing Assets Strategy. can be a complex problem influenced or constrained by
are generally increasing, largely due to environmental There are a range of options to manage the end-of-life of external factors, working practices and political or union
considerations, so it is important that decommissioning an asset or system. The simplest approach is to react to If fix-on-fail and planned replacement represent two considerations. It is normal for organisations to identify
and disposal costs be considered in Life Cycle cost models. functional failures, sometime referred to as fix-on-fail. This extremes of approach and for many assets, there are a which resource requirements are core capabilities that
can be appropriate and effective for low-criticality assets - range of specialised solutions designed to slow the onset need to be developed or retained ‘in-house’, and which
Asset Life Cycle Costing and Value Optimisation those with low consequences of failure. Even for high- of end-of-life. These range from simple changes to are non-core capabilities which are more appropriate
have significant contributions to make to the Asset value assets, fix-on-fail can be a valid approach where there maintenance techniques to extensive asset refurbishment to buy in. This decision will be influenced by market
Management Strategy & Objectives and should be is redundancy built in to the system and the failure rate is programmes. The determination of the most efficient availability of suitable suppliers over a period matching
the plan as well as the desires of the organisation. inside the organisation (see Contractor & Supply However, many organisations find this difficult and ‘bundling’ it into packages for execution to maximise
The level of ‘in-source’ versus ‘outsource’ is a strategic Management). spares are often not procured or overstocked for a availability of asset systems (see Shutdowns & Outage
decision, which should be set out clearly in the number of reasons. When considering spares holding, Strategy).
Resources Strategy. The Resourcing Strategy is heavily influenced by the it is important to recognise obsolescence and shelf
changing requirements of the business, technology life as well as opportunities for using modular and 5.2.5. Shutdowns & Outage Strategy
Organisations that mainly outsource are often described changes and workforce demographics. This feeds standardised spares which can be used to replace a For many industries, planned plant or system
as ‘thin asset managers’. For them, it is strategically the HR Strategy or People plan to ensure that the skill variety of assets. The tools and techniques for this shutdowns and outages are an essential part of
important to retain the in-house capability to specify, sets available are matched to those needed over the analysis are widely publicised and much has been Asset Management. They are required to facilitate
manage and monitor outsourced services. The life of the plan. This includes developing competency written on Capital, Critical and Strategic Spares holdings maintenance, inspection or project work which cannot
Resourcing Strategy and resultant ‘in-house’ capabilities through, succession management, recruitment, as well as the theory and formulae for optimising stock be executed when assets are operating. Whilst such
have a direct influence on the general procurement training, performance management and personal levels and Economic Order Quantities (EOQ). shutdowns may be essential to ensure asset safety and/
strategy supporting the procurement of services through development planning. or regulatory compliance, from a production perspective
turnkey contracts, partnerships, framework agreements The Resourcing Strategy should define how specialist they are undesirable as they disrupt output or reduce
and other vehicles. An appropriate procurement The Resourcing Strategy is not only about skills. tools are to be managed, ensuring that they are service levels.
strategy supports contractual commitments The availability of critical spares or raw materials available, matched to work requirements, calibrated,
compatible with the resource requirements in the is an important factor in achieving targets. As inspected and maintained as appropriate. The Shutdowns and outages also introduce specific risks
Asset Management Plan(s). To be realistic and with Maintenance decision making, there are well accountabilities for this must be clear and management associated with interrupting stable processes and
realisable, the Resourcing Strategy must consider of established tools and techniques for optimising spares rigorous as failings in test equipment have a systems. Shutdowns and outages are expensive to
the relevant supply chains to ensure that capabilities that consider the cost holding spares versus the risk of disproportionate impact on the organisation’s objectives. execute and often require large amounts of scarce or
will be available to meet the plan from outwith or spare unavailability as shown in the diagram below. It is often possible to create savings by rationalising skilled labour resource to be mobilised and set to work
specialist tools and putting them into a managed system in a limited space over a fixed duration. All outages
but this is normally a secondary objective to assuring are followed by a start-up phase which is by its nature
safe and effective use of such tools. a high risk period where ‘infant mortality’ or re-
Risk for number Cost of commissioning problems occur. An organisation would
of spares held spares held Materials management is normally achieved as an typically develop a Shutdowns & Outage Strategy
£12,000
integral part of the production process or project which optimises the trade-off between asset operations
management and the Resourcing Strategy should and the need to perform work on the assets and
£10,000
Cost per Annum
define how an organisation intends to approach this. considers the various risks and resource constraints.
£8,000 Efficient and effective delivery of the Asset Management
Plan(s) require that material scheduling is matched to In some cases, the initial drivers for a shutdown interval
£6,000 the activities and properly under control, particularly become irrelevant. However, where a shutdown recurs
where lead times are long or uncertain. In some cases at a specific interval, a cycle of re-enforcement can
£4,000 additional stock may be retained (or delivered early) in develop where staff defer work to the opportunity
order to mitigate risk of the consequences of stock out. of the shutdown, thereby establishing an increased
£2,000 demand for the shutdown and making the interval a
Matching and optimising the resources to the Asset ‘self-fulfilling prophecy’.
£0 Management Plan(s) is a part of the wider process of
1 2 3 4 5 6 7 8 9 10
prioritisation and optimisation. The Asset Management Development of a Shutdowns & Outage Strategy
Number of Spares Plan(s) require alignment and optimisation based on a involves a robust, auditable processes carried out
number of criteria, including resources and will often by a multidisciplinary team, to assesses whether a
Figure 11. Optimising Spares Holdings need to consider the opportunities of aligning work and task must be done in the shutdown. Those that
5.3 Life Cycle Activities

are shutdown dependent are subjected to cost, support tools as the permutations available grow
risk and benefit analysis to define their individual rapidly. Commercial
optimal interval, i.e. where the Total Business Impact Environment
is a minimum (see Operations and Maintenance While the development of a Shutdowns &
Decision-Making for a description of Total Business Outage Strategy is a logical process, supported
Impact). These tasks are assembled into a work list where appropriate by technology, moving from a Organisational Strategic Plan

or schedule so that the optimal schedule of work traditional shutdown interval strategy to one that is
can be determined. Optimising the whole shutdown optimised can require a significant cultural change.
and outage schedule may involve moving tasks from This is an important factor to consider when making
their individual optimal periodicity as the resultant the transition to a more optimised approach (see
combined cost, risk and benefit values will represent Organisational Structure and Organisational Strategy & Planning Acquire Operate
the lowest Total Business Impact for the work Culture).
programme. Often this work is done using decision Lifecycle
Delivery

Asset Management
& People Review
Decision-Making
Asset Information
The Subject Group on Asset Management Decision- The Life Cycle Delivery Activities should not be
Making explored approaches to many of the trade- considered in isolation as individual activities or
off decisions Asset Managers are typically faced rigidly bound by the sequence in the diagram above
with. However, it is in the Asset Management Life - Operations and Maintenance (O&M) go hand in
Cycle Delivery Activities where the majority of the hand and many O&M cycles may take place before
expenditure is incurred. Consequently, there are significant the ultimate disposal of an asset. Although the
opportunities to identify efficiencies through good decisions about what assets to acquire may have
practice Asset Management in these Life Cycle Delivery already been taken, a full Life Cycle approach to Life
Activities. Opportunities which are matched with Cycle Delivery Activities should be adopted. The
significant risks if these activities are not well managed. clearest example is the importance of considering
the Maintenance Delivery phase of the Life Cycle system shall include “documented information for independent compliance committee within an • Concept phase – establishment of a project team
at the Asset Creation & Acquisition and Systems applicable legal and regulatory requirements” (clause organisation (see Management Review, Audit & that includes the asset manager in the role of project
Engineering phases of the asset Life Cycle to ensure 7.6.1). Assurance). sponsor. The project deliverables/benefits and success
maintainability issues are incorporated into the design. criteria (typically constraints such as funding, health
Similarly, considering the Asset Disposal phase at In many sectors, technical standards and legislation 5.3.2. Asset Creation & Acquisition and safety and customer targets) are confirmed by the
the Asset Creation & Acquisition and Systems are moving towards a risk-based approach which Once an organisation has decided that new or project team.
Engineering phases of the Life Cycle can influence defines the required outputs or goals rather than different assets are required to achieve the strategic • Definition phase – exploration of one or more
the disposal costs through the engineering design, defining the inputs or controls to be put in place. This plan (see Capital Investment Decision-Making), a options and selection of the one that will best meet
construction methods or material selection. type of technical standard / legislation is aligned to choice must be made as to how to create or acquire the project deliverables within the constraints of
the Asset Management approach to decision-making these. The four most common delivery strategies the project success criteria. Investment appraisal
For the organisation, the Life Cycle is not a once endorsed by the IAM. They allow each organisation chosen by organisations, either singularly or in any models are generally used to support the decision
through process and it is important that lessons to set an approach appropriate for the organisation. combination are: making process where there is more than one option.
learned during Maintenance Delivery and However, many technical standards and legislation Typically the Net Present Value whole-life cost and
Operations are feedback to the Asset Creation & were developed several years ago, before this style • acquisition of existing assets from another cost/benefit ratio are calculated.
Acquisition and Systems Engineering activities to emerged and often define very specific interventions organisation • Implementation phase – procurement and delivery of
continuously improve the design of assets and systems. and periodicities. • building new assets either on “green field sites” or the solution to time, cost and quality targets.
add-ons to existing facilities • Handover and closeout phase – hand over of the asset
The Life Cycle Delivery Activities Group contains Where technical standards or legislation cause an • replacement of existing assets at the end of their to the end user - generally the operator/maintainer.
the following Asset Management Subjects:- Asset Management activity to be undertaken that is service or economic life The sponsor determines whether the expected
suboptimal, it is important to understand the cost • refurbishment of existing assets to extend their benefits have been realised and the project team
• Technical Standards & Legislation of this sub-optimal intervention. An example of this service life reviews how the project was delivered and identifies
• Asset Creation & Acquisition might be legislation that requires an inspection to be lessons to be learned.
• Systems Engineering undertaken every 3 months, but an analysis of costs The choice of delivery strategy may be supported by
• Configuration Management and risks (see Operations & Maintenance Decision- tools that compare the Life Cycle cost and benefit IT tools are often used to develop and monitor
• Maintenance Delivery Making), reveals that the optimum time to undertake of each option as part of the Capital Investment the project schedule and plan, capturing, costs
• Reliability Engineering the inspection is every 12 months. Decision-Making process. For larger investments, the including manpower, plant and materials. Where
• Asset Operations creation phase is likely to be managed through one or multiple projects or resources are managed within
• Resource Management If this ‘cost of compliance’ is significant, it may be more projects, each with its own set of deliverables, a programme, various techniques are available to
• Shutdown & Outage Management worth challenging the relevant technical standard or time, cost and quality project success criteria that align maximise the opportunity to deliver as efficiently as
• Fault & Incident Response legislation. Where the standard is set internally, this with the strategic plan and form a programme of work. possible. For example, a flat expenditure or resource
• Asset Decommissioning and Disposal may be relatively straightforward, leading to significant profile is preferable to one that has peaks and troughs.
Each of these is described in more detail below. benefits to the organisation. Where the standard is Each organisation will have its own project / Project Management is a significant discipline in its
defined externally, particularly where interventions are programme management processes to meet its own own right and there are several bodies which provide
5.3.1. Technical Standards & Legislation defined in legislation, it may still be worth challenge requirements. A typical set of capital governance support and guidance in the field.
Most organisations have to comply with a range of these with the relevant authority but the effort of the processes can be found in the Association of
internal and external technical standards as well as challenge will clearly be more significant. Project Management (APM) approach and Body of 5.3.3. Systems Engineering
various pieces of legislation. The Strategic Planning Knowledge; other popular methodologies include Asset Management cannot be successfully conducted
processes and Asset Management Decision- It is also important that organisations have in place PRINCE and PMI. In all of these, projects are managed based on individual assets, but must take into
Making processes clearly need to take account of appropriate arrangements for the periodic assessment through a Project Cycle divided into phases, separated consideration the whole asset system that considers
these technical standards and legislation in developing of compliance with the relevant Technical Standards by governance gateways where progress to the next the interrelationship and dependencies between
the Asset Management Plan(s). It is an ISO 55001 and Legislation. Reports from the assessment phase is approved. the key assets. Systems Engineering in an Asset
requirement that an organisation’s asset management of compliance would typically be reviewed by an
Logistics Systems Engineering

Management context is the practice of ensuring apportioning of Reliability, Availability, Maintainability Planning Maintenance -Requirements/Function Analysis
Contractual
Resources Plan Allocation & Synthesis
Provisions
effective planning, optimal design, performance, and Safety (RAMS) requirements and the consideration Time
performance operation and maintenance at an asset of interfaces with existing assets or systems.
Program Initiation
system level. Systems Engineering also includes the development of RFP & Contract Input
MANAGEMENT
Communication
functional and technical specifications, safety approval AND PLANNING Documented CM Process
This tends to be practiced in industries with complex of equipment, installation processes and acceptance Product & Document
C Ident (Naming, Marking,
and possibly dynamic assets, where relationships processes including the comparison of the assets that are Serialisation, etc.)
Mgt Training & CONFIGURATION
between assets can be several times removed from delivered with original RAMS requirements. Support Guidance IDENTIFICATION Approved
Working Resources Approved
Configuration
physical or functional points at which they have an Relationships & Facilities Changes
Documentation
Change Ident,
influence. Systems Engineering will be applied A typical Systems Engineering approach is shown in Documentation Approved ECPs, RFDs
Doc Types
C & Disposition & Implementing
at the design of the system, or sub-components, the V-diagram below. This shows how the requirements Need for
CM Planning
Documented
Direction/Authorisation
CM Process
Change CONFIGURATION
for complex asset systems, and this complexity will are apportioned through the design process on the left- Status & ECPs, RFDs CONTROL
Configuration
normally prevail when maintaining the system. hand part of the V and components are integrated and Information Status &
Configuration
validated into an overall system on the right-hand part of C CONFIGURATION Information
Approved STATUS
Systems Engineering includes the consideration and the V to meet these requirements. Configuration ACCOUNTING
Documentation
Performance
Measurements
Verification,
Validation,
C Action Items
CONFIGURATION
VERIFICATION
Physical CI/CSCI Test & AUDIT Confidence
Results, Mfg & Engng Verified
Business FRACAS Tools/Documentation Product &
Requirements Monitoring Validated
C Process
Figure 13. Configuration Management

Operational Operational
Requirements Proving Key
Scope System Process Flow

& Function Testing
5.3.4. Configuration Management This diagram provides an overview of the principles of
Assessment Configuration Management identifies the functional and configuration management which can be described as
Outline Sub-System
Design Testing Validation
physical attributes of components, software and related follows:
documentation at various points in time, including
Detailed Component This ‘V’ Diagram is based upon identifying links between items within a system. It • Configuration Management and Planning -
Design Testing EN50126
demonstration of Reliability, provides a process for systematic control of changes this element is the overall establishment of
Availability, Maintainability & to the identified attributes of items for the purpose the documented controls and mechanisms
Factory Safety (RAMS) in Railway
Manufacture Acceptance Applications of maintaining integrity and traceability throughout for undertaking Configuration Management,
Testing
the Life Cycle. This sometimes seen as part of a wider which includes the elements of ‘Configuration
Management of Change (MOC) process and is integral to Identification’, ‘Configuration Change Control’,
good Project Management and Asset Creation & Configuration Status Accounting’ and ‘Configuration
Acquisition. Verification & Audits’, as defined below.
Figure 12. Systems Engineering V Diagram Configuration Management Planning includes the
A good top-level overview of configuration requirement to produce appropriate Configuration
A good practice approach to Systems Engineering can be found in ISO 15288, Systems and Software management is provided in the following diagram Management Plans.
Engineering, System Life Cycle Processes. above, sourced from the military standard MIL-HDBK- • Configuration Identification - configuration
61A, Configuration Management Guidance. identification is the process of identifying a
configuration item (a hardware and/or software/data maintenance is optimised to ensure that the service and Maintenance Delivery is informed by Data & problems as early as possible in the product Life Cycle
product) and its defining attributes. The attributes performance requirements are achieved at minimum Information and includes the need to retain records of and ensure that the reliability requirements will be
of a configuration item are recorded in configuration whole life cost. As previously stated, this should inspections and measurements in order to understand met. Changes to a design are orders of magnitude
documentation and base lined, with a formal start with the design of the assets, accommodating asset performance and plan accordingly. Maintenance less expensive in the early part of a design phase rather
configuration change control process applied to maintainability and supporting integration of assets interventions - even the corrective ones - need to be than once the product is manufactured and in service.
manage changes to the configuration item’s defining into operation. However, the operating context, scheduled and logistical support arranged, for example
attributes and associated baselines. objectives and constraints generally change over the access, plant, tools, spares, consumables. In many Reliability Engineering consists of four key
• Configuration Control - configuration control is a set course of asset life, asset condition may deteriorate organisations, the level of planning and coordination fundamentals:
of processes and approval stages required to manage and few organisations start with a “clean sheet”. needed is large and this activity is often managed using
any changes to a configuration item’s defining Maintenance management includes the need to keep a Maintenance Management System tool. • Reliability deals with potential events - this
attributes and to re-baseline them as necessary. the arrangements under review and deliver the optimal means that failure is regarded as a probabilistic
• Configuration Status Accounting - configuration maintenance strategy at the time. The scope of maintenance management and the phenomenon: and the likelihood of failure may
status accounting is the process of recording and remit of those responsible for it in an organisation be random or can vary over time according to a
reporting on a configuration item and its defining Maintenance is itself a broad term with many specialist are often broad and include legal and commercial distribution (probability density function). Reliability
attributes, as well as any associated configuration disciplines and professional bodies. In the context of accountability for: Engineering is concerned with delivering a specified
baselines, at any given moment in time. Asset Management, the maintenance strategy / plans probability of not failing, at a specified statistical
• Configuration Verification & Audits - configuration for an asset or system need to be determined and • Meeting legislative, environmental or safety confidence level.
audits can include functional and physical documented in line with the Asset Management requirements and standards. • Reliability is predicted on required function -
configuration audits. A functional configuration Strategy & Objectives and Asset Management • Ensuring asset inventories, configuration and generally, this is taken to mean operation without
audit would ensure that any defined functional Planning activities. In broad terms, maintenance interfaces are maintained. failure. However, even if no individual part of the
and performance attributes of a configuration item tasks can be divided into three groups: • Managing the supply chain. system fails, but the system as a whole does not
have been implemented/achieved, while a physical • Ensuring the competence of resources. do what was intended, then it is still assigned to
configuration audit ensures that a configuration item • Inspection, Testing & Monitoring - non-intrusive checks • Providing technical and quality assurance. the system reliability. The system requirements
is installed in accordance with the requirements of its to confirm safety and integrity of assets and to provide • Considering manufacturer warranties and provision of specification is the criterion against which reliability
approved supporting documentation. information for determining maintenance and renewal specialist support services. is measured.
needs. This may include the use of remote monitoring • Reliability applies to a specified period and seeks to
5.3.5. Maintenance Delivery systems. 5.3.6. Reliability Engineering ensure that components and materials will meet the
The overall objective of maintenance is to ensure • Preventative Maintenance - planned maintenance Reliability is defined as ‘the ability of an item to perform requirements during the specified period. Note that
that the assets continue to meet their service undertaken to prevent (reduce the risk of) faults, a required function under given conditions for a given units other than time may be used, for example km
and performance requirements including safety, failures or excessive deterioration from occurring. The time interval’ in ISO 60050 (191), Quality Vocabulary, or number of cycles.
environmental and output parameters. Selection of criteria for initiating preventative maintenance may be Availability, Reliability and Maintainability Terms. • Reliability activities are restricted to operation
the appropriate maintenance and inspection regimes time-based, condition based or usage based but should under stated conditions. This constraint is necessary
to achieve this objective is outlined in Operations always take account of risk. Reliability Engineering is the systematic application because it is impossible to design a system for
and Maintenance Decision-Making above. • Corrective Maintenance - activities performed to repair of engineering principles and techniques throughout unlimited conditions.
Maintenance Delivery refers to the effective and defects, damage or a shortfall in performance / outside a product Life Cycle to ensure that a system or device
efficient coordination of the resources needed to specified limits and where work is necessary to bring has the ability to perform a required function under Reliability Engineering processes are well documented
deliver the chosen regime. the asset up to standard and keep it operational. given conditions for a given time interval. Reliability and many excellent texts have been published on this
Engineering is an ongoing process starting at the subject. The key activities undertaken by reliability
The operation and maintenance phase of the Life Cycle conceptual phase of a product design (including professionals include the following:
can last a significant time and account for a significant The maintenance strategy or plan for an asset or defining system requirements) and continuing
proportion of an organisation’s annual budget. It is system blends tasks from these groups to maintain throughout all phases of a product Life Cycle. The • Participate in the planning stages to ensure that
therefore important that the planning and delivery of performance. goal always needs to be to identify potential reliability resources for a good Reliability Engineering program
are being allocated. maintenance requirements. 5.3.7. Asset Operations • Asset loss or systems failure, including consequential
• Prepare a reliability program plan by listing the • Formulate and run tests on components, subsystems, In most cases, Asset Operations deliver the product financial loss
required reliability tasks, when it should be performed, and the system itself. or service to the customer and are an important • Reduced asset life
who will use the results, and the resources (time, • Investigate user complaints and field failures. Set contributor to achieving an organisation’s objectives. • Breach of statutory obligations
people, money) that the task will use. up processes to ensure that information about It is therefore important that Asset Managers provide • An unhealthy or unsafe environment and
• Calculate the allowable system failures for each field failures is timely, accurate, well organised, and guidelines to Operators about how to operate the consequential liabilities
system component. targeted at those who can do something with it. assets within the appropriate design, maintenance • Inefficient systems performance
• Conduct a Failure Modes, Effects and Criticality and operational parameters. This may include the • Unpredictability of performance and expenditure
Analysis (FMECA) – see Operations & development of an Asset Operations strategy and demands
Maintenance Decision-Making. Being predictive, Reliability Engineering models plan which would outline the approach, activities and • Loss of esteem with stakeholders.
• Evaluate the reliability potential of alternative rely on statistical techniques and can be daunting resources involved in managing and implementing
designs. or misleading to the untrained. To assess the operations. One of the common contributory factors in these risks
• Ensure that all components in a design will actually reliability of a system, it is necessary to construct a is operational error and for many years the trend has
behave as the designer anticipates and that they will model that represents the times-to-failure of the An Asset Operations strategy would define the been to reduce risk through:
have suitably long lives. entire system based on the probability density function organisation’s approach to ensuring that the assets
• Provide information to designers on how to improve of the components, subassemblies and/or assemblies or assets systems meet their functional requirements, • Greater automation of system control
the life of a system and its ease of maintenance. from which it is composed, as illustrated the diagram are operated to deliver the required service level, meet • Better equipment and assets
• Provide information to maintainers by defining the below. all statutory and technical requirements for health, • In-built protection in equipment
safety, security and reliability and achieve and sustain • Inherent fail safe designs
defined levels of physical, functional and financial • Better maintenance.
performance.
Welbul Lognormal
However, operator errors in many organisations
Component Component An Asset Operations Plan would describe the continue to be a cause for concern. Techniques such
ß μ, σ
A B
System A activities necessary to deliver the Asset Operations as Total Productive Maintenance (TPM) and Ergonomic
f(t) Strategy and would include consideration of how the studies at the time of design are now being used to try
operations activities could impact on: to design out the potential for operational error at the
Exponential Θ
design stage of the Asset Management Life Cycle. The
Component λ
or MTBF • Effective risk management appropriate use of these techniques should be defined
D
• Extended asset life in the Asset Operations Strategy.
• Reduced operating and maintenance costs
• Compliance with statutory obligations 5.3.8. Resource Management
• Provision of a healthy and safe work environment The Resources Strategy & Optimisation Subject
Figure 14. Reliability Engineering • Improved performance of asset systems described earlier covers the approach to optimising the
• Investment predictability through a Life Cycle use of resources at the time the Asset Management
approach Plan(s) are put together.
• Asset performance aligned with users’ expectations of
Once a system or a group of assets are operational, the (FRACAS). It is important that any such system captures productivity and service delivery Resource Management examines how an organisation
model can be refined by incorporating actual failure data. data in a way that is consistent with the FMECA that • Improved user satisfaction implements the Resources Strategy in terms of planning
This feeds off the good practice of recording was undertaken to enable feedback - of actual failure • Enhanced community perceptions. and allocating resources to Asset Management activities
as-found conditions and the Root Causes of any failures rates for different failure modes - to the Operations & to enable the Asset Management Plan(s) to be carried out
that occur. Such data capture typically involves the use Maintenance Decision-Making process to inform the Key risks associated with an inadequate Asset efficiently and safely. Resource Management includes the
of a Failure Recording and Corrective Action System choice of maintenance or inspection intervention. Operations strategy and plan could include: efficient management and delivery of the following:
• Human resources (taking into account any specific of implementing this strategy, it is essential that the within budget and in the allotted shutdown duration. response evaluation and lessons learned.
Competence Requirements); shutdown or outage is managed in the most efficient
• Spares and Inventory; and effective way to minimise direct costs and lost Shutdown & Outage Management does not begin Fault & Incident Response should be aligned to
• Plant & Equipment; opportunity. when the asset comes out of service. It is a continual cyclic maintaining or recovering service outputs following
• Tools; and process with varying levels of activity during the cycle. unplanned events, and mitigating the consequential
• Vehicles and special equipment. Shutdown & Outage Management is essentially Shutdown intervals are typically many years leading to effects. As service output can often be a defining
gathering engineering activities which require assets to the experience base within the organisation being eroded measure for asset performance, the approach to
Resource Management includes the analysis of be shut down into a programme of work and managing through organisational change, promotion and retirement. Fault & Incident Response should be considered in
current resources against future requirements, and the these as such. Each task within the shutdown window Key to the long term sustainability of Shutdown & the Asset Management Strategy and the Fault &
evaluation of work priorities and risks where there are needs to be carefully planned to manage conflicting Outage Management is the recognition that dedicated Incident Response activities included in the Asset
insufficient resources. It includes the use of project requirements for; resource, material, tools, equipment shutdown management arrangements are required. Management Plan(s).
management tools and techniques to ensure the or access and to ensure that the correct sequence of
efficient delivery of these resources. actions is executed. The tasks often vary in complexity Shutdown & Outage Management is a fundamental The Fault & Incident Response approach should
from simple inspections to integrated asset/asset system business activity and the associated management consider the criticality of the different assets and the
5.3.9. Shutdown & Outage Management overhauls. A large increase in human resource, normally processes need to form part of the organisation’s potential for incidents to impact on service or outputs and
Optimising shutdown intervals is a developing area of contractors, is often required and significant logistical business management processes. These processes and should make proportionate and appropriate preparations.
interest within the Asset Management community (see issues can arise when ensuring that material, parts and their performance management measures must be
Shutdowns & Outage Strategy) and this can bring specialist tools/equipment are available at the time of linked to the organisation’s strategic goals. They identify Clearly, the degree to which asset managers and
significant benefit in terms of optimising the interval the shutdown. All of this must be done with due the key elements of the shutdown management cycle, operational teams can prepare for unplanned incidents
and duration of shutdowns and outages. In terms consideration of health, safety and the environment, for example scope exploration, scope freeze, detailed varies according to the assets and the corresponding
planning, execution and post-shutdown review prior to service. For example, no amount of planning can
the next shutdown or outage. The activities within these significantly reduce the time taken to shut-off very
typical phases and the timeframes at which they are large diameter water mains, irrespective of the
required will be dependent upon the complexity of the resources on hand. However, in such circumstances
shutdown or outage. the provision of alternative supplies to affected
customers and measures to clean up the affected area
Although shutdowns and outages are cyclic events, will be enhanced by effective planning for the incident.
their management is a continuous business activity
requiring robust processes and tight control to realise Fault & Incident Response also includes the evaluation
the opportunities presented and avoid their huge of the causes of failure which may require a detailed
inherent risks. technical investigation for more serious failures or
incident to ascertain the root cause. Lessons learned
5.3.10. Fault & Incident Response from the response to Faults & Incidents should be
Fault & Incident Response is the ability of an evaluated, captured and where appropriate implemented
organisation to plan for and respond to asset in terms of improved processes and practices.
failures and non-asset incidents in a systematic and
appropriate manner. This includes incident detection 5.3.11. Asset Decommissioning and Disposal
and identification, identification of appropriate Although some assets have extremely long lives,
response resources, information management and there comes a point where they are removed from
communications, competence of response teams, service. For many organisations, there is a rolling
use of standard responses, temporary and permanent programme of asset renewals and refurbishments to
repair procedures, site access and hand-back, deliver improvements to the assets, address existing
reporting, updating of asset information systems and serviceability issues and deliver enhanced serviceability
outputs against the targets set by the Business. For • Implications based upon the outputs of the 5.4 Asset Information
others, there are less smoothed approaches. Environmental Impact Assessments, risk assessments
Commercial
As part of any Asset Management Strategy there Rationalisation of assets where there is an over Customers Legislation Investors
Environment
should be continuous reviews with regard to the capacity, often where required capacity or service
effectiveness or viability of the assets in question and levels have changed over the years, is an area of Asset
drivers for asset rationalisation and disposal decisions Management that many organisations overlook. There Organisational Strategic Plan
could include one or more of the following: can be significant benefits from reducing the number

of assets employed, even where these assets have
• Changes to standards rendering the assets unsuitable significant remaining lives. Such decisions should be
for the latest requirements. subject to an evaluation of costs, risks and benefits (as
• Changes to the required level of service described in Capital Investment Decision-Making) Strategy & Planning Acquire Operate
• Changes to the required capabilities the asset or asset against the operational needs of the business.
systems are expected to achieve Lifecycle
• Changes to Health and Safety legislation rendering It is often the case that, over the life of an asset, the most Delivery
the assets unsuitable for operation or viable for significant cost is that of operation and maintenance Risk &
Organisation Asset Management Dispose Maintain
decommissioning / disposal. and not the design and construction. However, asset & People Review
Decision-Making
• Changes to financial constraints e.g. decision made decommissioning and disposal costs can also be significant
to move production to another site. and are frequently a differentiator when considering
• Assets become beyond their useful life, for example options for capital investment. Understanding these costs
uneconomical repair. and feeding them into the Capital Investment Decision-
Asset Information
• Ageing assets expected to become obsolete or Making processes is therefore an extremely important part
unsupportable of Life Cycle costing.
Asset intensive organisations rely on asset data, supporting context e.g. The span of the bridge is 25
information, knowledge and wisdom2 as key enablers metres.
in undertaking both strategic Asset Management • Knowledge - A combination of experience, values,
activities and operational activities. These four terms information in context, and insight that form a basis
are widely used to segment what is an ever expanding for decision making.
area or work. • Wisdom - The result of evaluation of and
understanding of knowledge. It is sometimes
• Data - Numbers, words, symbols, pictures, without defined as ‘the ability to increase effectiveness’3.
context or meaning, i.e. data in a raw format, e.g. Wisdom can be considered to be the output of the
25 metres. whole asset management system and is not explicitly
• Information - A collection of data expressed with a explored further in this section.
2
http://en.wikipedia.org/wiki/DIKW
3
Rowley, Jennifer; Richard Hartley (2006). Organizing Knowledge: An Introduction to Managing Access to Information. Ashgate Publishing,
Ltd. pp. 5–6. ISBN 978-0-7546-4431-6
In general, data and information can be improved data locations and data qualities The quality of Data & Information should be assessed, adds to the organisation in terms of improved decision-
through a specific management approach that is set o Data Attributes – a quality or feature as a understood and managed in order to ensure that it making and support the day-to-day delivery of Asset
out in an overall Asset Information Strategy. This characteristic or inherent part of an asset. Types of provides effective support to business decision making Management activities. The Asset Information Strategy
defines the activities an organisation will undertake attributes can be further broken down to and processes and that these processes include suitable should be demonstrably aligned with an organisation’s
to ensure that its asset information meets current - Function controls based upon assessed data quality. Typically, Asset Management Strategy & Objectives and Asset
and future requirements. In the context of asset - What asset intensive organisations do not have all the Management processes.
management, information typically includes: - Condition asset information they would ideally require, and the
- Topography – spatial, photogrammetry information they have may not be to the required quality. An Asset Information Strategy should include
• Records of the existence of a physical asset, - Topology – e.g. component, command & control, Therefore, organisations will need to assess and prioritise considerations of:
collectively known as an asset inventory or asset telemetry, energy, functional and operational data gathering and data cleansing activities to focus on
register. relationships areas that will be beneficial. Further guidance can be • Key decisions and the information required to support
• Attributes about these assets e.g. make, model, - Capability found in the IAM Asset Information Quality Handbook.5 these;
serial number, age, rated capacity, etc. - Utilisation • Relationship with the end-to-end business process for
• Attributes of the asset systems, e.g. capability, - Cost The Asset Knowledge Enablers Group contains the Asset Management;
capability. - Risk following Asset Management Subjects:- • The proposed approach to defining information
• Location, spatial information, dependencies, and - Failure modes requirements taking into account the costs of providing
connectivity information – especially in Geographical o Intervention data • Asset Information Strategy asset information and the value of the information;
Information Systems (GIS). - Workbank – maintenance, renewal, • Asset Information Management • Information flows and the overall logical data model;
• Logical groupings e.g. systems, equipment types, enhancements & failures • Asset Information Systems • Data management and governance arrangements;
zones, etc. o Unstructured data – user manuals, drawings • Data & Information • The costs, benefits and timescales for delivery of
• Access requirements e.g. permits, right of way Each of these is described in more detail below. improvements to asset information;
requests, safety related information The IAM’s Asset Information Guidelines provide further • Main outcomes and functionality required from Asset
• Performance information about the asset. This can detail on this subject.4 5.4.1. Asset Information Strategy Information Systems;
be subjective (from experience & knowledge) or Asset information is a combination of data about assets • Core Asset Information Systems required;
objective (from measurements and data). It covers Asset Information Standards are used to define used to inform decisions about how they are managed. • A description of how different asset information systems
information such as asset reliability, condition and explicitly the data and information that is required, Good asset information enables better decisions to be (both existing and proposed) will integrate;
serviceability assessments. why the data is required, how it is collected and made, such as determining the optimal asset maintenance • A strategy for migrating both data and users from
• ● Historical records of past events and work carried measured, the format it is required in, who should or renewal frequency for an asset. The decision may existing systems to new systems.
out on the asset; either during short, medium, or provide it and when it shall be provided. The ISO 8000 be based on information regarding the asset’s location,
long term planned activities or as the consequence series of standards provide useful guidance on the condition, probability and consequence of failure, work
of unplanned tasks (e.g. breakdown repairs). management of asset information. option specifications and costs, constraints such as The Asset Information Strategy should contain
• ● Documents, design models and drawings, and resource availability, and other business priorities, such as objectives relating to the proposed improvements in asset
photographs of the asset. Asset Information Systems, are the collection of compliance with regulatory requirements. information that are Specific, Measurable, Achievable,
o Asset types: an understanding of the types of asset processes, applications and technology, utilised to Realistic and Time bound (SMART).
within the asset management system and how automate Asset Management processes and to enable An Asset Information Strategy should define how
they are represented in data is critical, for example; consistent decision support analysis. These are often an organisation intends to collate, maintain, utilise and Internal and external stakeholder consultation should
- Point assets, Linear assets, Area assets, Volume integrated but must always share the same key fields dispose of asset information to support both strategic be undertaken to ensure that the Asset Information
assets, System level assets and codes to avoid misinformation to achieve a single planning and Life Cycle delivery activities. The Asset Strategy captures their information and access
o Meta data – This is data that describes data version of the truth. Information Strategy should take into account the Life requirements. The Asset Information Strategy
including its structures, data types, business rules, Cycle costs of the provision, collection and maintenance should be been signed-off by the appropriate
of asset information and the value the information stakeholders within the business.
4 http://theIAM.org/knowledge/iam-project-work/subject-or-sector-specific-guidance/asset-information-guidelines-aig 5
http://theIAM.org/wiki/IAM_Asset_Information_Quality_Handbook
5.4.2. Asset Information Standards of the decisions that are made using the Asset • Common data environments. asset and complies with organisational standards for
Asset intensive organisations rely on asset data, Information. • Condition monitoring systems monitor key condition data update timescales.
information and asset knowledge as key enablers indicators of assets, such as temperature and • Uniqueness - all keys should be unique with no
in undertaking both strategic Asset Management 5.4.3. Asset Information Systems vibration, to help predict possible future failures. duplication of data.
activities and operational activities. Asset Information Systems are the applications, • Mobile working devices. Organisations should assess the quality of their data,
software systems and other systems that collect, store, and then develop a data population plan to ensure
Asset Information Standards are required to ensure process and analyse the asset information that an Across the Asset Management Life Cycle, different that missing, or sub-standard data can be acquired
that asset information is collected, categorised and organisation requires to manage its assets over their functions of an organisation will have an interest in the within acceptable timescales. It is acceptable for an
provided to agreed levels and to agreed timescales. Life Cycle. These systems ideally store, or are integrated asset and will require asset information presented and organisation to decide not to gather missing data
Standards for the measurement process also determine with, a register of all of the company assets. This allows manipulated in differing formats, therefore it is just as if it would not be beneficial, so long as this has
the link between the data and its meaning (for integrated planning and operational activities to be important to have a robust reporting system as part of been decided at a suitable level in the organisation.
example height is height above ground, condition is effectively undertaken. the asset information systems. Processes for the provision of asset information
tested by standard method). resulting from asset interventions (e.g. asset
Asset systems can range from complex integrated Note that there is not a clear dividing line between Asset replacements) should be specified. Business decisions
Asset Information Standards will typically include:- Enterprise Asset Management (EAM) suites to mixed Information Systems and other enterprise/corporate must incorporate suitable controls based upon actual
environments of “Best of Breed” software, bespoke systems - information in asset information systems data quality.
• Classification of assets to an agreed topology in applications and spreadsheet based analytics. The may be used for wider organisational purposes and
order to allow an overall asset inventory to be optimum mix of applications will depend on the size information in enterprise/corporate systems may support Asset Knowledge is a more subjective topic and can
created and managed. and complexity of the organisation and the nature of asset management objectives. For example training and be influenced in many different ways. Knowledge is
• Definition of the required attributes and their the regulatory environment it operates in. competency records in enterprise HR systems may support derived from the combination of experience, values,
respective quality criteria that should be gathered decisions about who can/should respond to a defect. information in context, and insight and can be reliant
and managed for each asset type and what these Typical Asset Information Systems include: - on key individuals to recall specific events or to know
attributes represent. 5.4.4. Data & Information Management where key information is stored. The quality of this
• Common approaches to the assessment and • An asset register to detail the assets of interest to an Asset intensive organisations rely on Data & understanding will affect the reliability and quality
recording of the condition of an asset in order to organisation. Information as key enablers in undertaking both of decision making, for example, forecasts of future
support strategic Asset Management planning. • A Geographical Information System (GIS) and / or strategic Asset Management activities and operational behaviour require good knowledge and not just
• Common methods for categorising asset defects topological systems to record the location and spatial activities. good data. A key challenge for organisations is to
and failures for use in planning remedial actions to details of assets. ensure that such personal knowledge and insights are
improve service and reliability. • Work management systems to plan and record work Asset Data quality is a generic term to cover a secured and made more widely available for future
• Defined approaches to the assessment and recording activities related to an asset. number of specific data quality measures, these decision making and to counteract the potential loss
of the performance or serviceability of an asset to • Logistics systems are required to manage the include:- of knowledge when staff leave an organisation or
support long and short term planning activities. storage, issuing and use of materials and spares. when control of an asset passes from one organisation
• Agreed methods for assessing and recording the • Possession management systems are used to plan • Accuracy – the data is a true reflection of the to another. Concepts like BIM (Building Information
utilisation of an asset to help determine overall asset access to assets for work activities. physical entity it represents. Modelling) are increasingly being used to prevent loss
lives and intervals between intervention activities. • Demand management systems will forecast how • Completeness - a complete set of data is available of knowledge (and information) at key stages in the
demand on assets will change over time. for each data record. Life Cycle of an asset.
• Decision Support Tools such as investment modelling • Consistency - data is consistent in its definition,
Asset Information Standards should also define the systems are used in strategic planning activities. rules, format & value.
level of quality and accuracy that is appropriate for • Process, telemetry and SCADA systems provide a • Validity - all data held complies with data storage
the different types of information, taking into account record of how well assets have performed and are rules.
the criticality of the different assets and the criticality meeting their service requirements. • Timeliness - Data reflects the current state of an
and embed asset management successfully. The as good and believe is possible, how they behave
5.5 Organisation and People purpose of, and the main justification for investing and how committed they feel. A key role for
in these enablers is to produce the performance senior management is to proactively shape the
Commercial
and behaviours that are needed to deliver the Asset organisational climate and cultures that are both
Environment Management Strategy & Objectives. conducive to Asset Management thinking and
tailored to their specific Asset Management goals.
The relationship between Asset Management • Competence Management is concerned with
Organisational Strategic Plan Strategy and these subjects is multifaceted. Each has making sure that enough suitably competent people
implications for the other which need to be defined, risk are available to match the demands of individual
assessed and actively managed if a strategy is to prove roles and work effectively in teams. A systematic
successful. They are important mechanisms for delivering approach to defining competence and behavioural
the level of business integration that characterises more requirements, selecting and developing staff,
Strategy & Planning Acquire Operate mature asset management capability. The five subjects deploying and developing them and managing
are summarised below: their work are the hallmarks of best practice Asset
Lifecycle Management organisations.
Delivery
• Effective Asset Management organisations are
Dispose Maintain Risk & clear on what activities can be outsourced and Each of these is described in more detail in the following
Organisation Asset Management
Review
& People Decision-Making what needs to be kept in house. Their approach sections.
to Procurement & Supply Chain Management
reflects strategic objectives for cost, risk, quality 5.5.1 Procurement & Supply
and performance management. They develop and Chain Management
Asset Information manage supplier and contractor capabilities and One of the challenges facing organisations that
relationships with long term Asset Management embrace whole life, whole cost asset management
goals in mind. is how to embed this in the way they manage their
© Copyright 2014 Institute of Asset Management (www.theIAM.org/copyright) • Asset Management Leadership is required at all suppliers. For many, the shift from short cycle contracts
levels to ensure Asset Management strategies and to longer-term relationships involves changing the
plans are not undone by conflicting perspectives habits of a lifetime. Collaborating with suppliers is
amongst departments, professional functions or nothing new. Research indicates that organisations
work groups on what constitutes best value or by which use their supply chains strategically are still in
a lack of clarity on organisational objectives and a minority.
priorities.
• Organisational Structure should complement In mature asset management organisations,
Asset Management is a way of thinking that puts a The Organisation & People Enablers Group contains rather than contradict the Asset Management Procurement & Supply Chain Management is
new light on everything an organisation does. Often, the following subjects: Strategy. Senior management needs to give fully aligned with the Asset Management Strategy
it calls into question traditional ways of looking at careful consideration to where asset management & Objectives and cost-risk assumptions. They work
things, existing structures, roles and responsibilities • Procurement & Supply Chain Management responsibilities sit in the organisation, lines in partnership with suppliers to develop the mature
and contractual relationships. This this can make • Asset Management Leadership of reporting and communications, roles and capabilities and efficiencies they need to achieve. The
the introduction of asset management thinking and • Organisational Structure responsibilities to make sure they are conducive most successful organisations approach their supply
practices an uncomfortable experience for people, in • Organisational Culture to information sharing, cross functional working, chains in the same way as they would any of their
the boardroom, on the front line and in the supply • Competence Management multidisciplinary teamwork and other features of other critical assets. They apply the same principles and
chain. The lessons learned by early adopters strongly good asset management behaviour. are focused on the same issues, such as making the
suggest that these issues should be addressed sooner These subjects are highly interdependent and all exert • Organisational Culture is important because it relationship between supplier performance and asset
rather than later. strong influence on an organisation’s ability to adopt has a profound effect on what people perceive value transparent.
Asset Management organisations are clear on what relationships, are unlikely to generate longer term Leading is not the same as managing or supervising. The situation will be different for organisations which
activities can, and should be, outsourced and what relationships required to underpin successful asset Managers and supervisors plan, organise, control and have other structures such as bureaucracies, project
needs to be kept in house. In reaching these decisions, management. make sure that work gets done. They do this in situations based companies, matrix organisations or loosely
they: where work and procedures are defined. Leaders are not based network businesses. This is why Organisational
5.5.2 Asset Management Leadership needed in this situation. They are, however, important in Structure is such a key issue. Position asset management
• Consider the criticality of the work required relative to To understand Asset Management Leadership, it defining, developing and implementing such procedures wrongly in the organisation chart at an early stage in its
their asset management objectives, their volumes of is necessary to understand what it means to be an and systems in the first place. development and it could be years before its potential
work, management overheads and the availability of effective leader. There are many different ways to be benefits are realised.
competent staff. an effective leader and people with quite different Asset Management Leadership is, therefore, crucial
• Identify and set objectives for their suppliers, and personalities, styles and approaches can be successful. in an organisation aspiring to deliver effective Asset The key is to have organisational structures (and cultures)
consider how best to deploy contracted staff and However, all leaders need to be able to do the following Management as this leadership will set the direction that support the achievement of organisational goals
integrate them into their own workforce. things well: and priorities for the development of the organisation’s and objectives, have clear commitment of leadership, are
• Specify procurement requirements and service level asset management capabilities that are necessary to applied consistently, are viable and a clear line of sight
agreements and assess the criticality of individual • Give the group (organisation, function, team, etc.) deliver the organisation’s overall objectives. between top management and staff working on the
supplier relationships to overall asset management direction. In the context of Asset Management this ground.
strategy, objectives and plans. means that leaders must have a clear vision of how 5.5.3 Organisational Structure
• Ensure that asset management activities achieve the organisation can optimise the use of its assets One of the most common questions relating to asset 5.5.4 Organisational Culture
organisational objectives. and gain maximum benefit from them, be able to management is Where should we put it? There is no The culture of an organisation affects everything it does
• Engage in effective supplier recruitment activities, clearly articulate this vision and to communicate it in right answer to this, no right place to put it. The answer and all aspects of its performance. Asset management
develop clear criteria and processes for choosing a persuasive and practical way. depends on how your organisation is structured, how is no exception to this, any more than are safety, security,
suppliers and design effective contracts that fit their • Make the difficult decisions. Difficult is not the same asset management is perceived by senior management financial management, customer service or corporate
asset management policy. as complex. Difficult Asset Management decisions and the level of Asset Management maturity in the reputation. This is why a proactive approach to culture
• Consider how best to incentivise suppliers and build are those where the problem is ill defined and organisation. management is important to organisations which seek to
sustainable relationships with their suppliers that non-routine and where the decision requires tough benefit from asset management.
ensure their capabilities meet service level needs. choices to be made which affect both individuals In traditional, hierarchical organisations, where functions
• Use appropriate performance indicators to monitor and the organisation as a whole. The key here is that and departments work to separate agendas and their There is no one single correct culture for an organisation.
and manage supplier contracts that minimise the leaders need to be decisive in the face of ambiguity. work is integrated at the top, accountability for asset Culture is quite simply ‘the way things are done’ and
introduction of risk into the business. • Inspire staff to achieve organisation’s goals. management ought to lie in the senior management each organisation needs to decide what type of culture
• Monitor their suppliers’ commercial circumstances • Give confidence to stakeholders of the direction team, but if they perceive asset management as it needs to be successful and seek to establish this. If the
and ownership to ensure that relationships are viable being taken and the benefits that will be achieved. something the engineers do then it may be difficult to current culture of an organisation is short-term, closed to
and ongoing. persuade them of this. outside ideas, output driven and risk averse, it will need
• Decide how best to make the transition from one This means that they have to be able to motivate staff. to do much more to benefit from asset management
supplier management approach to another. There are a number of ways in which leaders can Where asset management responsibilities are delegated thinking and practices than an organisation which plans
motivate their staff. For example, they can act as a role to one part of the organisation but there is no for the long term, values processes as well as outputs,
Designing contracts that deliver these requirements model, provide the necessary organisational support, explicit accountability for asset management in senior benchmarks itself to external best practice and practices
is vital to aligning supplier expectations, obligations treat people as individuals and provide incentives, both management, then the asset management team may innovation.
and rights with the asset management strategy. psychological and tangible, which will work for each deliver incremental benefits but struggle to drive asset
For example, in some circumstances, it may be individual, and so on. The best leaders have an armoury management practices across functions, departments or The first step towards creating a culture which is
counterproductive for asset maintenance contracts to of such techniques which they mix and combine as into front line services or the supply chain. Often, in this conducive to asset management is for the senior
be shorter than the life of the assets being maintained, appropriate. However, more than that, they need to situation, a stalemate forms where asset management management team to produce a clear idea of what it is
whereas in others the focus might be on aligning the be trusted by their staff. To be trusted you need to be is perceived as a tactical issue by senior management they are trying to achieve and why the approach they
contract term with service level requirements. Forms of consistently fair and just and show that you are prepared because the people responsible for asset management are adopting is likely to be effective. Clearly, this should
contract which suit short term, or generate adversarial to take the heat when problems arise. lack the authority to act more strategically. support both the Asset Management Strategy &
5.6 Risk & Review

Objectives and the wider aims of the organisation. important influences on people’s ability to perform.
It should also take into account the constraints under Commercial
which the organisation operates. A fundamental task for all organisations is to make Environment
sure enough suitably competent people are available

There are a number of best practice principles that to undertake the activities their success depends on.
senior managers need to apply when deciding on the In the case of asset management organisations, senior Organisational Strategic Plan

appropriate Organisation Structure & Culture for management needs to understand the implications
their Asset Management activities which include: that the Asset Management Strategy & Objectives
have for the competence of their workforce. This
• Be clear about the purpose of the organisation. means being clear about competence requirements
• Be consistent across the whole organisation. at all levels and ensuring these are used to select,
• Ensure everyone understands the boundaries of their develop and review people and define role and
Lifecycle
responsibilities and accountabilities. responsibilities and the relationships between them. Delivery
• Ensure everyone is motivated to accept their The IAM Competences Framework is now widely used
Asset Management
responsibilities and accountabilities. by companies to specify their specific competence & People Decision-Making
Review
• Ensure everyone is completely clear about the requirements and build competence management
chain of command and how, and under what systems around them.
circumstances, issues are escalated.
• Ensure everyone is completely clear about the Bringing Competence Management into a
Asset Information
organisation’s channels of communication and how structured approach does not need to be bureaucratic
information gets passed from the top to the bottom, or expensive. There is still no single formula which all
sideways and back up again. organisations should be striving to adopt. Even where © Copyright 2014 Institute of Asset Management (www.theIAM.org/copyright)
• Ensure communications get acted upon. there is general agreement about the benefits of a
• Ensure everyone knows where, when and how particular approach, such as being risk based, there
decisions are made and who makes them. is no agreement about the best way to design and
• Ensure visible support and engagement from senior implement it. Nowhere can this be seen more clearly
management for any Asset management changes or than in the variety of guidance and practice promoted
improvement initiatives. by regulatory bodies. However, it is generally agreed
in the research literature that organisations need to
5.5.5 Competence Management adopt a strategic approach to managing competence In any management system, Risk and Review is performance risk in order that criticality can be appropriately
One of the most widely used definitions of and behaviour and that this should cover both the a fundamental requirement for a sustainable asset defined and decision making processes informed. The
competence is the ability to perform activities to development of individual competence and the management system. In the field of Asset Management development and ongoing management of stakeholder
the expected standard. However, competence development of organisational competence. Decision-Making, it facilitates the constant and evolving engagement is key to understanding, describing and
does not guarantee good performance. There are trade-off between performance, cost and risk whilst communicating these tolerances since it is the stakeholders
several reasons for this. Competence is a condition People come to asset management roles from a range providing the feedback and review mechanisms to who ultimately face the risks of the organisation.
which tends to deteriorate if it is not practised. of different technical, operational and managerial facilitate the adaptation of objectives and evolution of
Competent people will struggle to perform well in a backgrounds, bringing with them different concepts, understanding of asset criticality to the delivery of the Risk and Review processes are also fundamental in
dysfunctional team or organisation. Some activities perspectives, methodologies and networks. Knitting business aims. preparing an organisation for significant events like
occur infrequently which makes it hard to maintain the these together to form coherent and effective asset accidents, incidents or the impacts of climate change to
competence of those who perform them. Attitudes, management teams should be a key component of The organisation needs to understand its tolerance to risk in ensure that it has appropriate contingency planning in
beliefs, lifestyles and work relationships all exert asset management strategy and planning. terms of safety, environmental, financial, reputational and place and mechanisms for assuring business continuity.
Having understood tolerance to risk and thus the role It is part of the process that enables a disciplined how the description of the asset-related and asset Further to considering what the impact of future
the assets play in terms of criticality to business decision approach for an organisation to maximise value and management-related risks can be combined with the Climate Change is on the assets, organisations
making it is important to ensure that appropriate deliver its Organisational Strategic Plan. specific transparency requirement provided by internal must consider what the impacts of the assets are on
feedback and review mechanisms are in place to control and risk management and/or the corporate the environment. There is a careful balance to be
monitor the risk profile against these risk limits. A The purpose of having a view of asset criticality is governance framework. struck between investment in future asset resilience
strong understanding of asset performance and health to inform the organisation’s Asset Management and preventing future Climate Change. Preventing
helps inform the appreciation and development of Strategy and decision making tools and processes. Weather & Climate Change poses a particular risk flooding through the construction of physical defences
criticality and risk measurement in the organisation. Assessing asset criticality requires the organisation for asset owners and operators in all sectors. Specialist might increase resilience but its high carbon footprint
The investigation and review of incidents and failures to anticipate the consequences or impact of the knowledge and robust processes and procedures are would further add to the problem.
provide feedback mechanisms to bring together the failure of an asset, how the organisation assesses required to make sure actual and potential impacts are
understanding of asset performance and health in consequence or impact of asset failure depends on the well understood and can be controlled or mitigated, Once actual and potential impacts have been
the context of criticality and business objectives. This organisation’s vision, mission, values, business policies, taking into account the impacts that assets themselves identified and calculated, structured processes can
structure ensures that change requests are informed and stakeholder requirements, goals and risk management on the environment. be put in place to manage the associated risk. While
appropriate and suitable Change Management processes criteria. These are all important considerations as an it is not possible to create an asset base which is
provide the necessary controls over this aspect. Asset can only be critical to delivering an objective or Whereas weather can be defined as the conditions completely resilient to any kind of threat, being
goal, and the risk of its failure can only be quantified experienced in the short term, climate is the weather able to demonstrate a proportionate response to
Standard or General Accounting Practices provide through the potential impact of that failure on the averaged over a long period of time. Both have the the kinds of risk posed by Weather & Climate
assurance that the thermometer of our financial organisations goals. Assets have no inherent criticality potential to seriously affect the availability and/or Change is considered good practice. For example,
performance is correctly calibrated and audit provides and there is no risk without consequence. reliability of assets and the goods and services that there are many instances where major technical or
assurance that everything in the organisation is as it depend on them. In the immediate term, operations can infrastructural changes have turned out to be less
should be. Together, these formal controls provide Once the consequences or impact of asset failure has be degraded by a range of common weather events, effective and many times more expensive than better
additional feedback to inform the evolution of the been recorded by an organisation it has to be put in such as heavy rain leading to the flooding of electricity organisational use of more carefully specified weather
Asset Management processes across the business. a useful format that would enable an assessment of sub-stations; snow and frost preventing construction forecast data.
the information to take place. The risk assessment works; high winds bringing down overhead power
The Risk & Review Group contains the following criteria used by an organisation will typically reflect lines and high temperatures causing rails to buckle. The implications of Weather & Climate Change
Asset Management Subjects: the key issues that the organisation is managing i.e. Events like these not only impact adversely on should be taken into account during the development
it may be cost based or another metric important to service provision but also make planned and reactive of Asset Management Policy and Asset
• Risk Assessment and Management the organisation. However the purpose of the risk maintenance activities difficult to carry out effectively. Management Strategy. Organisations which do
• Contingency Planning & Resilience Analysis assessment is to enable the organisation to optimise Asset Management strategies and plans need to factor this are more likely to manage the associated risks
• Sustainable Development their Asset Management decision making by providing in these risks to continuity and performance and the and uncertainties and ensure resilience and continuity
• Management Of Change a consistent methodology for assessment and costs of adapting procedures, information systems and in the face of long-term climate change as well as
• Assets Performance & Health Monitoring management of uncertainty. infrastructures to lessen their effects. helping address the root cause of a changing climate.
• Asset Management System Monitoring
• Management Review, Audit & Assurance Risk Assessment and Management is part of a Longer term Climate Change poses challenges ISO 31000, Risk Management Principles and
• Asset Costing & Valuation disciplined management framework and governance of a different order. These range from increased Guidance, provides further guidance on good practice
• Stakeholder Engagement process. Often organisations develop risk registers or frequency of occurrence of severe weather events to approaches to Risk Assessment and Management.
logs and processes to support the opening, updating the emergence of new weather events not currently
Each of these is described in more detail below. and closure of business risks. The management experienced or planned for. Asset Management 5.6.2. Contingency Planning & Resilience
of risks typically includes the risk management organisations need to ask themselves whether current Analysis
5.6.1. Risk Assessment and Management policy, framework and processes that define how assets and those being installed are capable of coping The resilience of any organisation or its assets is
Risk Assessment and Management is an essential the assessment and decisions on risk controls and with the predicted future climate and what implications essential to its operation. In the Pitt Review, 2008,
component that enables an organisation to benefit mitigations take place at the appropriate level within these predictions have for current Asset Management Resilience was described as “The ability of a system or
from optimised Asset Management decision making. an organisation. Organisations should consider planning assumptions and delivery practices. organisation to withstand and recover from adversity.”
In the case of a transportation network, the ability Once an understanding is attained and a detailed This process required the following steps to be and Organisational Culture to ensure that resilience
to enable free passage to the ultimate customer, the risk assessment process is completed, then undertaken: is robust and up-to-date.
user, is the resilience requirement. As such, this is not Contingency Planning can be introduced to deal
just about clearing up after an incident but providing with a majority of the threats faced. A consistent • Step 1 is to understand the organisation by completing 5.6.3. Sustainable Development
continuity of business as well. To become resilient to methodology needs to be adopted to ensure that all a threat and vulnerability study (sometimes referred to Sustainable Development highlights the need
unplanned and unexpected events, it is essential that a threats and vulnerabilities are effectively captured, as a Business Impact Analysis), looking at the entirety for consideration to be given to apply long-term
full awareness of the critical points of an organisation effectively risk assessed, responses, other mitigations of the asset against all potential threats faced. This will perspectives to current Asset Management activities
and its assets is captured. An understanding of the and Contingency Plans developed, tested and need to be linked to the relevant Risk Assessment & and their impacts. Underpinning the requirement for
minimum requirements to ensure the organisation or exercised and a review process introduced. A cyclical Management processes to identify the key areas of Sustainable Development is recognition of the need
asset can operate is developed and an assessment of all process that captures this methodology is detailed vulnerability which need to be addressed. to safeguard the interests of future generations over
potential threats that could be faced completed, be they within British Standard, BS25999; Business Continuity • Step 2 is to determine the strategy to be adopted, the long-term while promoting short-term economic
natural occurrences (flooding, wind and longer term Management - Code of Practice as shown in the looking at the risk assessment process and deciding and environmental stability.
climate change), accidental or deliberate events. diagram below. processes to follow.
• Step 3 is to develop and implement the response, Asset Management has an important impact on
introducing identified mitigations where required long-term sustainability as a result of its effect in the
and developing and implementing detailed following areas:
he organ
in t is
Contingency Plans.
M at
BC
• Step 4 will be to regularly Test / Exercise, Maintain • The effective management of a nation’s.
io
g n and Review the mitigations and plans and ensure infrastructure and manufacturing base.
n ’s
Understanding that the responses are still fit for purpose and feed • The impact on the environment.
i
d
the organisation outcomes in the continual review process. • Being a key enabler for many societal structures.
cu
d
be
• Whole life consideration of risks, costs and

lt
ur
Em
The description of the contingency procedures performance of assets

established for identifying and responding to incidents
e
and emergencies should include: Sustainable Development involves considering

the environmental, social and economic aspects of
Exercising, BCM Determining a The kind of procedure the organisation has put activities (sometimes referred to as the triple bottom
maintaining programme BCM in place to identify, prevent and respond to line approach). Rather than trading off one factor
and reviewing management strategy contingency risk; against another, all three factors should be optimised
b Information related to the contingency provision, in the decision making process. Hence a Sustainable
with a comparison to the provision of last year Development review within an organisation has to
e
Em
and the reasons for any decrease or increase in the be supported by the broader Asset Management
r
tu
provision; Strategy and the Risk Assessment & Management

b
Developing and
l
ed
cu
c Identification of the main contingency situations framework. However, these Asset Management
implementing
d
’s n that arose during the financial year with the possible related elements can only be influenced and managed
i
on BCM responses BC
g
financial or operational impact on the assets; with clear direction on an approach to Sustainable
ti a M Development from the top management of the
nis in t
he orga The description can be combined with the risk organisation.
management disclosure requirement as specific
contingency risks. Having a holistic Asset Management Strategy
requires the incorporation of Sustainable
Figure 15. Business Continuity Management All of these aspects will need to be embedded within Development review and the methodology
the Asset Management Organisational Structure surrounding the review can be adopted to meet the
Asset Management Policy and Asset Management Change Management Planning is a growing subject that measures that predict the future performance of asset a range of performance evaluation requirements
Strategy of the organisation. Further guidance often involves the whole organisation. Changes to the systems are normally combined to give a view of how in line with other management standards. Internal
concerning the implementation of a Sustainable operational circumstances or the risks associated with the process is performing and what outcomes are efficiency measures monitor the efficiency of processes
Development approach can be found in BS 8900, the assets should form a key input to the organisation’s being achieved. PAS 55 requires the consideration and output measures provide a measure the actual
Guidance for Managing Sustainable Development. change management processes as well as Configuration of proactive, reactive, leading, lagging, qualitative delivery of the business such as ‘system reliability’ and
Management Processes discussed earlier. and quantitative measures and also provides a useful ‘delivered product’. These principles are shown in the
5.6.4. Management of Change description of them; meanwhile, ISO 55001 specifies diagram below
There is a wide range of changes that an Asset 5.6.5. Assets Performance & Health Monitoring
Manager needs to consider, for example new Assets Performance & Health Monitoring is
technology, new approaches, ageing assets, the necessary for good Asset Management. A robust
workforce retiring or becoming more skilled, new measurement framework includes measures that relate
legislation, new knowledge and data collection to the performance and health of the physical assets Asset Management
Assets
System
processes. Some of these are obvious, but the Asset and asset systems.
Manager must also consider how these impact on
changes in organisational objectives or tolerance to It is fundamental that performance measures LEADING
E.g. E.g.
Process Asset
Performance Indicator
risk. Some of these changes are predictable but others and targets align to the business, vision, goals Maturity Condition
are not and an appropriate approach to Management and stakeholder requirements as defined in an
E.g.
LAGGING Past or Existing
of Change needs to reflect this. organisation’s strategic plan and Asset Management Performance Indicator Non-Conformities
Asset Failures
or Incidents
Strategy & Objectives. Appropriate performance
The challenge for the Asset Manager is to define what measures provide feedback and understanding of the
constitutes a change that can impact their particular physical assets and form an essential part of risk and
assets, in their particular industry and subsequently business management through this feedback into the
Reactive Pro-Active
manage all of these changes in such a way as to Asset Management Decision-Making processes. Monitoring Monitoring
optimise the risks to the Life Cycle operation of the
asset. Risk Assessment & Management are key The mechanism for setting required levels of service is Continuous Management
Improvement Review
to narrowing down what is important and what is defined in the Asset Management Policy and Asset
not, however, the Asset Manager should be wary Management Strategy & Objectives, which define
of changes that can change criticality; potentially the measures of the desired functional performance, Figure 16. Performance Measurement
downgrading the criticality of an asset or system or level of service and condition of assets.
making a previously unimportant asset very critical to
the operation. It is normal for Asset systems - groups of assets that Increasingly the term asset health is being used in relation i.e. the effectiveness and efficiency of the processes
operate together to provide some function - for to measures that monitor the current (or predicted) and activities that the organisation has in place for
Having identified that change is required, or being example an electrical circuit, a rail track, a process capability or condition of an asset to perform its desired Asset Management. This is most clearly embodied in
implemented, it is important not to over-react. plant or a pipeline, whole plants, assembly lines or function. This is a complex idea and can involve ISO 55001, where the requirement to adopt a ‘Plan-
Appropriate management of change activities should networks have required performance criteria. Good composite measures which combine various modes Do-Check-Act’ approach to all aspects of the Asset
not only utilise previous risk assessments to identify Asset Management requires a level of monitoring both of failure. It is most frequently used as a measure for Management System is a specific requirement.
critical change, but should also use risk assessment at the asset system level and at the asset level in order supporting Capital Investment Decision-Making.
and analysis to appropriately assess the proposed to understand and manage performance and to be A range of performance measures need to exist at
‘new-solution’ to provide assurance that the new able to support decisions at strategic and tactical level. 5.6.6. Asset Management System Monitoring various levels of granularity to give insight on the
asset, technology, process or people do not introduce As well as monitoring the performance of assets and performance of the Asset Management System. At
new and previously unconsidered risks that could be Lagging performance measures that monitor the past their associated systems, it is necessary to measure the the highest level a management dashboard presents
worse than the previous situation. performance of assets and asset systems, and leading performance of the Asset Management System itself, summary information to senior managers, with
increasing levels of detail provided through the Audit is typically undertaken within several parts to the relevant stakeholders. This is of particular • Maintenance Costs - the method used by the
organisation appropriate to the decisions and issues of an organisation. Most organisations have an importance in the case of asset-intensive companies, organisation to assess maintenance costs (planned,
that are being managed. Good practice requires clear internal audit team that would normally report into where assets constitute a substantial portion of the total predictive and unplanned) including the breakdown of
accountabilities for both the reporting of measures an independent audit committee. This internal audit balance sheet value and annual expenditure. these costs into labour, materials, plant and equipment.
and acting on them, including managing individual team will examine a range of issues, some of which • Renewal Costs - the method used by the
performance. Most Asset Management organisations would be asset management related. Organisations Additional information in the annual report on organisation to assess renewal costs in terms of the
include asset performance measures in personal targets. would normally also have technical audit teams and financial, technical and operational aspects of unit costs of individual renewal activities including
HSEQ audit teams that are evaluating the level of physical assets will increase the comprehensibility, the breakdown of these costs into labour, materials,
Performance measures and their management are an compliance with technical standards, legislation and relevance, reliability and comparability of the financial plant and equipment
integral part of business processes and the documented regulatory requirements where relevant. statements. Organisations will need to consider • Renewal Liabilities - the processes used to identify
Asset Management System. It is inevitable that this whether the transparency requirements of an Asset future capital expenditure renewal liabilities,
generates information system requirements, and Additional assurance activities would include the Management standard (ISO 55001) can be combined including any backlog in maintenance.
performance measurement is closely linked to the wider monitoring of asset management work undertaken with the transparency requirements from other sources • Social, Environmental, Safety and Reputational Costs
issue of data and information management. Good by supervisors and managers and the potential use of such as the applicable financial reporting framework – the method used by the organisation to quantify
practice requires the ongoing monitoring and trending external expertise for high criticality activities. (e.g. local GAAP, IFRS, US GAAP), legal and regulatory social, environmental, safety and reputational costs
of performance measures, to enable control and requirements, international applicable framework on in monetary terms.
prediction. Management Review is the activity where an internal control, risk management and/or corporate
organisation takes stock of its Asset Management governance requirements. Organisations that are demonstrating good practice in
Asset Management System Monitoring takes account activities and reviews the: Asset Costing & Valuation would typically be able to
of all available feedback mechanisms (performance, Each organisation is typically governed by a set demonstrate the following:
asset health, incident investigations, and audit reports) • performance of assets against the Asset of accounting codes and practices according to
and compares them with expected performance so that Management Strategy & Objectives; the jurisdiction in which they operate. Like many • The ability to recognise and adopt appropriate
changes in the objectives, risk control measures and more • performance of people against their personal standards, accounting codes are harmonising across valuation practices that may be driven by local
in general the Asset Management System can be made to objectives; countries and irrespective of the codes applied, there regulatory or legislative regimes.
fine tune the direction of the organisation. • feedback from customers; are common elements from an Asset Management • The ability to value assets at all levels of the
• effectiveness of processes; and perspective outlined as follows: hierarchical asset register structure & update this
5.6.7. Management Review, Audit & Assurance • the risk profile and whether it remains appropriate valuation cost effectively in both value, unit rates
Management Review, Audit & Assurance is part of the for the organisation’s risk appetite. • Asset Valuations - the method of valuation used and effective residual lives;
collection of processes that help to close the loop in the by the organisation, its appropriateness and • The ability to understand the operational costs of
Plan Do Check Act cycle of management system design. 5.6.8. Asset Costing & Valuation the accuracy with which the valuations have individual assets and/facilities in terms of the above
Asset Costing & Valuation is concerned with how been developed including schedules & rates. It break up, together with special costs for smaller
Audit is one of the processes (along with system an organisation manages the financial information also includes the methods used to update this plant or equipment that may consume high power
performance monitoring, Asset health monitoring and relating to its assets and asset management activities. information and the alignment of Asset Valuations costs.
incident investigation) that provide an organisation This includes ensuring that the quality of financial with the financial balance sheet of the organisation. • The ability to identify the maintenance and renewal
with assurance that everything is occurring as information is appropriate for the applicable financial • Depreciation - the method used to establish the costs from the Asset Management information
intended. It is the process that an organisation uses to reporting framework for the organisation. residual or effective lives of the individual assets and system or elsewhere for all levels of the hierarchy
check that processes are being followed and standards if necessary their components and the accuracy of down to the chosen item;
or specifications adhered to. It provides assurance Additional to the information laid down in local the depreciation calculations. • The ability of the organisation to identify its future
that processes (which are designed to manage risk) Generally Accepted Accounting Principles (GAAP) • Operational Costs - the method used by the renewal program, and the associated residual
are both in place, and being effectively used. Audit is and IFRS, relevant information regarding the financial, organisation to assess the cost of operations of business risk exposure/s;
part of the ‘Check’ element of the Plan Do Check Act technical and operational information relating to the individual facilities and assets and the breakdown of • The ability to include social, environmental,
Cycle. activities undertaken on assets should be made available these operational costs in terms of labour, energy, safety and reputational costs and risks in Asset
chemicals and plant & equipment. Management Decision-Making.
6. Definitions
5.6.9. Stakeholder Engagement parts, withholding a license to operate, shutting down
Stakeholder Engagement is an increasingly an operation due to a strike notice, imposing penalties
formalised area of business, particularly for regulated for non-conformance to regulations, and reducing the
utilities where regulators are setting expectations operating budget resulting in deferred maintenance Asset Asset management information
on consultation with stakeholder groups. This are but a few of the negative consequences external Item, thing or entity that has potential or actual value Meaningful data relating to assets and asset
element relates to the methods used to engage with stakeholders can impose on an asset-centric organisation. to an organisation. management.
stakeholders to articulate different scenarios within
an organisation’s Asset Management Plan(s). The Each external Stakeholder’s Relationship reflects their Notes: Note: Examples of asset management information
management of Stakeholder Engagement requires interactions with the organisation. These interactions are include asset registers, drawings, contracts, licences,
an understanding of the costs and outputs associated measurable and can be used to monitor performance. 1 Value can be tangible or intangible, financial or legal, regulatory and statutory documents, policies,
with each scenario in order to reflect stakeholder The health of these stakeholder relations determines how non-financial, and includes consideration of risks standards, guidance notes, technical instructions,
priorities and to select scenarios that most closely meet well these stakeholders interact with an organisation and and liabilities. It can be positive or negative at procedures, operating criteria, asset performance and
their aspirations. how well they support the Asset Management Strategy different stages of the asset life. condition data, or all asset management records.
& Objectives. External Stakeholder Engagement 2 Physical assets usually refer to equipment, inventory
It is critical to identify the stakeholders that have an supports an organisation’s ability to manage assets and properties owned by the organization. Physical Objective
interest in an organisation’s physical assets. Typically effectively, efficiently, and reliably. assets are the opposite of intangible assets, which Result to be achieved.
these will include: are non-physical assets such as leases, brands,
Although many of these stakeholders are outside digital assets, use rights, licences, intellectual Notes:
• Vendors / Suppliers of equipment and of spare parts the direct control of an organisation, Stakeholder property rights, reputation or agreements.
• Regulators Engagement can be influenced by changing what 3 A grouping of assets referred to as an asset system 1 An objective can be strategic, tactical or
• Governments an organisation does internally to align the outcomes could also be considered as an asset. operational.
• Board of Directors of these interactions with the organisation’s strategic [SOURCE: ISO 55000:2014] 2 Objectives can relate to different disciplines (such as
• Owners objectives. Organisations can change business financial, health and safety, and environmental goals)
• Unions processes, introduce and enforce policies and Asset life and can apply at different levels (such as strategic,
• Influencers procedures, develop incentives to drive employee The period from asset creation to asset end ¬of ¬life. organisation-wide, project, product and process).
• The Community and neighbours behaviour to align with a vision of how that [SOURCE: ISO 55000:2014] 3 An objective can be expressed in other ways, e.g.
• Customers, both strategic and non-strategic organisation wants external stakeholders to perceive it. as an intended outcome, a purpose, an operational
Measuring the delivery of this vision provides visibility Asset management criterion, an asset management objective or by the
Each stakeholder type has an impact on how an and a drive to do business differently redefining how Coordinated activity of an organisation to realise value use of other words with similar meaning (e.g. aim,
organisation performs. Introducing defective spare the organisation relates to its external stakeholders. from assets. goal, or target).
4 In the context of asset management systems, asset
Notes: management objectives are set by the organization,
consistent with the organisational objectives and
1 Realisation of value will normally involve a asset management policy, to achieve specific
balancing of costs, risks, opportunities and measurable results.
performance benefits. [SOURCE: ISO 55000:2014]
2 Activity can also refer to the application of the
elements of the asset management system. Asset management plan
3 The term “activity” has a broad meaning and can Documented information that specifies the activities,
include, for example, the approach, the planning, resources and timescales required for an individual
the plans and their implementation. asset, or a grouping of assets, to achieve the
[SOURCE: ISO 55000:2014] organisation’s asset management objectives.
Notes: Asset portfolio GAAP Life Cycle

Assets that are within the scope of the asset Generally Accepted Accounting Principles. A widely Stages involved in the management of an asset.
1. The grouping of assets may be by asset type, asset class, management system. accepted set of rules, conventions, standards, and
asset system or asset portfolio. procedures for reporting financial information, as Note: The naming and number of the stages and the
2. An asset management plan is derived from the strategic Notes: established by the Financial Accounting Standards Board activities under each stage usually vary in different
asset management plan. (FASB). industry sectors and are determined by the organisation.
3. An asset management plan may be contained in, or may 1. A portfolio is typically established and assigned for [SOURCE: ISO 55000:2014]
be a subsidiary plan of, the strategic asset management managerial control purposes. Portfolios for physical IFRS
plan. hardware might be defined by category (e.g. plant, International Financial Reporting Standards. Guidelines Optimise
[SOURCE: ISO 55000:2014] equipment, tools, land). Software portfolios might be and rules set by the International Accounting Standards Achieve by a quantitative or qualitative method, as
defined by software publisher, or by platform (e.g. Board (IASB) that companies and organisations can appropriate, the best value compromise between
Asset management policy PC, server, mainframe). follow when compiling financial statements. The conflicting factors such as performance, costs and
Principles and mandated requirements derived from, and 2. An asset management system can encompass creation of international standards allows investors, retained risk within any non-negotiable constraints.
consistent with, the organisational strategic plan, providing multiple asset portfolios. Where multiple asset organisations and governments to compare the IFRS-
a framework for the development and implementation of portfolios and asset management systems are supported financial statements with greater ease.
the asset management strategy and the setting of the asset employed, asset management activities should be
management objectives. coordinated between the portfolios and systems.
[SOURCE: ISO 55000:2014]
Asset Management Strategy /Strategic asset management
plan (SAMP) Asset system
Set of assets that interact or are interrelated.
Documented information that specifies how organisational
objectives are to be converted into asset management [SOURCE: ISO 55000:2014]
objectives, the approach for developing asset management
plans, and the role of the asset management system Enablers (asset management)
in supporting achievement of the asset management Supportive systems, procedures, processes, activities
objectives. and resources that enable an organisation to operate
its asset management system efficiently and effectively.
Notes:
Functional policy
1. A strategic asset management plan is derived from the Specified approach, rules and boundaries set out by an
organisational plan. organisation that provide direction and the framework
2. A strategic asset management plan may be contained in, for the control of specific asset-related processes and
or may be a subsidiary plan of, the organisational plan. activities.
[SOURCE: ISO 55000:2014]
Note: Functional policies, strategies and objectives
Asset management system relate to asset management activities or processes,
Management system for asset management whose such as capital investment, construction methods,
function is to establish the asset management policy and maintenance and purchasing, These should not be
asset management objectives. confused with asset management policies, asset
management strategy and asset management
Note: The asset management system is a subset of asset objectives, which are cross-functional, considering the
management. Life Cycle optimisation of all relevant activities.
[SOURCE: ISO 55000:2014]
This document has been approved for publication by Richard Edwards, Chair of IAM Faculty.
Organisation 3. Risk is often characterized by reference to
Person or group of people that has its own functions potential “events” (as defined in ISO Guide 73:2009,
with responsibilities, authorities and relationships to 3.5.1.3) and “consequences” (as defined in ISO The IAM’s Faculty is a Standing Committee of the IAM, which directs and prioritises the technical
achieve its objectives. Guide 73:2009, 3.6.1.3), or a combination of these. work of the Institute.
4. Risk is often expressed in terms of a combination of
Note: The concept of organisation includes, but is not the consequences of an event (including changes in It is responsible for ensuring that the IAM’s view of the discipline of Asset Management and all
limited to, sole-trader, company, corporation, firm, circumstances) and the associated “likelihood” (ISO the standards, guidance, knowledge and other outputs produced by the Institute are developed
enterprise, authority, partnership, charity or institution, Guide 73:2009, 3.6.1.1) of occurrence. within a common and evolving framework and are aligned with the aims of the Institute.
or part or combination thereof, whether incorporated or 5. Uncertainty is the state, even partial, of deficiency of
not, public or private. information related to, understanding or knowledge
[SOURCE: ISO 55000:2014] of, an event, its consequence, or likelihood. The IAM acknowledges gratefully the following IAM Members for their valuable contribution to the preparation and
[SOURCE: ISO Guide 73:2009, 1.1] updating of this document:
Organisational strategic plan
Overall long-term plan for the organisation that is Property, Plant and Equipment • Darren Anderson, Ferrovial • Donald Miller, Scottish Power
derived from, and embodies, its vision, mission, values, According to International Accounting Standard 16 • Paul Barnfather, EA Technology Ltd • Dr Christian Roberts, GHD
business policies, stakeholder requirements, objectives (IAS16), “Property, Plant and Equipment” comprise • Roger Byrne, Semi-Retired Asset Management Mentor • Daniël Pairon, KPMG
and the management of its risks tangible assets held by an entity for use in the • Dave Champness, United Utilities Water Plc • Richard Schouten, Accenture
production or supply of goods or services, for rental to • Rudy Crous, Competence Assurance Solutions Ltd • Andrew Sharp, Asset Management Consulting Ltd
Risk others, of for administrative purposes that are expected • John Darbyshire, London Underground Ltd • Navil Shetty, Atkins Plc
Effect of uncertainty on objectives. to be used for more than one period. Depending on • Rhys Davies, Smart Asset Management Solutions Ltd • Tom Smith, University of Wisconsin
the applicable financial reporting framework, another • Derrick Dunkley, National Grid Plc • Julie Spinks, J D Spinks Ltd
Notes: definition of “Property, Plant and Equipment” might be • Richard Edwards, AMCL • Graham Stroud, Atkins Plc
appropriate. • David Gazda, EA Technology Ltd • Julian Schwarzenbach, Data and Process Advantage Ltd
1. An effect is a deviation from the expected — positive • Kirk Gillett, Wipro Technologies • Sue Thomas
and/or negative. Sustainable • Andrew Harrison, EA Technology Ltd • Alex Thomson, The Woodhouse Partnership Ltd
2. Objectives can relate to different disciplines (such as Achieving or retaining an optimum compromise • Peter Jay, The Woodhouse Partnership Ltd • Sarah Vine, Atkins Plc
financial, health and safety, and environmental goals) between performance, costs and risks over the Life • Dr Charles Johnson, Competence Assurance Solutions • Andy Walton, Atkins Plc
and can apply at different levels (such as strategic, Cycle, whilst avoiding adverse long-term impacts to the Ltd • Andy Watts, EC Harris
organisation-wide, project, product and process). organisation from short-term decisions. • Mike Jones, IAM • Marie-Pierre Whaley, Northumbrian Water Ltd
• Chris Lloyd, Competence Assurance Solutions Ltd • Aled Williams, National Grid plc
• Ian McLellan, Atkins Plc • John Woodhouse, The Woodhouse Partnership Ltd
Notes
Download your copy FREE!
www.theIAM.org/AMA
The Institute of Asset Management

St Brandon’s House
29 Great George Street
BRISTOL
BS1 5QT
United Kingdom
Design and production by Redhouse Lane Communications www.theIAM.org

Asset Management - An Anatomy v2 PDF

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Asset Management - An Anatomy v2 PDF

Uploaded by

Copyright:

Available Formats

Asset Management – an anatomy

Version 2  July 2014

Asset Management – an anatomy

Asset Management – an anatomy

2. What does ‘Asset

Management as: “the coordinated activity of an

Life Cycle Activities replacements, modifications, obsolescence, changing

Business impact (£k/yr)

Sell Figure 3. Optimum value achieved by optimising total cost/risk/performance impact.

Set of inter-related or Stakeholder and organisation context

Assets that are within the Asset management

Figure 4. Asset Management in the context of the Discipline of Asset Management.

4. The Scope of Asset Management

Organisational Strategic Plan

Scope of Asset Management

Organisation Dispose Maintain Risk &

© Copyright 2014 Institute of Asset Management (www.theIAM.org/copyright)

Figure 6. The IAM Conceptual Model

These Subject Groups are split into the following 39 Subjects.

Figure 7. The 39 Subjects of Asset Management

5. Subjects Groups and Descriptions

Scope of Asset Management

Organisation Dispose Maintain Risk &

© Copyright 2014 Institute of Asset Management (www.theIAM.org/copyright)

Typical priorities & ‘values’

5.3 Life Cycle Activities

Scope of Asset Management

Organisation Dispose Maintain Risk &

© Copyright 2014 Institute of Asset Management (www.theIAM.org/copyright)

Logistics Systems Engineering

Figure 13. Configuration Management

Scope System Process Flow

Scope of Asset Management

© Copyright 2014 Institute of Asset Management (www.theIAM.org/copyright)

5.6 Risk & Review

sure enough suitably competent people are available

Scope of Asset Management

• Whole life consideration of risks, costs and

The description of the contingency procedures performance of assets

and emergencies should include: Sustainable Development involves considering

provision; Strategy and the Risk Assessment & Management

Notes: Asset portfolio GAAP Life Cycle

The Institute of Asset Management

Design and production by Redhouse Lane Communications www.theIAM.org

You might also like

Version 2 July 2014