Asset Management

Question 1

dictionary definition of asset

Answer 1

any item of economic value owned by an individual or corporation

Question 2

‘physical’ asset

Answer 2

referring to items such as buildings, utility infrastructure and individual assets

Question 3

other features of a ‘physical’ asset include:

Answer 3

• value may be represented on a corporation’s balance sheet
• may be listed in a register
• value normally depreciates over time
• condition normally deteriorates over time and/or use
• likely to benefit from good stewardship

Question 4

Asset Management Choices

Answer 4

• not just about maintenance
• not a substitute for quality management
• not a project management system
• not just for engineers - but everyone working in a company that owns/operates assets
• not just an accounting exercise
• not a purely academic discipline

Question 5

Evolution of modern AM

Answer 5

• restructuring of water sector in Australia and the UK
• comprehensive international guidance
• comprehensive U.S. guidance
• The Risk Based Approach
• UK Asset Management Specification
• New International Standard for Asset Management

Question 6

AM

Answer 6

Asset Management

Question 7

What is AM

Answer 7

• mindset which sees physical assets as systems responding to their environment
• recognition that assets have a life cycle
• as important for those working in finance as for engineers
• looks to get the best out of assets for the benefit of the organisation and/or stakeholders
• understanding and managing the risk associated with owning assets

Question 8

Asset management is important because it can help organisations to:

Answer 8

1. Reduce the total costs of operating their assets
2. Reduce the capital costs of investing in the asset base
3. Improve the operating performance of their assets
4. Reduce the potential health impacts of operating their assets
5. Reduce the safety risks of operating these assets
6. Minimise the environmental impact of operating the assets
7. Maintain and improve the reputation of the organisation
8. Improve the regulatory performance of the organisation
9. Reduce legal risks associated with operating assets

Question 9

The key to good asset management

Answer 9

is that it OPTIMISES these benigits
- determines the best blend of activity to achieve the best balance for all of the above for the benefit of the organisation

Question 10

The Asset Life-Cycle

Answer 10

1. Acquire
2. Commission
3. Operate
4. Dispose

Question 11

Acquire (asset life-cycle)

Answer 11

• covers everything that goes into planning, designing and procuring the asset
• proper application of these activities ensures the asset is fit for purpose

Question 12

Commission (asset life-cycle)

Answer 12

• covers the activities of installing/creating or building the asset, and ensuring that it is fully functional
• recognised fact that there is a higher incidence of failure after first installation/building of an asset (infant mortality)

Question 13

infant mortality

Answer 13

recognised fact that there is a higher incidence of failure after first installation/building of an asset

Question 14

Operate (asset life-cycle)

Answer 14

• normally the bulk of the life cycle of an asset, during which it provides function for which it was designed
• asset should be subject to appropriate monitoring, maintenance, refurbishment and potential upgrade to meet any change in condition or operational requirement
• for many assets this phase is decades long

Question 15

Dispose (asset life-cycle)

Answer 15

• often the most overlooked phase
• assets can last beyond a human lifetime and it can be difficult to consider asset disposal when it is so far into the future
• asset management teaches us that we ignore any stage of the asset life cycle at our peril

Question 16

dictionary definition of risk

Answer 16

the possibility of loss, injury, or other adverse or unwelcome circumstance; a chance or situation involving such a possibility

Question 17

Risk

Answer 17

= probability x consequence

Question 18

Seven Key Activities that Asset Managers get involved in:

Answer 18

1. Developing Policy
2. Developing Strategy
3. Asset Management Planning
4. Delivering the Plans
5. Developing People
6. Managing Risk
7. Managing Asset Information

Question 19

1. Developing Policy

Answer 19

• Asset Management Policy is the link between the Organisational Plan and the Asset Management Strategy
• typically a set of principles or guidelines to steer AM activity, to achieve the organisation’s objectives

Question 20

2. Developing Strategy

Answer 20

• Asset Management Strategy directs the organisations AM activity
• it will determine the high level AM objectives that are needed from the activity, to deliver the organisation’s objectives
• it will define the approach to planning that will be taken

Question 21

3. Asset Management Planning

Answer 21

• AM planning looks at considering the options for activities and investments going forward, and putting together a set of plans to describe what will be done when, and by whom
• Asset Manager ensures that the plan delivers what is required by the strategy

Question 22

4. Delivering the Plans

Answer 22

• the part where work is actually done on the assets
• activity clearly needs to include the appropriate controls to ensure the work is done efficiently and that information gathered is fed back into the strategy and planning activities

Question 23

5. Developing people

Answer 23

• specifically about developing the skills and competencies of people to better deliver AM activities
• spans from the boardroom to the tool box and also through the supply chain
• looks at the culture within an organisation and how change can be managed to achieve optimal results

Question 24

6. Managing Risk

Answer 24

• understanding risk is a critical concept in AM and a key function and area of competence
• focus on being able to assess the risk of action or inaction on the performance of the assets, in the context of the organisation’s corporate objectives

Question 25

7. Managing Asset Information

Answer 25

• collecting and collating the right information to inform AM decisions is crucial to ensuring AM success
• too much data: confuses the picture and costs money to collect
• too little data: results in decisions made in the dark

Question 26

Asset Management Maturity

Answer 26

0. Innocent
1. Aware
2. Developing
3. Competent
4. Optimising
5. Excellent

Question 27

Innocent (maturity)

Answer 27

organisation has not recognised the need for this requirement and/or there is no evidence of commitment to put in place

Question 28

Aware (maturity)

Answer 28

organisation has identified the need for this requirement, and there is evidence of intent to progress it

Question 29

Developing (maturity)

Answer 29

• organisation has identified the means systematically and consistently achieving the requirements
• can demonstrate that these are being progressed with credible and resourced plans in place

Question 30

Competent (maturity)

Answer 30

organisation can demonstrate that it systematically and consistently achieves relevant requirements set out in ISO 55000

Question 31

Optimising (maturity)

Answer 31

organisation can demonstrate that it is systematically and consistently optimising AM practice, in line with the organisation’s objectives and operating context

Question 32

Excellent (maturity)

Answer 32

the organisation can demonstrate that it employs the leading practices, and achieves maximum value from the management of its assets, in line with the organisation’s objectives and operating context

Question 33

Good Asset Management Practice

Answer 33

advises that you should only be as sophisticated as you need to be

• high levels in maturity in AM practices for an asset base which is of low complexity and low criticality will attract unnecessary cost
• immature AM practices on complex or critical asset bases introduces huge risk to an organisation