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Lecture 1Asset: something that has potential or actual value to an organization
Asset management: coordinated activity of an organization to realize value from assets
involving a balancing of costs, risks, opportunities and performance benefits
Asset classes
- Real estate and facilities
o Asset hierarchies, value to stakeholder
o Focus on location, construction, lease management
- Plant and production
o RCM, TPM, Production ROA focus
o Configuration management
- Mobile assets
o Asset configurations, regulatory compliance
o Tracking mobile asset locations, timing of planned maintenance
- Infrastructure
o Asset hierarchies and data, by location
o Depreciation and maintenance forecasting focus
- Information technology
o Asset configuration version management
o Change management
Focus: tangible assets for operations and production
Asset characteristics: expensive, complex, engineered-to-order, technology-intensive,
delivered in a project-like fashion, service intensive, in support of core (production)
operations, capital goods
Assets can be managed as
- Individual units
- Systems
- Systems of systems
,Questions for an asset manager
- Do you understand the risk profile associated with your asset portfolio and how this
will change over time?
- Do you understand the business consequences of reducing your capital
investment or maintenance budgets by 10% over the next five years?
- Can you justify your planned asset expenditures to external stakeholders?
- Can you easily identify which investment projects to defer when there are funding or
cash flow constraints?
- Do you have the appropriate asset data and information to support your AM
decision making?
- Do you know if your people have the right competences and capabilities to
manage your assets?
- Do you know which AM activities to out-source?
Aims effective asset management
- Maximize productivity (productive capacity)
- Maximize accuracy (the ability to produce to specified tolerances or quality levels)
- Minimize cost per unit produced (the lowest cost practical)
- Minimize the risk that productive capacity, quality, or economic production will be lost
for unacceptable period of time
- Prevent safety hazards to employees, and the public as much as possible
- Ensure the lowest possible risk of harming the environment
- Conform to national and international regulations
Better AM definition: systematic and coordinated activities and practices through which an
organization optimally and sustainably manages its assets and asset systems, their
associated performance, risks and expenditures over their lifecycles for the purpose of
achieving its organizational strategic plan
Core elements of an AM system
- Context of the organization
- Leadership
- Planning
- Support
- Operation
- Performance evaluation
- Improvement
, Important aspects of life cycle management
1. Interdisciplinary coordination
o Usually, none of the phases in the life of an asset is dominant and/or can work
irrespective of decisions in the other phases in order to optimise the
performance of the asset
o Different phases in the life cycle and different disciplines are often carried out
by different parties (departments, suppliers)
o Feed-forward and feedback loops are needed within and across asset life
cycles
2. Life cycle cost: for many complex assets, the operational costs are significant and in
the same order of magnitude as the cost of the initial investment
o So investment decisions need to take LCC into account, not just the
acquisition price
Servitization: the process of shifting the core of manufacturing (‘make’) firms’ activities from
manufacturing (supply of physical goods) to service (maintaining and sometimes even
operating customer’s assets), the process by which manufacturing firms increasingly base
their competitive advantage on services
Principle-agent problem
- Asset owner/operator can be interpreted as the principal and the service provider as
the agent
- Deals with the optimal contract offered to an agent, given that
o The principle cannot observe the agent’s efforts
o Only outcomes can be measured
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