Asset management is the management of assets including real estate, stocks, bonds, etc.; it is the art and science of making the right decisions and optimising the delivery of value. Publicly Available Specification (PAS) 55 published by the British Standards Institution (BSI) defined ‘asset management’ as, “A systematic and coordinated activities and practices through which an organisation optimally and sustainably manages its assets and asset systems, their associated performance, risks and expenditures over their lifecycles for the purpose of achieving its organisational strategic plan”. The PAS 55 definition of asset management involves the management of “financial assets, physical assets, human assets, information assets and intangible assets”. International Organisation for Standardisation (ISO) 55000 defines asset management as the “coordinated activity of an organisation to realise value from assets“. Asset management facilitates the investment in the most profitable assets and offers risk analysis as well as identify which assets offer the highest returns.
In turn, asset is defined as follows: “An asset is an item, thing or entity that has potential or actual value to an organisation“. Asset management involves the balancing of costs, opportunities and risks against the desired performance of assets, to achieve the organisational objectives. This balancing might need to be considered over different timeframes (IAM Institute of Asset Management). The management of physical assets (their selection, maintenance, inspection and renewal) plays a key role in determining the operational performance and profitability of industries that operate assets as part of their core business.
Other definitions of asset management are as follows:
- the process of organising, planning, designing and controlling the acquisition, care, refurbishment, and disposal of infrastructure and engineering assets to support the delivery of services. It is a systematic, structured process covering the whole life of physical assets.
- the art and science of making the right decisions about assets and optimising these processes. It is a systematic and coordinated activities and practices through which an organisation optimally and sustainably manages its assets and asset systems, their associated performance, risks and expenditures over their life cycles for the purpose of achieving its organisational strategic plan.
Asset management deals with the optimal management of physical asset systems – a planned alignment of physical assets with service demand, which is achievable by the systematic management of all decision-making processes taken throughout the life of the asset. It represents a cross-disciplinary collaboration to achieve best net, sustained value-for-money in the selection, design/ acquisition, operations, maintenance and renewal/ disposal of physical infrastructure and equipment. A common objective is to minimise the whole life cost of assets but there may be other critical factors such as risk or business continuity to be considered objectively in this decision making.
Elements of asset management program
According to Asset Management Primer (1999), the elements of an asset management program include the following:
- Strategic goals.
- Inventory of assets (physical and human resources).
- Valuation of assets.
- Quantitative condition and performance measures.
- Measures of how well strategic goals are being met.
- Performance-prediction capabilities.
- Relational databases to integrate individual management systems.
- Consideration of qualitative issues.
- Links to the budget process.
- Engineering and economic analysis tools.
- Useful outputs, effectively presented.
- Continuous feedback procedures.
