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Assets often represent a significant portion of the overall valuation of an organisation. As such, it’s critical to have a plan for them. Having an asset management plan in place is like having a business case for everything you plan to do with those assets.
Key to making informed asset management decisions is understanding the organisation’s exposure to and appetite for risk. By maintaining an accurate asset register with appropriate condition assessments, you can paint a clearer picture of risk exposure.
Identifying critical systems and their condition allows you to make informed decisions around prioritisation. Knowing what work needs to be done now, vs what can be deferred, is key to managing risk exposure.
Asset managers are faced with an abundance of choices everyday, and it can be helpful to have a framework to utilise to support timely, consistent decision making.
When it comes to defining the problem or objective you’re faced with, consider it from the perspective of key stakeholders. Having a clear definition of what you’re trying to achieve sets the context for the remainder of the decision-making process.
To effectively evaluate multiple investment options, all must be evaluated with the context of an evaluation framework. The most common evaluation frameworks include:
· Net present value (NPV)
· Benefit-cost analysis (BCA)
· Cost effectiveness analysis (CEA)
· Multi-criteria analysis (MCA)
Operating costs include costs such as operations personnel, materials, fuel, chemicals and energy consumption etc. These costs can be significantly affected by factors such as age and condition of the assets external environment, or maintenance-related issues affecting the efficiency of the system. Significant savings can be made through efficiencies in operations, for example, by ‘supply side” demand management measures.
Maintenance costs include scheduled/planned maintenance, reactive repairs, alteration or reconfiguration of assets and holding of spares required to repair failures. Increasing the level of one type of maintenance can decrease the need for other types of maintenance.
Administration and support costs are the organisation-wide support costs such as insurance, rates, management expenses and other overheads required to enable the organisation to deliver these services. Often these are difficult to identify with respect to specific assets or facilities.
Initial evaluation efforts may narrow down the potential options in front of you. There might be one option that goes against organisational values, or some that are way out of budget.
The remaining options can be ranked according to your evaluation method, with the “right” option emerging.
Once a decision has been made, the process of selection, and implementation of that option should be appropriately documented. Having a record to refer back to assists with the “evaluate” or final stage in the framework.
The process doesn’t end with the implementation of any particular option. Evaluating the effectiveness of a decision is key to continued success in the organisation. By evaluating and re-assessing a decision, factors not considered during the initial decision-making process can be uncovered.
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