Making strategic asset management decisions

by FM Media
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BRUCE CHAPLIN of FM Essentials stresses the importance of applying a clearly defined strategic asset management process to determine the asset management program required to achieve the desired optimal outcomes.

Most building and portfolio managers responsible for assets will tell you that the optimum outcome in the management of assets is a balance of cost against the performance of the asset. Put simply, the strategy is to position the asset to meet its business performance requirements, while at the same time minimising the cost of maintaining the asset.
When asked about how these assets are managed or how a maintenance program is determined, however, the answers are many and varied. It would seem that most building and portfolio managers responsible for the strategic management of buildings have an asset management process of sorts, but, in general, do not apply a clearly defined strategic asset management process to determine the asset management program required to achieve the desired optimal outcomes.

Strategic asset management involves a whole-of-life assessment that begins with the design of the asset, going through to the disposal of the asset and involves the following steps:

  1. Planning and design – requirement, cost, fit for purpose, criticality, buildability, replaceability and simplicity
  2. Acquisition – availability, lead time, quality, price and obsolescence
  3. Construction – ease of installation, commissioning, access for maintenance, decommissioning and replacement
  4. Operations – usability, simplicity, consistency, reliability, flexibility, energy, cost, emissions and monitoring performance
  5. Maintenance – maintainability, frequency, criticality, access, spare parts, skills required and monitoring
  6. Life cycle renewal or rehabilitation – replacement time, installation, current use, availability, improved technology and performance history, and
  7. Disposal – resale, reuse, recyclability and waste management.

Although all the steps in the cycle are vital to the overall success of the project, strategic asset management focuses mainly on the operations and maintenance components of existing assets. Operationally, strategic decisions need to be made on how the assets will be used.
For example, if there is a duty asset and a standby asset, do you run one 80 percent of the time and the other 20 percent of the time to ensure that when one reaches the end of its service life the other is not in the same condition and you’re not left at risk of both failing? Or, do you operate the systems in 50 percent/50 percent mode because it is easier to replace both at the same time and there is minimal risk to the continued effective operation of the business?
Other options to consider may include: to operate the asset off-peak to reduce cost, or to operate assets at different settings to reduce load or start and stop times.

A strategic approach to maintenance needs to consider a variety of issues that will affect the maintenance and the frequency with which it is carried out. Consideration needs to be given to the following factors:

  • regulatory requirements (as a minimum, these standards must always be met)
  • environmental conditions (for example, is the asset indoors or outdoors, and is it exposed to severe weather conditions?)
  • time in use (is the asset operational 24/7 or only when it’s hot?)
  • business needs (is the asset critical to the continued operation of the business?), and
  • risk of failure (does the asset have to perform every time; for example, electric locking systems for fire evacuation).

All these considerations will affect the maintenance strategy adopted, and will impact on the balance desired between the cost of maintaining the asset and the performance required from the asset. On the one hand, there is no point saving money by reducing the frequency of maintenance, if the outcome is that it will have a reduced lifespan and need to be replaced more often. On the other hand, in some instances it can be more effective to do the minimal amount of maintenance, because the asset is going to be replaced or the cost of maintenance is more than the cost of replacement. This latter aspect may seem a little unusual, but if an asset is located in a remote location, the cost of maintenance may be very high due to travelling time, which could quickly add up to the cost of replacing the whole asset.
The important objective here is to assess all the competing aspects of the operations and maintenance of assets and make strategic decisions that will have known outcomes. This will ensure that all assets achieve the desired optimal outcome. With a bit of luck and strategic planning, you will even save a few dollars.

Bruce Chaplin is managing director of FM Essentials. He passionately believes in the virtues of good facility management as key to supporting business growth. He has been in the industry for 30 years, and has comprehensive knowledge of the facility management industry and strategic asset management solutions through his work with major corporates, smaller businesses and government departments.

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