Literature review
What are (Physical) Assets?
Assets are things that have actual or potential value, and AM achieves the realization of that value. (IAM, 2014)
An asset is defined in BSI PAS 55 as ‘Plant, machinery, property, buildings, vehicles and other items that have a distinct value to the organization’. (BSI, 2008)
According to ISO 55000 an asset is a ‘thing, an item or an entity that has actual or potential value’. (ISO 55000, 2014)
Asset knowledge
Asset Knowledge (IAM, 2014) is a crucial element in AM Decision-Making. Required Asset Knowledge about the assets can be grouped into the following three areas:
• Strengths and Weaknesses: Understanding the criticality, performance and condition of your assets. (AS-IS situation)
• Opportunities: the action that can be taken to improve the condition and performance of the assets, new technology or skills that can be brought into the organization to improve AM capability. (TO-BE situation)
• Threats: the risks to performance and condition to understand the mitigating actions that can be put into place to manage these risks.
According to Hastings (Hastings, 2010) knowledge about the organization’s assets depends on AM, in terms of current equipment and business role of the assets and future prospects. A Mgr.s need to have practical knowledge of the assets at a management level so they can make proper business decisions. There is also a requirement for keeping systematic tracks of changing in equipment configurations, such as technical upgrades and modifications.
Points of knowledge which an A Mgr. may need to have are:
1. What assets have we got;
2. Where are they located;
3. What is the business significance of our major assets;
4. What is the profit and loss position of our major assets;
5. What is our asset utilization including peak load and seasonal factors;
6. Are there gross imbalances – that is, major shortages, surpluses or misallocations equipment or personnel;
7. What is the condition of each major asset;
8. Are reliability or availability issues significant;
9. How much longer can specific assets last;
10. Are there significant risks;
11. Are maintenance costs a significant factor;
12. What asset related developments and market opportunities exist;
13. What has the market got to offer in terms of assets that we might usefully acquire.
Elements of chapter 3.1 and 3.2 are used in chapter 5.2 and 6.2
What is Asset Management (AM)?
AM gathers the tools and knowledge together an organization needs to use its assets to achieve its purpose. More ever these processes and techniques allow an organization to demonstrate that it is managing its assets optimally. This often of great interest to many stakeholders, like owners, customers, regulators, neighbours or the general public. (IAM, 2014)
Good AM: (IAM, 2014)
- Is aligned with the organizational strategy;
- Should be ‘enterprise’ wide, avoiding silos;
- Applies to asset owners, managers and those with delegated management responsibilities (e.g. outsourced asset responsibilities);
- Has to balance risks, performance and costs on different timescales;
- Applies to both tangible or physical and intangible assets;
- Applies to public, private and not-for-profit organizations.
AM is defined in BSI PAS 55 as ‘the 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 life cycles for the purpose of achieving its organizational strategic plan’. (BSI, 2008). In the ISO55000 AM is defined as ‘coordinated activity of an organization to realize value from assets’. (ISO 55000, 2014)
There are various other definitions of AM around the world, but, essentially, AM allows asset intensive businesses to use limited resources to achieve their stated business objectives in the most cost-effective way. (Lloyd, 2013)
The conceptual landscape model of the IAM, see Figure 5 (IAM, 2014), shows all the subjects and subject groups that are aligned with PAS55. The conceptual model describes the total scope of AM at the high level group of activities that are included within the discipline. It also highlights the fact that AM is going about the integration of these groups to serve the organizational goals.
General information used in the whole research
Where modern concepts of Asset Management come from.
According (IAM, 2014) AM is not new, people and organizations have been managing assets for thousands of years. What has changed, however, is the cumulative recognition of what good AM involves the optimizing of cost, risks, performance, resources and benefits over the whole asset life – within any absolute constraints.
These insights have three primary origins:
1. The financial services sector has been using the term for over 100 years to describe the juggling act of ‘optimizing’ risk, yield (performance), short and long term security from a mixed portfolio of cash, stocks & shares and other investments.
2. The North Sea oil & gas industry adopted the term “Asset Management” in the era following the Piper Alpha disaster and the oil price crash of the late 1980’s. Radical change was needed and it was discovered that the creation of small, dynamic, multi-disciplined teams managing each oil platform (the ‘asset’) with a full Life Cycle view, unleashes great creativity and massive improvements in performance, safety and productivity.
3. Meanwhile, in Australia and New Zealand, the public sector faced a ‘perfect storm’ of falling levels of service, escalating costs and poor planning. The public outcry forced a corresponding radical re-think, and the establishment of much better strategic planning, prioritization and value for- money thinking.
Background information not used during the research
BSI PAS55
BSI PAS 55 is the ‘publicly available specification’ for the optimized management of physical assets and infrastructure. It is published by the British Standards Institute. BSI PAS 55 was initiated by, and is now distributed and supported worldwide by, the IAM. It was originally published in 2004 and, after extensive international consultation, was updated and reissued in 2008. BSI PAS 55 specifies requirements for 28 aspects of good practice AM, from lifecycle strategy to everyday maintenance. It enables the integration of all aspects of the asset lifecycle, and provides a common language for cross-functional discussion. The specification defines what needs to be done, but not how. This allows companies to develop effective processes that reflect the challenges in their particular business.
However, BSI PAS 55 deliberately says nothing on ‘to what extent’ or ‘how well’ a business needs to develop its AM capabilities. The standard is a framework; an organization can address the requirements necessary to demonstrate compliance, but its processes for doing so can still be at a relatively low level of maturity. For the many asset-intensive businesses under pressure to deliver more for less, compliance with BSI PAS 55 is a good starting point, but compliance alone is unlikely to be enough. Good AM is also about implementing a culture of continuous improvement. (Lloyd, 2013)
BSI PAS55 is the base from the research, is therefore used during the whole research.