asset management

How to Go From Crisis Management to Asset Management

Proactively manage the facility and maximize the return of your assets.

By James Piper, P.E.  

Facility managers are responsible for the operation and well-being of a wide range of physical assets within their facilities. Some of these assets may be brand new or relatively new. Others may be years or even decades old. Some will have long-rated service lives, others will have relatively short ones. Practically all will have at least some maintenance requirements. 

Not all assets are equally important to the operation of the facility. While the failure of most individual assets will be little more than a blip in the operation of the facility, failures in certain critical assets can result in a halt in operations, or put the facility itself and its occupants at risk. 

Without a comprehensive approach to managing these assets, facility managers often find they are spending their time jumping from crisis to crisis. While this approach may solve the issue at hand and keep things running, it does not allow managers to look to the future and decide the best course of action for a particular asset when issues arise. 

One of the biggest factors that contributes to this management by crisis approach is that few managers know the entire scope of the assets that they are responsible for. While they may know in general terms what they oversee, not many know the details. For example, how many facility managers know the number of HVAC systems that are installed in the facility? What is its age and condition? Who is the manufacturer? What areas do they serve? It is this type of information that can help managers make better decisions. And without that information, managers may be focusing on the wrong issues.

A comprehensive asset management program offers an alternative to this crisis management approach. Facility asset management examines all of the assets within the facility and establishes a program to maximize the return on those assets. It is a cradle-to-grave analysis that covers the entire life-cycle of an asset, including design, construction, operation, maintenance, replacement, and decommission.

Facility asset inventory

One of the most important steps in managing a facility's assets is understanding just what a facility asset is. In the financial world, an asset is something that has actual or potential value to the organization. It can be physical or non-physical and often includes intellectual property. For facility management, a narrower definition is needed. Facility assets include all items owned by the facility that provide a benefit to the operation of the facility. This includes, for example, all land, site improvements, buildings, mechanical systems, electrical systems, utilities, computers and office equipment, and vehicles. 

For each of these categories of assets, a detailed inventory must be developed. It is not enough to just say that an entire building is an asset, as different physical components of the building will have different service lives, different values, and different impacts on operations. Therefore, general categories, such as the building, must be broken down into individual components. For example, an inventory of building exterior assets would include such items as the roof, gutters, exterior walls, windows, doors, and light fixtures.

A general rule of thumb to follow when identifying what items are to be included in the facility asset inventory is all items that must be maintained on a regular basis, any item that would cause significant disruption to operations should it fail, and any item whose replacement exceeds a certain dollar value. That value depends on the size of the facility and the type of operations being performed in it. For most facilities, it typically ranges between $1,000 and $5,000. 

Identifying what to include in the facility asset inventory is only the first step. Managers must also collect basic information on each item. For mechanical and electrical components, this would include the manufacturer, the model number, its capacity, the area it serves in the facility, and any other information that would assist maintenance personnel. Similar data will need to be gathered for other assets.

Practically all components in a facility have a rated service life. Therefore, if managers are to project when a particular component will need replacement due to age, it is necessary to identify the age of the component and the estimated remaining useful life. While age is not the only factor to consider when estimating remaining service lives, it gives managers a starting point.

Each component in the facility asset inventory must also have its current condition assessed. While condition assessments are somewhat subjective, managers will have data to go on. Start with the maintenance history. Has it required frequent maintenance? Is the level of maintenance increasing? If replacement parts are required, are they still readily available from the manufacturer or supplier? 

The condition assessment must also consider the aesthetics of the component. A component may be in acceptable condition and still need replacement if it no longer supports the image that is desired for the facility. 

Another factor to consider when conducting the condition assessment is the usefulness of the item. As facilities evolve and their operations change over time, components installed for a specific function may no longer be needed, yet they continue to be maintained. They are there simply because they have always been there. When conducting the inventory, identify components that are no longer necessary and can be readily removed.

Similarly, changes in operations may have resulted in different needs that are not adequately supported by the existing assets.

Finally, the facility asset inventory must include an estimate of the cost to repair, restore, or replace each item included. Those costs should include all related expenses, including design, engineering, permits, project management, installation, and disposal.

Asset management software

Compiling an inventory of a facility's assets is a major effort. Keeping that inventory up to date can be overwhelming. Fortunately, there are a number of software packages that have been developed specifically for facility asset management. 

Each type of software allows for the centralization of all data related to the assets. Asset histories, maintenance tasks, maintenance costs, warranties, depreciation; all are readily tracked by the software allowing managers to schedule maintenance activities and to identify upcoming asset replacement requirements and costs. To be most effective, managers must select the software that is best suited for their facility operations.

Start by looking at how difficult the software will be to implement. Packages are available with a wide range of capabilities. Not all facilities need all of these capabilities. Identify what your asset tracking needs are and then compare that to the capabilities of the software. In general, the more features that the software package offers, the more complex the implementation and operation of the program. 

Have the people who will be using the software try a demonstration of the package. Is the user interface intuitive and easy to work with? If the system is too complex and difficult to learn, it will not be used effectively.

Avoid tunnel vision. While you do not want an overly complex system, you also do not want one that will limit your options in the future. Facilities are not static. As they change, managers will find that their information needs also will change. Additionally, as managers get comfortable using the system, they will find that it can be used in ways that were not envisioned initially. The asset management software must be able to meet those changing needs. 

Demonstration packages and site visits are a good starting point when evaluating asset management software, but they are not sufficient. Managers also need to talk to other facility managers who are already using the system. What has their experience been? Does the software live up to its billing? Are those who regularly use the software happy with it? What is the level of support from the application developer after the sale? Are periodic upgrades made to the software? How difficult are they to implement and how expensive are they? It is the recommendations of users that will provide managers with the best understanding of the value of the software and its suitability to the facility.

Developing the plan

The facility asset inventory will identify what significant assets the facility has, their condition, and when they are most likely to need replacing. That information must now be compiled into an action plan. The asset inventory listing will lay out anticipated future costs by year; costs that may or may not match anticipated budgets.

Being able to project asset facility funding requirements well into the future will allow managers to develop plans and budgets for asset maintenance and replacement. And by doing so, the focus of their operations will shift from responding to crises to one that evolves around planning and scheduling.

A facility asset management program is an effective planning tool that will help managers make better decisions; decisions that are based on data and evidence rather than emergencies and failures. And by doing so, it helps managers and owners derive the greatest benefits from their assets over the life of those assets.

James Piper, P.E., is a national facilities consultant based in Bowie, Maryland. He has more than 35 years of experience with facilities engineering, maintenance and management issues.

Contact FacilitiesNet Editorial Staff »

  posted on 9/10/2021   Article Use Policy

Related Topics: