A guide to plan, acquire, maintain, operate, renew and dispose assets.
Asset management is a systematic process to guide planning, acquisition, maintenance, operation, renewal and disposal of assets in order to maximise the asset service delivery potential and to manage involved risks and costs. In the water sector, asset management means to monitor and maintain facilities and systems. An asset management policy provides the framework for such a management system from procurement to disposal.1 Asset management is a scalable approach that can be implemented by organisations of any size.
PURPOSE & LINK TO INTEGRITY
Asset management ensures accurate asset accounting by tracking, unitising and capitalising assets. By doing so, asset management can help the organisation to yield better performance and to increase the reliability of the asset portfolio at reduced cost. It can improve the maintenance, and helps to identify and correct errors and failures with the objective of providing the best possible service to users and customers, and ensuring that installations achieve a good return.2
Putting sophisticated asset management systems in place will minimise the risk of opportunistic theft or loss due to lack of monitoring. Ensuring that assets are managed properly decreases the risk for fraud and furthermore ensures that assets can be utilised effectively and throughout their entire life span.
- Does your organisation possess sufficient knowledge on asset accounting (e.g. depreciation schemes etc.)?
- Does your organisation have investment planning tools in place to evaluate investments in new assets?
These core questions can help to develop any asset management policy and system:3
- What is the current state of my assets?
- What is my required “sustainable” level of service?
- Which assets are critical to sustained performance?
- What are my minimum life-cycle costs?
- What is my best long-term funding strategy?
A well-performing asset management programme incorporates detailed asset inventories, operation and maintenance tasks, and long-range financial planning to build system capacity. Depending on the type of assets that the organisation possesses, an asset management system could cover the following domains:4
- An assets register should be established with an entry or record for each item. Each asset should be tagged with a unique reference number for identification purposes. The register should record important information about each asset, such as: where and when the item was purchased and how much it cost, where it is held or located or how much it is insured for (including serial numbers details of guarantees or warranties). The depreciation rate and method can be included where relevant. The record sheet should also state who is responsible for its maintenance and security. The assets register should be checked by a senior manager or committee member every quarter and any discrepancies reported and appropriate action taken.
- Every organisation that owns vehicles should have a vehicle policy. This will set down the policy on a range of issues such as: depreciation, insurance, purchasing, replacement and disposal, maintenance and repair, private use of vehicles by staff, what to do in case of an accident, driver qualifications and training, carrying of passengers, etc. The costs of repairs and replacements must also be adequately reflected in the budget process.
- Asset management also includes the proper management of buildings and infrastructure – which is, of course, more complex. The aim of asset management is to ensure that infrastructure is maintained properly, in order to remain functional as long as possible. This can, for example, be achieved with a maintenance contract for which a realistic budget must be provided.
- For non-fixed assets it is important to maintain inventory systems, accounting controls and record keeping systems.5
Each utility is responsible for ensuring that its system stays in good working order, regardless of the age of components or the availability of additional funds. Asset management programs with good data—including asset attributes (e.g., age, condition and criticality), life-cycle costing, proactive operations and maintenance and capital replacement plans based on cost-benefit analyses—can be the most efficient method of meeting this challenge.6
You might also consider getting ISO certification. The International Organization for Standardization (ISO) is a worldwide federation of national standards bodies. The following ISO standard is applicable for this tool:
ISO 55000:2014 Asset management – Overview, principles and terminology (http://www.iso.org/iso/home/store/catalogue_ics/catalogue_detail_ics.htm?ics1=3&ics2=100&ics3=1&csnumber=55088): ISO 55000:2014 provides an overview of asset management, its principles and terminology, and the expected benefits from adopting asset management. It can be applied to all types of assets and by all types and sizes of organizations.
KEY GUIDING DOCUMENTS
EPA, 2008, Asset Management: A Best Practices Guide, United States Environmental Protection Agency (EPA)
ORACLE, no year, Oracle Utilities Work and Asset Management. Optimize Work Performance and Asset Management, ORACLE, http://www.oracle.com/us/products/applications/utilities/business-solutions/work-asset-management/overview/index.html, accessed 02.12.2015
WikiHow, no year, How to Develop a Strategic Asset Management Plan, Wiki How, http://www.wikihow.com/Develop-a-Strategic-Asset-Management-Plan, accessed 02.12.2015
BMC Software, no year, Automated IT Asset Management. Maximize organisational value using BMC Track-It, BMC Software, USA
Tweed Shire Council, no year, Asset Management Policy Version 1.4, Tweed Shire Council, Australia
- Tweed Shire Council, no year, Asset Management Policy Version 1.4, Tweed Shire Council, Australia
- ORACLE, no year, Oracle Utilities Work and Asset Management. Optimize Work Performance and Asset Management, ORACLE, http://www.oracle.com/us/products/applications/utilities/business-solutions/work-asset-management/overview/index.html, accessed 02.12.2015
- EPA, 2008, Asset Management: A Best Practices Guide, United States Environmental Protection Agency (EPA)
- MANGO, 2012, Financial Management Essentials – A Handbook for NGOs, Management Accounting for Non-governmental Organisations (MANGO), UK
- Nordmann, 2012, Deepening Governance in Water and Sanitation Services; Discussion Paper for Water Services Regulatory Board, Kenya
- EPA, no year, Asset Management, United States Environmental Protection Agency (EPA)