Asset management Definition:
Asset management is an organisation’s coordinated activities to realise the full value of assets in delivering service delivery objectives. It is carried out over the whole asset lifecycle.
The four key stages of the asset lifecycle are:
- Planning: determination of asset requirements, based on an assessment of both service delivery needs and the capability of the existing asset base to meet these needs.
- Acquisition: procurement of assets to meet an identified service need, including the assessment of procurement options.
- Operation and maintenance: management and use of an asset to deliver services, including maintenance.
- Disposal: treatment of an asset that has either reached the end of its useful life, is considered surplus, or is under-performing.
Accountability: the attribution of responsibility for asset management activities.
Asset: an item or thing that has potential value to an organisation, and for which the organisation has a responsibility. For the purposes of the Asset Management Accountability Framework, asset does not include financial assets.
Asset management: the coordinated activities of an organisation to realise lifecycle value from assets in delivery of its objectives.
Realisation of value will normally involve a balance of costs, risks, opportunities and performance benefits. When asset outputs or required service levels are pre-determined and non-negotiable, or when value is negative (e.g. dominated by risks or liabilities), ‘realise lifecycle value’ may represent minimising the combination of costs and risks.
Asset management strategy: a set of agreed principles and actions that determines how an organisation manages its assets over a defined period of time.
Asset management system: a set of interrelated or interacting elements of an organisation that establish asset management policies and objectives and processes to achieve those objectives. A management system can address a single discipline or several disciplines. The system elements include the organisation’s structure, roles and responsibilities, planning and operation.
The scope of a management system may include the whole of the organisation, specific and identified functions of the organisation and sections of the organisation, or one or more functions across a group of organisations. However, an asset management system will normally realise greater value if it takes a cross-functional approach over the asset lifecycle.
Continual improvement: an ongoing effort to improve performance.
Functionality: the range of activities and functions an asset delivers.
Lifecycle: the period of value realisation from an asset by an organisation. There may be a number of lifecycles within an asset’s whole life. Lifecycle represents an organisation’s view of an asset, whereas whole life covers an asset’s continuing life history through potentially multiple cycles of ownership or responsibility (i.e. an asset for successive organisations).
Lifecycle costing: a key asset management tool that factors in the whole of life impacts of planning, acquiring, operating, maintain and disposing of an asset. It is a process that analyses the known costs over an asset or non-asset’s life to reflect the true overall cost of acquiring an asset.
Lifecycle processes: include identification of needs, creation or acquisition, utilisation, care and disposal, decommissioning or renewal.
Non-physical assets (intangible assets): are identifiable non-monetary assets without physical substance. They are generally long-term resources of an organisation and derive their value from intellectual or legal rights, and from the value they add to the other assets. Common examples include patents, copyrights, trademarks, designs, computer software and licenses.
Organisation: means any public body or Department.
Physical assets: comprise land, buildings, infrastructure, plant and equipment, cultural collections, natural resources and information and communication technology (ICT) assets.
Real option: the right–but not the obligation–for an investor to undertake certain business initiatives and actions in the future to optimise the opportunities and risks of an investment over its lifecycle and mitigate the risks that an investment will be regretted. Real options do not eliminate the change of regret but seeks to limit the extent of the regret.
Risk: the effect of uncertainty on objectives.
Risk management: the coordinated activities to direct and control an organisation with regard to risk.
Useful life: the period over which an asset is expected to provide the organisation with service.
Utilisation: how intensively an asset is being used to meet the Accountable Officer’s service delivery objectives in relation to the asset’s potential capacity.