Better Asset Management and Its Financial Rewards

Asset managers have long been faced with the challenges and costs concerning asset management implementation.

Still, throughout the years’ asset management (AM) has revolved from a “reactive” and “segmented” to one that uses an integrated and holistic approach.

The IPWEA article, “Opinion: Why better asset management matters,” explains how organizations are better off financially when applying a holistic asset management approach.

It also cites research findings showing that asset management is linked to the health and maintenance of assets and their financial fortunes in the medium to long term.

The article explains how asset management evolved ten years ago when the first plans came out.

According to Jacqui Hansen, Senior Adviser in Asset Management at IPWEA, the first plan looks like a campaign for more money to be invested in infrastructures, even though these aging infrastructure is still working – something that puts off councils.

Another past error is using a ‘reactive’ approach where asset managers are busy “putting out fires” when infrastructure fails instead of looking at it in a “broader context.”

Hansen says that if an organization wants to have better control of its finances, it should take a more enlightened and modern approach.

According to Hansen, “organizations are learning to tell a more truthful story in their asset management plans.” She said that “they now document their assets, consider the condition of the assets and assess the future demand and risk associated with assets, giving their organizations the ability to be more financially self-sufficient and to increase the lifespan and value of their assets. They find the people they need to do this.”

Aside from the obvious financial rewards of applying asset management, the transparency that follows from its implementation will encourage stakeholders and local communities to participate and even invest in infrastructure initiatives and projects – something that would it easier for councils to secure funding.

When it comes to implementing a holistic approach to asset management, the article says that some of the world’s leading infrastructure organizations “struggle to implement even basic predictive maintenance techniques effectively.

They are also facing mushrooming costs to maintain and replace aging assets while dealing with increasing demands for capacity and reliability” because asset management techniques are not fully understood yet.

The United States has an estimated US$2 trillion worth of underutilized assets because of failing to integrate asset management into its system fully. The article says that many studies support that financial success follows when organizations adopt fully integrated asset management strategies and establish interrelationships among assets.

Another critical element to the success of implementing AM to any organization is when it has the right culture that promotes understanding of the vital role of asset management and one that encourages training of its staff to understand the many facets of asset management.