An asset management plan serves as the cornerstone for an effective asset management system. These plans provide a road map for organizations to understand their objectives and long-term asset management strategy.
In this blog, you’ll learn the five steps to effective asset planning, from completing an asset inventory to financial planning.
Step 1. Complete an asset inventory
You can’t effectively manage your assets if you don’t know what assets you have! Before constructing your plan, you must take a close look at your assets by conducting a complete asset inventory. This will serve as the basis of your plan. In the inventory, include:
- What assets you have
- Where they are
- What their values are
- When they were built or bought
- What their expected life-cycles are
Step 2. Calculate life-cycle costs
In order for your plan to be as accurate as possible, you need to calculate your assets’ entire life-cycle costs, not just how much they cost at initial purchase. During an average asset’s life, there are many opportunities for added costs, like maintenance, capital, condition and performance modeling and even disposal costs. Remember: your asset management plan is only as accurate as your life-cycle costs.
Step 3. Set levels of service
Use levels of service to outline the overall quality, capacity, function and safety of the different services your assets provide. The requirements of maintaining that service will dictate the operating, maintenance and renewal activities that need to occur moving forward. To access levels of service, think about:
- The level of service you’re currently providing
- How that level of service is expected to change
- The annual cost of current service
- If there is funding to support any change in service
- If your current level of service is meeting to needs and expectations of users
Step 4. Apply cost-effective management
Are you managing your assets in a proactive or reactive manner? In most cases, proactive management is more cost-effective in the long-run than reactive management. For example, if you wait until there is a bad pothole on one of your streets before performing road maintenance, you can end up spending more money than if you proactively conduct road maintenance over time. You’re practicing cost-effective management when you do the most cost-effective maintenance, repair or replacement at the right time during the entire asset life-cycle.
Step 5. Execute long-term financial planning
Your asset management should naturally translate into long-term financial planning. A long-term financial plan will help you determine which of your objectives are feasible, which are important and which can maintain your priority assets over the long term.