5 Biggest Risks to Effective Asset Management

Asset management as defined by the British Standards Institute:-

"The systematic and coordinated activities and practices through which an organization optimally and sustainably manages its assets and asset systems, their associated performance, risks and expenditures over their life cycles for the purpose of achieving its organisational strategic plan."

This definition includes assets of various types - be it physical, financial, human, information and intangible. They all contribute to the overall organizational strategic plan. Best practices suggest an asset management plan, comprising of the three main sections 'Operations', 'Maintenance' and 'Risk' be developed.

As such, there are at five main risks that most often contribute to an organization's failure to manage their assets optimally. This article will focus mainly on physical assets, but there is no reason why these ideas can't also be applied to other asset type categories

1. Not knowing what you have

Inside the manufacturing industry it's known as FDH; In layman's terms it's "Fat, Dumb, and Happy" approach to asset management. Whatever you want to refer to it as it's a form of complacency where an organization chooses not to take the time to manage, or even properly catalogue, the assets because it's not seen as being important. Maybe they've been lucky enough to get away with such lax practices or, more likely, they have no idea what real level of damage such practices are doing to their bottom line.

Obviously, remedying this situation is the first logical step in instituting a practical asset management program. Here are the essential steps required to lay the foundations for an efficient asset management system.

• Compile a list of organizational assets and verify these in the field.
• Use this to configure a physical asset hierarchy. Use ISO 142242 from the International Organization for Standardization as a guide.
• Link individual assets to how they affect the organizational strategic plan. Do this by developing and applying the criticality evaluation criteria, for the business, to your verified asset base.
• Implement a management change procedure to record and evaluate any future changes to the assets.

2. Over/Under-maintenance

During the asset's operational life cycle, level of maintenance can be an issue, as they can be both over and under maintained.

When it comes to over maintaining assets, there are usually two issues that reduce the management systems effectiveness. The first is the significant cost often associated with carrying out non-value-added maintenance. If this is the case, following well-documented industry benchmarks for maintenance spending can be used as a guide. Secondly, most organisations prone to over maintaining assets are likely to be performing intrusive maintenance tasks more frequently. This can lead to additional exposure risks, asset failures and more incurred costs.

The impacts of under maintenance on asset management efficiency are even more obvious. With cutting costs, and maximizing profit often being the sole focus, maintenance is often seen as a tempting area for cost cutting. Performance requirements of the asset, such as reliability and uptime, are often juggled with balancing overall costs. These cuts will often manifest in the form of maintenance delays, reduced skills training for staff, and inadequate or substandard tools for performing precise work.

The solution to both problems is to start with the most critical assets, determine the optimum maintenance requirements of each asset, then load the level of financial and human input required to implement the maintenance plan. Always ensure a relevant, skills-based training plan is in place to compliment this.

3. Improper operation

Many organizations lack an understanding of the design and operational capabilities of their assets which often leads to them being operated outside the design range, and at a far from optimal level. This can lead to a severe reduction in length of the asset life cycle. For example, an asset that was designed to run intermittently will be adversely affected if it is run continuously. Running an asset faster or slower than recommended will have a similar effect and may lead to cascading failures. If the asset operates in an improper way that could be indicated by using something like a temperature sensor or energy draw meter on a pump. That should then notify nominated responsible personnel.

The solution here is simple.

• find out how your assets should be run
• understand the effects of operating outside of design ranges
• if you can't operate within the ranges, understand the risks or mitigate the risk. Eg increase inspection frequency or customize maintenance routines.

4. Improper risk management

Risks associated with the ownership and use of the asset is one of the basic tenets of best practices asset management. Risk is a combination of the likelihood of an event taking place vs the consequence of an event taking place. AS such risk management takes place on 2 fronts – assessment/identification and management and control. When neglected, each area continues to contribute to ineffective asset management, while new problems are prone to develop as a result. This is where the ISO model comes in handy:--

• Establish context
• Risk assessment: Risk identification, Risk analysis, Risk evaluation.
• Risk treatment
• Review and monitor

5. Sub-optimized asset management systems

Unfortunately, compliance needs and the disparate requirements of different organizational stakeholders - added to inherent workflow inefficiencies - often negate many of the hoped benefits of enterprise asset management platforms and asset management solutions generally. The human element is an important factor and should not be undervalued or pushed aside. The premise of Asseti is that it enables the EAM to fulfil organizational requirements, with Asseti working agilely aside it to expedite asset reporting, identification, and rectification works, without additional administration demands.

Conclusion

All in all, efficient asset management optimizes your assets by providing an integrated approach. It starts with concept of design, moves through usage, and finally to decommission and disposal. Recognizing these 5 primary risks to productive asset management will allow you to mitigate and plan against their effects. If you do so correctly, you will be able to change each of them from being a potential fail into an opportunity for success.

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