Principles of Asset Management

By Styles and Earp

Aimed at utilities in developing countries, SAMS, Simplified Asset Management Systems detailed an effective framework for anyone seeking to develop a low-cost asset management system for their physical assets. Based on worked examples it focused on the procedures necessary for the capital maintenance of infrastructure assets. This second publication seeks to extend that work into new areas and goes on to show how the basic principles can be applied to functions other than infrastructure. In contrast to other more formal publications on asset management, it concentrates on the practical aspects using worked examples to guide you through the process of producing a successful asset management system.

• Language: English
• Publisher: AuthorHouse UK
• Release date: Nov 29, 2021
• ISBN: 9781665594097

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ISBN: 978-1-6655-9410-3 (sc)

978-1-6655-9409-7 (e)

Published by AuthorHouse 11/25/2021

The authors have asserted their rights under the Copyright, Designs and Patents Act, 1988.

Thanks to Alan Sutton for his comments and valuable insights.

Thanks to Wayne Eddy for his thoughts on asset lives.

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All accredited photographs are via Creative Commons, to whom a donation has been made:

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Also by Peter W Styles (as Stilovsky and Schrodinger)

Hoggrills End published December 2017

The Power of Numbers published January 2018

The Power of Names published May 2018

The Power of Notes published September 2018

The Power of Words (1) published December 2018

Power Quiz ’18 published January 2019

Power Quiz ’19 published March 2019

Power Quiz ’17 published July 2019

The Power of Words (2) published March 2020

The Power of Words (3) published May 2020

The Power of Dreams published July 2020

SAMS, Simplified Asset Management Systems published December 2020

Contents

Abbreviations

Foreword

Introduction and Background

GRAMS – A Generic System

Utilities

Water Supply

Dams

Wastewater

Gas

Electricity

Telecoms

Postal Services

Waste Management

Weather Forecasting

Transport Infrastructure

Highways

Railways

Bridges

Airports

Docks and Harbours

Rivers and Canals

Digital – Hardware and Software

Mobile Assets – Ships, Aircraft, Cars and Vans, Lorries, Mobile Plant etc

Property – Land, Buildings, Housing, Retail and Catering, Stadiums

Land

Buildings

Housing

Retail and Catering

Stadiums

Financial – Stocks and Shares, Funds and Pension Funds, Currencies

Stocks and Shares

Funds and Pension Funds

Currencies and Corporate Bonds

Military Hardware – Ships, Aircraft, Tanks, etc.

Healthcare

General Practice

Hospitals

Paramedic Services

Care Homes

Human Resources – Employees, Employers and Contractors

Employees

Employers

Contractors

Education

Primary (Key stage 2)

Secondary (Key stage 4)

Sixth Form (Key stage 5)

Degrees and Technical

Appendix 1 – Asset Lives

Appendix 2 – Costing and Valuation

Appendix 3 – Investment Planning and Project Appraisal

Appendix 4 - Strategic Planning

Appendix 5 – Maintenance and CMMS

Appendix 6 – Criticality and Risk Management

Appendix 7 - Disaster Planning and Asset Management

Appendix 8 - Grading Systems and Maturity Scales

Appendix 9 – Sample AMS Manual

Appendix 10 – Standards

Appendix 11 Other Sites and On-line Publications

Abbreviations

Foreword

Around 100 AD Frontinus, the Governor of Britain, returned to Rome where he was made responsible for the aqueducts that provided the city’s water supply. He applied his military training to the problem and had drawings produced of each aqueduct so that, when problems arose, he did not need to ride out to inspect them personally. He discovered that one of the aqueducts supplied water that was too brackish to allow it to be used for drinking water and instituted a campaign against illegal connections along the length of each aqueduct. He measured the quantity flowing down each aqueduct and discovered that the water sellers who distributed the water from the terminal reservoirs had been defrauding Rome for hundreds of years - the quantity being delivered was approximately twice what they claimed to have sold. He can perhaps lay claim to be the first asset manager although he would not recognise the term.

Today asset management has developed into a sophisticated study of the condition and performance of long-life assets usually owned by utilities or other asset rich organisations. The availability of computers has allowed the large amounts of data to be analysed and modelled and the application of data mining tools and artificial intelligence will contribute to further sophistication.

The sheer scale of the possibilities is enormous and can prove daunting for those organisations who have not yet entered the fray but realise that their shareholders and/or regulators are expecting a more numerate approach. I am delighted therefore that two of my former colleagues have sought to address this issue and have produced this book and its predecessor to provide a low-cost starting point for those who wish to enter this ever-more complex world. I do emphasise that this is the low-level entry point; further complexity can be added as the user understanding develops.

The authors have also extended their horizons and added several chapters in the second half of the book to indicate where they believe that other organisations might find benefit from the methodology outside the world of infrastructure. I can offer no advice on the suitability of these proposals; it will be for others to decide whether or not they are beneficial. At present it is far too early to make any judgement.

The benefit of asset management for long-life utility assets is often questioned. For those who doubt the need, I would simply draw their attention to the poem by Percy Shelley Ozymandias of Egypt (Ozymandias was another name for Ramses II). It tells the story of a traveller who finds the remains of a statue in the Egyptian desert. Around the base of the statue is the inscription My name is Ozymandias, King of Kings, look upon my works ye mighty and despair! Clearly the statue had been erected, some 1200 years before Frontinus, to strike fear into all who saw it. The denouement comes in the final stanza Nothing beside remains. Round the decay of that colossal wreck, boundless and bare the lone and level sands stretch far away.

The irony is clear while, when it was built, the statue and surrounding city would have struck fear into the heart of a visitor, today despair arises from the transience of physical assets. Perhaps a suitable warning to all who believe that there is no need for formal management of long-life assets.

Professor John K Banyard, OBE, F.R.Eng.

Introduction and Background

Asset management can mean different things to different people. If you Google it, you will find many trying to sell you their services in order to manage your finances, especially your stocks and shares; this is financial asset management. There are also many who use the term, especially in the field of IT to ‘manage’ portable assets such as laptop computers in order to know who has them, where they are located, and what software is mounted on them. Fleet managers are known to use similar systems to keep tabs on the vehicles in their care. Our starting point though is ‘infrastructure’ asset management and all that implies.

The concept of an asset to which asset management practices can be applied has broadened over time. This is evident in the evolution of the asset management standard from PAS 55 to ISO 55000 which now defines an asset as something that has potential or actual value to an organisation. This definition is accepted as extending asset management from physical assets to encompass non-physical assets as well. Asset management is also now seen as being a fundamental element that touches all parts of a business and the service it delivers to customers.

By establishing the Principles of Asset Management we have gone further still. In distilling the core concepts we explore whether the same principles could provide an insight into areas that traditionally don’t take such an approach, including service-driven industries and other functions such as finance and human relations. Whilst these don’t have tangible assets in the same manner as infrastructure, they do consist of elements that have value to an organisation. For example, many businesses would consider their staff as their most valuable asset - what would a Premier League football club be without its players? So, what follows is a series of related systems, practices and procedures which enable us to keep tabs on a company’s assets in order to ensure that they continue to perform the required tasks, thus enabling it to deliver and improve its services to its customers.

As we apply PAM to a range of industries and functions a pattern emerges. The central concept of assessing condition and performance, using a five grade model, can be regarded as a ‘way of thinking’ that can be applied to our everyday lives. We provide an objective way of assessing items such as your own home or your financial assets. We demonstrate this in the later sections of the book which we hope you will find thought provoking and a way of assessing the world around you from an entirely new perspective.

So, who is this book aimed at? If your business has assets, tangible or intangible, and you’re considering how to maximise their value, then PAM offers a pragmatic starting point. If you work in an industry or function that traditionally applies its own methodologies, then PAM offers an alternative and challenging view. If you’re simply curious about how core asset management principles could be applied to our everyday lives then we hope that you find our examples interesting and useful.

Most of the chapters are in a similar format which relies on the standard methodology (GeneRic Asset Management Systems or GRAMS for short) for some of the detailed content. Other chapters, such as those concerning the water industry and highways, have been previously published in more detail. Cross reference is made to their publication rather than duplicating it. Apologies if this doesn’t seem logical but don’t let it worry you. If you decide to use the framework of our methodology for your own purposes, then you will soon need to further develop it into a level of detail similar to that for water or highways. Either way, you have a head start on those starting from scratch.

"Why have an Asset Management Plan?

‘Asset Management Planning’ improves the management and maintenance of essential assets in businesses and the utilities sector whilst increasing the effectiveness of management. It improves equipment reliability whilst maximising efficiency and output. This in turn helps to reduce unexpected large maintenance or replacement costs and avoids inconvenient outages caused by ageing infrastructure. A plan, based on a sound ‘Asset Management System’, will improve customer service, provide an understanding of risk and increase the organisation’s return on its investments.

Many systems, often based on standards such as PAS 55 or ISO 55000, are required to have high-level practices and procedures in place which can take over the whole life of the company. However, these systems can result in the loss of contact with the ‘customer’ who, in the long run, is the one who matters most. You might not know how to define ‘performance grades’ or ‘condition grades’ (yet) but, without them, the whole point of the exercise is lost. This is why they are at the heart of our book – Principles of Asset Management.

To be clear - the term ‘asset management planning’ is the set of actions required to carry out the function of ‘asset management’ and should result in an ‘asset management plan’ (AMP). The ‘asset management system’ (AMS) is the set-up which runs things. They are often confused without too much bother.

This book seeks an alternative approach – that of self help. It contains a set of simple-to-follow steps which should enable anyone to produce an effective asset management system without recourse to specialized consultants. It is predicated on the principle of ‘let’s do it like this’ rather than on lofty statements of requirements. After completing the basics, you should understand The Principles of Asset Management and be able to decide whether you need to get help with accreditation.

All that is required is a small basic staff, possibly even just one person, though two is always better, with a strong commitment from management to compile a working system. All of it can be done on a PC with commonly used software though a database may be preferred to a series of spreadsheets. Either way, data collection should be completed in spreadsheets and, if required, it can be migrated to database software at a later stage. Keep it simple!

One key factor is the commitment of management as all departments with physical assets are required to participate when their area of business is under consideration. Some organisations take a top-down approach and others work from the bottom up. Having had experience of both structures, we are strongly inclined to integrate asset management into the organisation rather than create a top level function into which others report.

You will make mistakes along the way but they should be minimal and should not involve great expense as long as only your time is involved. Most of these procedures were based on simplified versions of the more complex ones that were used by a major water and sewerage company but, if you only have three weeks to teach a system in a developing country, then simplicity is the key factor. Best skim through to the end before embarking on surveys as this should avoid you having to repeat steps which should be taken in the strict order herein.

One more word of explanation as many ask the simple question – "what’s the difference between ‘asset management’ and ‘maintenance’. The answer is fairly simple. Maintenance is the series of tasks which we undertake on a day-to-day basis to keep things running and repair them when they do go wrong. It is funded from regular income and is thus a ‘revenue’ function. Asset management is concerned with the future of the assets and requires a long-term plan to look after them. It is usually funded from borrowing to avoid shock loading of the finances and is thus, a ‘capital’ function.

Evolution of asset management

Following publication in the 1970s of a government report – Taken for Granted - followed by a number of damning papers and articles, the state of the sewers in the UK became a hot topic and investigations were undertaken to determine the scale of the problem. As an aid to ranking the condition of individual pipelines, the Water Research Centre (WRc) produced The Sewerage Rehabilitation Manual and appended a wall chart of CCTV stills indicating typical conditions of gravity sewers. These were ranked and, over time, became the basis of the accepted 1-5 condition grading system that most asset managers use today. As computer programs were developed to design and analyse sewer systems, the grading system was applied to the performance of pipelines according to whether they could carry the required flow. These considerations were brought together in the development of ‘drainage area studies’ which formed the basis for the UK’s sewer strategies.

Following these beginnings, a broader view of asset management (AM) was pioneered in New Zealand and Australia in the 1980s and has been adopted by a number of