The life of an asset is defined as the period from conception to end of life. Assets often pass through identifiable asset life stages. The naming of the stages differs between organizations. Asset life does not necessarily coincide with the period of responsibility.
Assets life cycle stages:
- Needs and feasibility assessments for assets;
- Concept design;
- Determination of asset solutions;
- Design of assets;
- Manufacturing or acquisition of assets;
- Installation and commencing;
- Utilization of assets;
- Maintenance of assets;
- Decommissioning, retirement, and/or disposal of assets.
The detailed structures of lifecycle stages are different at the three levels of physical assets: asset portfolio, asset system and individual asset. Also, different kinds of technological environments may demand for different kind of stage structure. The stages concept, solutions, design of assets can be replaced by acquisition of an asset. The costs, risks and asset performance are controlled across all the asset life cycle stages. Such controls consider optimization of risks, costs and performances at each stage.
The role of maintenance management contains two-way influence:
- The environment that influences strategies, plans and decisions and activities
- The strategies, plans and decisions on the assets.
The maintenance of assets must be an integral part of the management system. The maintenance activities depend directly from the organizations’ business and technological environments. The characteristic and objectives of an organization affect the requirements significantly asset management activities.
First, organizations’ objectives, strategies and economic and technological characteristics have a great influence on asset management and maintenance management (see Figure 1). Secondly, the specific features of the market where the organization is acting have impact on the requirements the asset management is facing.
In addition to the market, the stakeholders where the assets are located have political, economic, socio-cultural impacts (legislations, regulations) on the asset management requirements and solutions.
At the early stages of equipment lifecycle maintenance priorities differ from the priorities of the aged equipment. The role of maintenance management in the planning and decision making system is also influenced by the business and technological environments. The maintenance function should contribute to operation function in order to optimize operation and to meet safety and environmental requirements.
An asset management system is a set of interrelated or interacting elements of an organization, that establish asset management policies and objectives, and the processes needed to achieve those objectives. An asset management system includes the organization context (structure, roles, responsibilities), planning, operation, etc. An asset management system also requires performance evaluation and improvement.
Technological factors as construction, inherent dependability and economic life cycle stage of equipment, influence also on the asset management strategies and practices. The four strategic dimensions and influencing factors are utilized as input in strategic analyses and strategy process. The strategic process results in a set of requirements for assets. Indicators or measures can express these requirements.
The factors can be expressed in a more precise way using key performance indicators (KPI’ s). These KPI’ s can be used for internal purposes when developing the performance of the physical asset management and maintenance functions or when implementing benchmarking projects.
Determination of critical requirements on physical assets gives framework and basis for asset strategy formulation and planning. The physical asset management strategy and asset management plans can be derived straightforward from these requirements and controlled with KPI’ s. As soon as the asset strategy and asset management plans have been determined it gives direction to maintenance management. Therefore, as the next step it is possible to define maintenance strategies and maintenance plans and needed KPI’ s.
As asset management is an iterative process, feedback from maintenance management to asset management and further to strategic analyses is paramount. The iterative strategic process is carried out continually across the whole life cycle of assets and not only when new assets or assets systems or asset portfolio are acquired. Consequently, the maintenance strategy shall must therefore be adjusted along with changing requirements.
The aging of assets and therefore the increasing cost of maintenance are the main reason why asset management has become an essential part of organizations’ activities during the last decades. In addition there are also benefits, which can be achieved with asset management. More accurate long-term life cycle decisions related to the maintenance function, an integrated approach (assets, operation and maintenance) and an increased assessment of performance and control. Further benefits are being found through improved credibility in the eyes of stakeholders (regulators, customers and other). Asset Management can also results in more sustainable, continual improvement of processes.
Asset management is therefore defined as the life cycle management of assets to achieve the stated business objectives. Asset management focuses on the value that assets can provide to the organization. Value is organization specific and depends on the organizational context. That context has also a strong bearing on the type of assets that the organization operates and the management capabilities. The organizational strategic plan must sets clear short and long-term objectives and an approach for achieving these. Asset management objectives must be derived from these business objectives by taking into account the dynamics and speed of technological change that affect their activities.