Asset Management
Asset Management is defined in the International Infrastructure Management Manual as “the combination of management, financial, economic, engineering and other practices applied to physical assets with the objective of providing the required level of service in the most cost effective manner”.
In the water industry this covers water, wastewater and stormwater assets and is the professional management of water authorities’ assets to meet specified financial or customer service goals for the benefit of the authorities’ stakeholders. Stakeholders may be governments, businesses, customers, contractors, consultants and NGO’s.
The term asset management is often used to refer to the financial and/or operational management of individual assets or collections of assets termed systems (i.e. disinfection system). Asset management generally requires finding the answers to six basic questions, “What assets are owned”, “What are they worth”, “What condition are the assets in”, “What is the remaining service life of the assets”, “What risk is associated with each asset” and ”What should be fixed first”.
A key function of asset management is the development of a set of integrated investment strategies that represent a careful integration of operations, maintenance, and capital investments which collectively reflect the lowest projected total cost of ownership over the effective life of the asset or assets commensurate with risk, customer service and performance goals.
Content Table
Levels of Asset Management
Asset management has evolved over recent years and now has different levels of sophistication ranging from, “Condition based asset management”, “Performance based asset management”, “Service based asset management”, “Risk based asset management” and more recently “Sustainability based asset management”, with each level of sophistication requiring increasing levels of data and predictive management tools to allow the appropriate decisions to be made. As a consequence of this evolution more recent asset management philosophies do not focus directly on managing assets as an output, but instead seek to deliver appropriate levels of service to customers and minimize risk in the most cost effective manner.
condition-based asset management
is focused on using expenditure to maintain ‘what assets are’ (the condition they are in). This is a natural approach for engineers to adopt; if the condition is poor, the asset needs maintenance/investment to rectify defects.
performance-based asset management
focuses on ‘what assets do’ in a local sense; that is, the question is posed, “is the asset doing the job that it was intended to?” (This is a question that can often be related to the asset’s condition, but may not be.) If not, maintenance and/or capital investment are required. Again, this is a natural way for engineers to consider management of assets.
service-based asset management
is a more customer focused approach and performance is not viewed in terms of local considerations (the design intent of individual assets), but instead is considered in more inclusive terms and at a higher level. The question is posed, “is the asset contributing appropriately to the delivery of service?” This consideration is made independently of asset condition or its performance relative to design intent.
Service-based asset management thus seeks to maintain the service provided by the asset stock at both the local and regional level, with due consideration given to equitability issues (usually couched in terms of minimum levels of service). This approach is less intuitive for engineers, since it can mean that maintenance/investment is not always justified for poor condition assets or even poor performing assets where the impact on service is acceptable.
Risk-based asset management
seeks to achieve optimum life cycle management of assets through consideration of risk to service provision, with risk generally being defined as the product of ‘probability of failure’ and ‘consequence of failure’. The condition and performance of an asset are simply factors in the assessment of risk. Other factors taken into account include business risk factors such as those associated with safety and the environment, customer expectations, reliability, efficiency and effectiveness, finance, reputation and regulatory relationships.
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This article was created by:
Professor Stewart Burn
Senior Principal Research Scientist
Research Program Leader | Urban Water Systems Engineering
Research Stream Leader | Advanced Water Treatment
CSIRO Land and Water
