Asset Management Plan (Part 3 of 4): 5 Ways to Unlock Value for Your Assets from an AMP
Welcome to Part Three of our Asset Management Plan Series. We previously covered 13 elements of a successful Asset Management Plan implementation; and explained how to meet 3 types of stakeholder requirements with your Asset Management Plan (AMP).
The elements and stakeholder requirements of asset planning and management are important. However just going through these motions, collecting / producing the right asset management activities and evidence is not enough. Without a value-oriented approach, your Asset Management Plan will become ineffective because the primary purpose of asset management is the “coordinated set of activities to deliver value” as per ISO55000 / ISO55001 / ISO55002.
As many people in the private and public spheres increasingly move to contractual models of asset management, taking on asset management responsibilities on behalf of the asset owner, this too adds an additional layer of complexity in unlocking value for your assets from your AMP. This is because an area where one party may derive a contractual value realisation from an asset, may in turn be detrimental to the asset owner realising value from their assets.
If you are currently facing difficulties in unlocking value for your assets from your AMP, this blog will show you 5 ways to take your AMP to the next level.
Ready to learn more? Keep reading!
Diagram – Unlock Value from Your Asset Management Plan
1. Objective Management
As we mentioned above, many private and public asset owners increasingly move to contractual models of asset management. Contractual asset management organisations, though they may be ‘contractually compliant’, may not be able to maximise the asset value for the asset owners(s) they are supporting. The differences in the asset management capability and expectations can limit the value the contractual asset managers unlock for the asset owners.
If the asset owner seeks a potential contractual asset manager purely for the lowest cost year on year for Reactive and Corrective Work, they will lose opportunities to realise full value from their assets in terms of:
- Improving their asset condition
- More effective asset configurations
- Energy and maintainability efficiency
- Return of investment value to their key stakeholders/investors.
Therefore, Asset Owners need to build into their contracts objectives that drive a cost optimisation model which incentivises their contractual asset managers year on year improvements of their asset portfolio in terms of:
- Cost to maintain
Contractual Asset Managers, on the other side, can set themselves apart from the competition by investing into their organisational systems and people the capability that:
- Achieves the asset objectives
- Enables unlocking value to current client
- Entices potential clients.
This goes beyond looking for the cheapest Work order (preventative/corrective) but enables the long-term value realisation of your client assets.
2. Leadership and Alignment
Drawing from the ISO55000 asset management fundamentals, much has been said about the importance of leadership and alignment in asset management. However, more can be said what this looks like in practice.
Good asset management leadership is more than buzzwords and catchphrase repetition from ISO55001 and other asset management standards. Good asset management leadership is about EFFECTIVE ORGANISATIONAL WIDE ENGAGEMENT AND COORDINATION of asset management. This is the way you will unlock asset management value.
Nothing will increase the value of your Asset Management Plan in this area than leaders who walk the walk AND talk the talk. Asset Management leadership must be both, transparent, engaging and obvious. If not, then the AMP will not have the support to achieve the desired outcomes and value.
Alignment, in a nutshell, means everyone is on the same page or working towards the same values. Therefore, when the Asset Management Plan is written, it must hold far more weight than the paper it’s written on. The organisational values must be expressed by the people doing the work.
For example, the tasks of the asset manager or asset management planner must have alignment with Leadership. Conversely, leadership must be aligned and ready to provide the resources (HSEQ, Finance, ICT, Commercial, Legal) to support deliver asset management value. This is even more critical if you are ISO55001 certified and the key underlying principle that must be demonstrable is the value being realised by the asset management activities.
3. Concept, Design, Planning and Creation
Concept, design, planning and creation is about ensuring you have an asset management framework for successfully supporting the desired outcomes of your Asset Management Plan. Concept, design, planning and creation is an asset management planning process which starts with the objectives of your Strategic Asset Management Plan (SAMP). Your SAMP objectives (your asset management values) must be transparent in your AMP. Your SAMP should also be supported by your asset management framework with a clear focus on the concept and design activities in the asset management planning process that will unlock value of assets.
An organisational concept, design, planning and creation process needs to be consistent with what your organisation wishes to achieve. For example, if you are wishing to reduce reactive work orders:
- Your SAMP should note this as an objective derived from the Asset Management Policy.
- The Asset Management Framework notes the activities required to deliver this objective via the asset management planning process.
- The AMP has key KPI’s set to monitor this objective.
In summary, to unlock value from your AMP, the organisational Concept, design, planning and creation needs to have the required activities within the Asset management framework to enable value to be realised.
4. Operations and Maintenance
Operation and Maintenance is where 100% of the objectives set in the front end will (or won’t) be realised in terms of asset management value. To ensure value is realised from your Asset Management Plan at this stage, the objectives need to be set and championed in your operations and maintenance teams for:
- Quality and timeliness of any contractor you use to perform operations and maintenance
- Response times to reactive works
- Quality of data captured in preventative works (hour required, condition assessment)
- Clarity and usefulness of reporting of assets
- Clear operational level financial performance link to whether the expected outcome in the AMP is being achieved during operations and maintenance
Having these operations and maintenance areas identified and actioned in your Asset Management Plan, it will make sure the desired value to be unlocked.
5. Renewal and Disposal
Unlocking value during the renewal stage is about ensuing the Asset Management Plan directs the relevant parties to do more than just replace assets for ‘like for like’, or to renew/extend a contract on same or similar terms.
For asset renewal, by now the data you have gathered in operations and maintenance should enable you to identify:
- What assets are causing the most pain points in terms of reactive costs.
- What assets due to age lack spares or manufacturer support to maintain economically.
For contract renewal consider what areas of your maintenance contracts are counterproductive to the asset owner and asset maintainer in unlocking value of the assets.
Moreover, your Asset Management Plan needs to direct the key parties the steps to take during the asset disposal stage. Essentially a checklist will be sufficient to ensure the parties disposing of the asset have considered factors such as:
- Can the asset be reused in a different location/contract?
- Can the asset be recycled with monetary benefit?
- Have all the necessary HSE and quality requirements been met?
- Can the asset be written down financially?
To act on renewal and disposal asset value opportunities, clear and effective management of change processes need to be in place. This enables all parties that are involved in or contributing to this stage to carry out the required activities effectively, so that the organisation will be more likely to receive the maximised value for the effort they put into the Asset Management Plan.
Now, I hope you have a more comprehensive knowledge of the 5 ways to unlock value for your assets from an Asset Management Plan. Keep reading other articles in the AMP series by clicking the links below.
Catch up on other articles in the AMP series
Part 1: 13 Key Elements of a Successful AMP Implementation (strategy, activities, support).
Part 2: How to Meet Stakeholder Requirements with Your AMP (primary, industry, and regulatory)
Part 3: 5 Ways to Unlock Value for Your Assets from an AMP [THIS BLOG]
Subscribe to our newsletter to keep up-to-date with our Asset Management and Reliability blogs.