Organization-Wide Physical Asset Management. Dharmen Dhaliah
goes on, “In this situation an asset management framework does address those misconceptions. Imagine you have a puzzle with different individuals looking at the different pieces of the puzzle on their own. You would agree that it won’t make any sense whatsoever even if you take all the pieces of the puzzle and place it on a table. It is only when you have assembled all the pieces together that you will see the real picture of what the puzzle represents.”
Darren mimics building a puzzle on the table as he continues. “That’s exactly what an asset management framework will do,” he says. “It will assemble all the pieces from different functional areas and put them together to show how they are connected to each other and, most importantly, what asset management is all about.”
“Oh, I see,” Jerry replies. “Then if I show this to the different departments, they will be able to see where their pieces of the puzzle fit in the whole scheme of things.”
“True, and they will also be able to understand how their work relates to other work in the organization and how this can impact the overall objectives. There are many asset management framework templates out there, and it is easy for you to review them and create your own based on your organizational context. I have seen simple ones as well as some complex ones.”
As Darren continues to talk, he pulls the paper with the governance model sketch from Jerry, turns it over, and starts working on another sketch.
Darren is a very visual person and thinker. He likes to draw concepts and images. It is not a surprise that one of his hidden talents is actually sketching and drawing. This time he could not stop himself from having some fun with quickly drafting an asset management framework for Jerry.
Darren is sure Jerry will appreciate the sketch as he watches him do his artwork with a smile.
After a few minutes of drawing and shading, Darren hands the paper over to Jerry once again (Figure 2.2).
FIGURE 2.2 Asset management framework.
Jerry grabs it and starts studying it closely as he tries to follow and make sense of the lines and boxes.
As Jerry studies the sketch, Darren explains to him what he should look for when he develops the asset management framework: “The asset management framework needs to consider the broader view of the organization, meaning it has to consider the different levels in the organization, from strategic, to tactical, to operational. It also needs to show the line of sight from a whole lifecycle physical asset management perspective across all the different levels and demonstrate how everything fits together.”
“Can you please provide some examples of what needs to considered in the framework?” Jerry asks.
“Key elements of the framework are:
• The stakeholder’s requirements and expectations
• The organizational plan and objectives
• The different strategies needed for the asset management strategy, namely, lifecycle management, level of service, risk, and demand management strategies
• The tactical planning required for different asset classes: financial, operational, capital, and maintenance planning
• The actual execution of the lifecycle delivery activities over the entire life of physical assets to deliver required performance
• The enablers to support execution such as technology, people, data, and processes
• Performance monitoring and reporting
• Continuous improvement”
Darren lets out a deep sigh and continues: “Remember, asset management is intended to provide for the sound stewardship of physical assets, meet customer service commitments, and manage assets in the most cost-effective and efficient manner. This essence is clearly captured in the framework.”
“Once you have created your own asset management framework, I suggest you meet with your stakeholders, give them copies, and explain to them what the framework represents. Clearly show them where they fit in the framework, how their work relates to others, and how their work is important to achieve the goals of the organization.”
”Finally, you can point to them what your role is in the whole framework and how you fit in.”
Jerry looks at Darren as if he does not quite understand how he fits in the asset management framework. He carefully folds the sketch once and places it in one of his folders lying on the table.
Darren glances at his watch to check the time. He figures he still has around thirty minutes before he should really head out, as Debbie will be waiting for him for dinner.
“There is another key document that I would like you to think about or even start working on,” he continues.
Jerry stares at Darren with a surprised look on his face. He must be feeling really overwhelmed with what Darren has been throwing at him so far. However, he does not say a word, and Darren keeps going, cautioning, “Next it is very important that you have an asset management policy in place.”
Step 3: Develop an Asset Management Policy
“Jerry, do you have a health and safety policy in your organization?” Darren asks.
“Yes,” Jerry replies.
“How about an environmental policy, do you have one?” he again asks.
“Yes, I think we do have ... not so sure, though,” Jerry responds.
“I am pretty sure you do have, especially with the business you are in. You must also have many other policies at different levels in your organization, such as an accounting policy, personnel policy, procurement policy, and many others. Therefore, the question is why we do not have one for asset management yet?” Darren replies. “We have policies to protect and manage other types of assets, so why not for our physical assets?”
Then Darren reminds Jerry, “Last time I did mention to you the significant value of fixed assets that organizations end up owning and managing. These same fixed assets can be the source of many health and safety, environmental, or other consequences. The irony is that not having a commitment to manage physical assets in the form of a formal asset management policy can directly impact the goals of the other policies.”
Darren takes a pause and asks, “Isn’t this weird? Physical assets and their contribution have always been taken for granted or gone unnoticed in organizations—especially at the boardroom level.”
He pauses again to collect his thoughts and then says: “This has to change, and, actually, I should correct myself ... things are already changing these days. Many organizations have started to recognize that there is a gap in their commitment to responsibly manage physical assets. Organizations in general do an outstanding job in developing their strategic plan to outline their vision, mission, and strategic goals and objectives. From there they develop their long-term and short-term financial, marketing, and operating plans. The physical asset management portion is dealt with to some degree in the operating plan. However, there exists a considerable gap in this area, and this is what many industries are trying to address these days.”
Then Darren starts on a relatively long explanation of what an asset management policy is all about: “A corporate asset management policy helps formulate the commitment to look at the strategic aspect of managing physical assets. The policy outlines the multiple approaches and requirements the organization endorses and commits to for better asset management planning. It spells out the underlying guiding principles to follow when developing and deploying asset management practices to meet legislative requirements and the organizational strategic objectives. In order to ensure that the asset management system is compatible with the rest of the organization, it has to be clearly specified and defined through a formal policy statement by the organization as a whole. This