ASSET MANAGEMENT AND FACILITY MANAGEMENT IN CONTEXT: SYNERGIES, DIFFERENCES AND GAPS IN PRACTICE
1.0 Introduction
2.0 The Fundamentals of Asset Management
2.1 Evolution
Asset management is a pluralistic concept where it exists differently in various context; finance, enterprise and engineering, that is. Tracing the evolution of asset management then is difficult, thereby necessitating to focus on a particular context, at least for this paper, which is the engineering asset management. According to the engineering asset management has been one of the important contributors to corporate productivity and good governance, leading to the growing importance of such from both private and public perspectives from a decade ago (AMC). An offshoot of this still broad category is what came to be known as infrastructure asset management which mainly deals with infrastructure assets. Providing customers with quality ‘infrastructure’ services to enhance satisfaction as well as governance and its accountability, risk management and financial efficiency in sustainable way are the main objectives of infrastructure asset management (and 2008; 2002).
In Australia, the term ‘asset management’ was first integrated in the Australian Accounting Standard Board’s issuance of the Australian Accounting Standard 27 in 1993. In relation to construction, design and facilities, however, infrastructure asset management is a relatively new concept. Nonetheless, the life cycle of the physical asset reveals the necessity to evaluate the whole life cycle approach if it means to maximize utilization thereby the benefits of the physical asset. Infrastructure asset management increasingly becomes an important endeavor on the investment decision-making. It also appears more apparent that asset management could be treated as a strategy that accounts the long-term outlook of the infrastructure performance and cost. Sustainability was perceived to be the key and that the necessity for a more systematic approach is evident ( and 2008).
2.2 Definition and Scope
The term asset management is both strategic and tactical in nature. Depending on the orientation, however, the concept of asset management in engineering, design and construction emerged just recently as a holistic strategy in managing the physical asset’s life cycle for the purpose of achieving lowest costs and maximizing returns. Though there is no universally-acceptable definition of asset management, the paper will consolidate the definitions provided by the CRC for Integrated Engineering Asset Management and the Austroads. As a systematic process, asset management refers to the organisation, planning, maintenance, improvement, control and disposal of physical assets in as much as possible ‘risk-proof’, cost-effective manner but not sacrificing the quality of outputs. Such comprehensive and structured approach purports optimization of service delivery towards communal benefits in long-term. This will be considered as the working definition for this paper.
Based on infrastructure asset management as a more specific realm, there are four scopes as operational and strategic, resource and function (refer to Figure 1). Asset as a function deals with the improvement of infrastructure asset to prevent failure, manifesting that assets must be reliable and in optimum condition. The functionality of the asset must be also within an asset management system support. Making this asset a strategic endeavor, apart from being functional, the performance of assets must be on the basis of long term wherein value could be maintained. Asset as a business resource, asset management links with achieving organizational productivity and quality enhancements. Process responsibilities are addressed as a value-adding undertaking ( and 2008,).
2.3 Principles
With the combination of engineering principles and analytical tools as well as sound business processes and knowledge-based decision-making at its core, inherent to asset management are customer focused ideals, mission driven goals and system oriented performance as the guiding principles. Through asset management also, long-term outlooks and long-term and user-friendly facilities are feasible. Expectantly, asset management systems embrace strategic goal-setting, effective inventory and valuation of assets, reliable performance-prediction capabilities and utilizable outputs. Asset management also considers quantitative condition and performance measures and integration of individual management systems as well as the qualitative issues and the budget process. Important to asset management is the measure of how well goals are being met that impacts program quality, system performance and end-users expectations (Asset Management Primer 1999, pp. 7-9).
2.4 Process
The community benefits delivery facilitates accessibility, mobility, economic development and social justice, as made possible by the collective purpose of the elements of asset management. According to Austroads, asset management has three main elements: strategic planning process, actions and performance feedback. These elements are further divided into seven phases which includes definition of objectives, formulation of asset strategies, development of investment program, identification of asset requirement, implementation of work program, audit and review. As such, the process of asset management basically follows the identification of the necessity for the asset based on the community requirements, the provision of the asset which consists of the ongoing maintenance and rehabilitation when the needs arise, the operation of the asset and the disposal of the asset when it no longer serves it purpose as the need no longer exists or whenever a more beneficial asset would replace such (refer to Figure 2).
2.5 Methodologies, Techniques and Technologies
Provided that asset management is also a data-intensive process, there demand for various tools in acquiring data to maximize its utility is critical. Information-based decision-making is so important for physical asset management. There are several methods that asset managers could choose from: analytical tools, engineering economic analysis, forecasting tools and group decision-making analytical methods ( ). Firstly, engineering models, along with economic and behavioral models, are pivotal for asset management. Analytical tools in asset management relate investments strategies to the performance of the system in order to maximize benefits and reduce costs. Through analytical methods, there is high feasibility to determine the impact that the condition and performance of the physical asset to the user and vice versa via engineering and economic-based “what-if’ analyses.
Secondly, engineering economic analysis facilitates physical asset investment in which the relative economic efficiency levels are at the core. This kind of asset management method also uses analytical tools since the basic rationale is to evaluate costs over the life of each physical asset investment. Through this method, they could identify the best option for establishing performance objectives at the least possible long-term costs as well as quantifying the risks for the strategy to be implemented or had already implemented. Life cycle cost analysis, benefit/cost analysis, optimization and prioritization and risk analysis are the examples of engineering economic analysis methods. During post-rehabilitation, performance prediction model are also being used to determine the future performance of the asset (and 2005).
Third, forecasting tools are considered vital for asset management because of the fact that physical asset impacts future use. Forecasting tools are very important in relating future investment levels with future condition and performance. Further, forecasting tools assist in evaluating the impact of inadequacies in routine maintenance and deferred capital maintenance, for instance. Artificial neural networks and multiple regression model are the most utilized forecasting methods which provides framework in handling short and long-term planning of maintenance and rehabilitation of physical assets (and 2003).
Finally, in cases that there is a portfolio of proposed physical asset investments which could eventually lead to competition among assets and within modes, integrated systems approach are applied. Group decision-making embedded on analytical methods is one of these, whereby objective tools are used to assist the decision-making process. Creating a win-win situation is the main aim of these methods.
Moreover, soft computing techniques are also used to support the analytical tools identified above. and (2004) soft computing techniques are appropriate for asset management decisions, especially infrastructure, because these techniques are otherwise imprecise, uncertain and ambiguous. Artificial neural networks, fuzzy systems and genetic algorithms are the three most used soft computing techniques. Asset valuation techniques in major engineering works quantitative residual risk analysis is the commonly used technique since it can go along with certain technological applications. Given that this technique also concurs with other modeling techniques, and with the availability of statistical data on asset performance, the management, maintenance and operation of major infrastructure assets could be ascertain ( and 2006).
When it comes to technologies, there are general purpose software and asset specific software that asset managers employ. The former offers generic functionality and are needed to be customized and adapted for specific data and work processes depending on the specific classes of assets. The latter, on the other hand, provides built-in data models and processes in order to assist the management of a specific asset or a class of specific asset.
General purpose software uses Relational Database Management System (RDBMS) equipped with data management, work management, scheduling and procurement as well as data import/export options and the capability of interfacing with other software such as CAD, GIS and Enterprise Resource Planning (ERP) System. However, these software’s are not widely used because of large installation requirement and high start-up costs, and also requires experts to install, operate and maintain.
Implementing specific data and process management procedures is the function of asset-specific software’s, which are commonly used to support the RDBMS for asset inventory database and provide built-in GIS. Asset-specific software’s are used for managing assets such as pavement, water distribution systems, sanitary and storm sewers among others ( and 2006).
2.6 Example
In managing physical assets, there are many risks associated with it. Like in the case of , an electricity distributor, wherein the operation is always subjected to the risks imposed by external forces. Electricity assets could cause a major bushfire which is one of the major risks for electricity distributors, especially in a place where the geographical environment could exacerbate the already extreme condition. The distribution area of Powercor occupies 66% of Victoria and 54% of the assets are located in high fire hazard areas. A high bushfire risk for the residents of Victoria is inescapable, calling for the establishment of effective risk management and asset management systems in place. As such, could be started by own Powercor assets or by external sources. What the company did is assist other distributors in the area in order to reduce fire ignitions. Fire combatant agencies are also in full alert especially during hot season. Bushfire mitigation is also supported by the asset management strategy and model that underpins the 163 asset maintenance policies. Such policies are developed using reliability centered maintenance method so that maintenance and asset inspections costs could be reduced while also maintaining improved risk profiling within the area. Powercor, in addition, integrates a plant maintenance module in SAP which performs works and asset management functions
3.0 The fundamentals of Facility Management
3.1 Brief Background, Definition and Scope
At the point of completion of an architectural project as well as its initial occupation, the role of the architects and engineers had been concluded also; but for the architectural object itself, at that similar point, the lifecycle begins. As and (2007) put it, “the way an architectural object will be used, maintained, altered, renovated and finally destroyed and recycled often exceeds the interest and consciousness of architectural designers” and its original design documentation. The result of the exploitation of the architectural object explains the very different look and function after several years. As such, the lack of maintenance concept, ignorant behaviors of local users, application of important materials are just some of the emergence dilemmas the architectural experience during the period of exploitation. Such circumstance points to the fact that the responsibility of sustaining the object does not stop after inauguration, perhaps, an ongoing maintenance; that is, facility management.
Dubbed as the ‘built environment, facility management generally refers to the management of public and private facilities, encompassing all the fabrics and services of such facility. Take note that the word used herein is the term ‘facilities’ and not ‘building’; this is because the writer believes that the term facility is an all-encompassing term. The services that facility management regarded to are divided into two categories namely hard services and soft services. According to (2000, ), hard services cover the maintenance of the facility while soft services are inclined on ‘housekeeping’ functions such as cleaning and security. Per se, the facility management function is an important element in the lifecycle of the facility aside from its plan, design, construction and commissioning.
The International Association of Facility Managers, facility management is a profession that takes in multiple disciples for the process of ensuring functionality of the built environment by means of integrating people, process, place and technology. As what the Facility Management Association of Australia states, maintaining the efficiency of the ‘built environment’ is the primary goal of facility management. Through the integration of the elements identified, facility management is also responsible in ensuring that service are delivered in productive and profitable manner and in reducing the impact of use of the facilities thereby minimizing the life cycle costs while also keeping key administrative and technical services to sustain the efficient performance of the facility (FMA).
3.3 Philosophies/Principles
3.4 Process
3.5 Methodologies, Techniques and Technologies
3.6 Example
4.0 The interplay between Asset Management and Facility Management
5.0 The differences between Asset Management and Facility Management
6.0 Recommendations
7.0 Conclusion
9.0 Appendix
Figure 1. Scope of [Infrastructure] Asset Management. (Adapted: and 2008)
Figure 2. Asset Management. (Source: 2008,
Figure 3. Facility Lifecycle. (Source:.)
Credit:ivythesis.typepad.com
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