What is Asset Management?
Asset management involves the balancing of costs, opportunities and risks against the desired performance of assets to achieve an organisation's objectives.
Asset management also enables an organisation to examine the need for and performance of assets and asset systems at different levels. Additionally, it enables the application of analytical approaches towards managing an asset over the different stages of its life cycle (which can start with the conception of the need for the asset, through to its disposal, and includes the managing of any potential post disposal liabilities).
Asset management is the art and science of making the right decisions and optimising the delivery of value. A common objective is to minimise the whole life cost of assets but there may be other critical factors such as risk or business continuity to be considered objectively in this decision making.
International standards ISO 55000 provide a global consensus on asset management and what it can do to increase value generated by all organisations. ISO 55000 gives the following definition of asset management:
| "the coordinated activity of an organisation to realize value from assets."
ISO 55000, 2014 (3.3.1)
In turn, assets are explained with the following definition:
| "An asset is an item, thing or entity that has potential or actual value to an organisation".
ISO 55000, 2014 (3.2.1)
This is deliberately wider than physical assets but these form an important focus for more organisations.
The three international standards (ISO 55000, 55001 and 55002) are important because they represent a global consensus on asset management and what it can do to increase value generated by all organisations.
Asset Management - an anatomy
The IAM anatomy publication was put together to provide an appreciation of asset management, for both experts and newcomers: what it is, what it can achieve, the scope of the discipline and a description of the underlying concepts and philosophy.
|“Modern society is heavily reliant on physical assets in order to function effectively. Managing assets so they can provide products and services now, and into the future, is a core part of the discipline known as asset management. But assets can be made of anything - a brand, a licence, a right of way, a group of companies, opportunities - anything in which you invest to achieve your purpose!"
Asset Management - an anatomy, (2015)