Asset Management Plan (AMP) refers to a core document that focuses on describing the maintenance, functioning and shutdown of a specific asset-intensive site in a scheduled manner. It is a detailed and systematic plan that officially sets a standard for the agreed-upon service. The International Infrastructure Management Manual officially defines this document as a plan to develop the management of one or more infrastructure assets that combines multi-disciplinary management over the asset’s life cycle in the most cost-effective manner when providing a specific service. Generally, ISO 55001 is a universal standard that organisations must follow in managing assets, although this is not officially recognised as an asset management plan. This article will explain all you need to know about AMP.
Why Do You Need An Asset Management Plan?
There are multiple reasons why you should form an ASM from the get-go. For one thing, it allows asset managers to gain complete visualisation of the costs and benefits associated with providing a service. By understanding the level of work that needs to be done to complete the service, an ASM mainly caters towards reducing the overall cost at each stage, including for its operation, maintenance, replacement or disposal. It moreover helps managers to control risks, improve compliance with quality standards, improve the accuracy of financial statements and can assist you in managing the inventory without errors.
What Is Included in an Asset Management Plan?
Once the ASM problem is described, the ASM can span across several pages, although it should not be too long. The problem should encompass the current tools used to address the problem and look into strengthening the asset management system. Note that the exact structure of an ASM may vary. For instance, as per the Queensland Department of Local Government, which circulated a letter to the Queensland Councils in December 2008, there should be an introduction and overview of the problem followed by sections on service levels, future demand, lifecycle management and financial considerations, asset management practices and improvement and monitoring. While the exact criteria will be different in other states in Australia, here are a few mandatory aspects that have to be added regardless of what other term or phrase other bodies calls them:
Standard of Service
The standard of service must first be defined before setting out the complete ASM. This refers to describing the ideal performance of the asset in different conditions. Note, however, that this should be measurable and include a quantifiable performance specification and a minimum condition grade. The latter considers the possibility of failure due to a natural disaster. This looks at the practicality of adopting or performing the standard of service. In other words, if the rate at which failure of an asset occurs is prolonged and can be justified, a lower minimum condition is acceptable. In contrast, a higher minimum condition is required if the speed is high.
As indicated by the term itself, current asset performance will consider the health status of the asset in question. It would also have general information about the asset, including the asset owner’s name, age, years remaining from its lifecycle and more. This information allows asset managers to understand the physical status of assets and, based on it, decide how to proceed. Taken in another way, this section documents all assets owned by the utility and prioritises them based on their importance and condition. The purpose behind this is also to ensure that all limited resources are used to the maximum, leaving no asset out for waste.
This looks at the present situation and the long-term picture. It hence must have a short narrative explaining the near-term actions, which will subsequently help in bridging and reducing the gap between where the project is and its result. If, however, these actions are already identified, the ASM must describe how they can be achieved for a reduced cost. This section , therefore, focuses on innovation, looking at far better, cost-effective modes of providing the agreed standard of service.
This details a breakdown of costs needed in the short, medium and long term. In short, a complete and holistic cost profile needs to be described. This should have costings that measure the entire life cost of assets that have already been used in the factory to determine the average annual cost. It is common for this section, in particular, to be edited and changed occasionally, as external factors, including the rise in inflation rates, for instance, could change the project’s overall cost. As a rule, asset managers are expected to put the most realistic forecast for the finances set in a year and for the next three years. Beyond that, it is ok to have an estimate of what is expected.
It is not enough to simply list generic benefits. Instead, it should look at the very purpose of the standard of service and address benefits central to it. Thus, assets must provide some benefits that can be measured or explained. The best type of benefit understood in the asset management sector is where there is a clear monetary worth. There can, however, additionally be social and environmental benefits listed. While such benefits may not be categorised as financial, it demonstrates a holistic approach to assessing qualitative benefits. Listing out the benefits is also a great way to assess the worthiness of going ahead with a project. Hence, for instance, based on the number of advantages this project will offer, the reasonability for investing a specific amount can be confirmed.
Potential Future Improvements
What is deemed to be an improvement can differ. In some situations, reducing the standard of service could be seen as a future improvement. The disposal of an asset could also be regarded as an improvement. A standard of service can be improved by acquisition, enhancement or other ways. It should represent a potential change in the standard of service and is regarded as a separate project which will require additional expenditure.
A Good Asset Management is Key To Eliminating Waste
Being organised is critical to success. Hence, by creating an asset management plan, you ensure that you have thought of every possible scenario to help you address an asset failure. By having complete visualisation of all assets, the room for error will not only be reduced, but the way the financial budget will be made, allows every risk to be accounted for. As a result, asset managers can prepare against worse-case scenarios and feasibly determine the worthiness of carrying out an asset management plan before contributing an enormous fund which will be wasted unnecessarily.