We are Unraveling the Secret Code of Tangible Asset Management so that you don’t need to reinvent the wheel; since we will convey some of the best practice principles in Tangible Asset Management.

The Purpose of a Tangible Asset Management Strategy

The Responsibility Matrix

In this series of newsletters, we will convey some of the best practice principles in Tangible Asset Management.

Tangible Assets Defined

A tangible asset is an asset that has a physical form. Tangible assets include both fixed assets, such as machinery, buildings and land, and current assets, such as inventory.

It includes Property, Plant and Equipment (PP&E) and it forms the core of many companies’ balance sheets.

An Asset Management Strategy is an important component of the overall management of tangible assets. It is to establish an Action Plan that can be pursued over the next decade or so in order to address the necessities associated with PP&E, including the management of infrastructure assets and plant maintenance

The compilation of a Tangible Asset Management Strategy relies on a team working in concert to draft the plans for the future.

At a certain stage, the team tasked with drafting the Strategy need to be expanded to include those who would be tasked to implement this same Strategy to ensure buy in for its smooth implementation.

Tangible Asset Management is thus an approach to develop and maintain organization’s infrastructure and plant assets to ensure that:

Scarce financial resources are properly allocated and managed to optimize investment in infrastructure.
A long-term (life-cycle) approach is taken when determining asset operations, maintenance and renewal and the development of appropriate strategies.
Asset requirements and asset management strategies are driven by defined service levels and performance standards.

Since a top-notch Enterprise Asset Management (EAM) system is aimed at improving every aspect of maintenance, ranging from core functionalities such as basic asset management and preventive maintenance to professional services such as training, it is important to choose the right mixture of people to implement your company’s Tangible Asset Management Strategy and to better manage your maintenance processes

1. Executive Management

To act as stewards for tangible assets.
To approve organization’s Tangible Asset Management Strategy and Long-Term Plans and monitor its outcomes.
To set corporate Asset Management policy and vision.
To set levels of service, risk and cost standards.
To approve the annual plan and Best Value Program in accordance with organization’s policy.
To ensure appropriate resources and funding for Asset Management activities are made available to integrate Asset Management Policies, Strategies and Asset Management Plans into the Corporate Governance Framework.
Promote and raise awareness of Asset Management to the entire Organization.

3. Asset Management Steering Committee (AMSC)

To develop Asset Management plans for individual asset groups.
To implement improvement plans for individual asset groups as detailed in the Asset Management Plan.
To ensure appropriate community consultation is undertaken.
To deliver levels of service to agreed risk and cost standards, and report to the Board on service delivery versus service level standard.
To present information to the Board and Chief Executive Officer in terms lifecycle risks, costs and service levels.
To develop and implement (tactical plans) maintenance, refurbishment and capital works (refurbishment/renewal) programs in accordance with Asset Management Plans, Strategic Resource Plan and Annual Plan and report to Chief Executive Officer and Heads of Departments.
To develop and implement procedures with a goal of ensuring that the asset database is maintained and updated and provide required reports to the Board to meet their statutory and legal responsibilities.
Promote and raise awareness of asset management to the Board, Staff, Users and Clients.

2. Chief Executive Officer & Directors of Finance & Technical Services

To continue to refine the “overarching” Asset Management Policy with linkage to the Organization’s Plan
To implement the corporate Asset Management Strategy within agreed resources
To monitor and review performance of organization’s staff in achieving the Asset Management Strategy
To ensure that accurate and reliable information is presented to the Organization’s Board for decision-making
To foster and support the multi discipline Asset Management Task Team
To ensure that clients and key stakeholders inputs are integrated into the Asset Management Plan
Promote and raise awareness of asset management to the Board, Staff, Users and Clients
Provide recommendation to the Board on levels of service, risk and cost standards and to ensure assets are managed to the approved levels

4. Heads of Departments

Is Organization’s representative as the Asset owner.
Lead the Asset Management Task Team.
Monitor and review the Asset Management Policy and Strategy implementation within agreed resources.
Implement Asset Management strategy within agreed resources.
Provide accurate and reliable information to the Board for decision making.
Conduct community consultation to enable the Board and Shareholders to set and review levels of service and maintenance standards.
Provide Asset Valuations.
Ensure assets are utilized to maximize Client benefit and are fit for purpose.
Ensure assets are maintained, renewed and upgraded as and when required to meet the needs of the clients.
To ensure day-to-day maintenance of the Assets they are responsible for, is delivered to service levels specified in Service Agreement.
Meet requirements as specified in the Service Agreement.
To carry out routine inspections as specified in Service Agreement.
To report on maintenance actions versus levels of service as specified in the Service Agreement.
Promote and raise awareness of Asset Management to staff.
Provide recommendations to AMSC on upgrades or renewals for assets they are responsible for.
Provide input into Service Agreement.
Recommend any changes of service levels to AMSC.

5. Maintenance Personnel / Service Providers

Asset Identification

This has to be done thoroughly to ensure that each and every asset is identified. If the correct processes are followed, it would not be necessary to repeat this afterwards.

Because of the expense involved, it is generally avoided, which means that any of the steps that follows is lacking subsistence, and, essentially, meaningless.

The Asset Register is a key to understanding in detail what assets are owned and controlled and, depending on the complexity of information entered, can be used to determine:

The likely current condition of assets;
When assets need to be replaced;
Information required in meeting accounting standards and other regulatory requirements;
Asset locations and asset custodians for stock-takes;
The level and frequency of asset maintenance programs; and
Life-cycle costs by asset, program and business activity.

Asset Verification

A physical verification of assets is a process that is used to determine that the assets in the Asset Register are in fact in the possession of the company. Usually, the goal is confirm the physical existence of the assets and ensure that they are accounted for.

But that is only part of the process. For insurance purposes, you need to verify that the records match the asset’s nameplate detail. Apart from the engine, gearbox and differential, the remaining part of a vehicle could have over ninety specification fields that have to match. Make, type, model and serial numbers are simply not enough.

Newsletter – The Purpose of a Tangible Asset Management Strategy