4.1 Definition of Asset Management
Asset management has been described in a variety of ways, including as a strategic discipline covering all facets of asset development through to disposal, while other definitions are confined to the preservation or maintenance of existing assets.
‘Asset management’ is defined in the Austroads Glossary of Terms (Austroads 2015) as:
A systematic process of effectively maintaining, upgrading and operating assets, combining engineering principles with sound business practice and economic rationale, and providing the tools to facilitate a more organised and flexible approach to making decisions necessary to deliver optimal community benefits.
While for many the term ‘asset management’ has a technical meaning, there is also a general recognition around the world that a wider organisational approach is necessary, a focus that is emphasised in ISO (2014), which specifies requirements for an asset management system within the context of an organisation. It can be applied to all types of assets and by all organisations.
According to ISO (2014), the factors which influence the type of assets that an organisation requires to achieve its objectives, and how the assets are managed, include the following:
- the nature and purpose of the organisation
- its operating context
- its financial constraints and regulatory requirements
- the needs and expectations of the organisation and its stakeholders.
These influencing factors need to be considered when establishing, implementing, maintaining and continually improving asset management.
The fundamentals of asset management and the supporting asset management system introduced in the ISO Standard, when integrated into the broader governance and risk framework of an organisation, can contribute tangible benefits and leverage opportunities. Asset management translates the organisation’s objectives into asset-related decisions, plans and activities, using a risk-based approach.
There are three levels of asset management:
- strategic – the establishment of policies, objectives, strategies and plans which respond to current and future service expectations
- tactical – the development of prioritised work programs which address service expectations and challenges
- operational – the implementation of the programs.
From the customer’s point of view, ‘asset management’ is all of these, as it involves working in parallel to translate an organisation’s objectives and customer outcomes into asset-related decisions, plans and activities. In other words, ‘asset management’ is a ‘whole of agency’ approach to creating and maintaining assets which deliver the services valued by the agency’s customers in the most cost-effective and efficient manner.
Asset management processes are important in ‘institutionalising’ the focus on customers and reminding everyone involved that what they do supports the achievement of these outcomes.
This description leads to the purpose of asset management used in this GAM, which is:
To provide the required levels of service at the lowest life-cycle cost to present and future road users and customers, using a ‘whole-of-agency’ approach to the acquisition and management of physical assets.
It is important to remember that the key focus should be on conducting asset management well, i.e. as good business practice. While compliance with regulations and standards may often be a benefit, it should not be the primary driver of good asset management practice.
The use of asset management principles by road agencies in New Zealand and Australia has developed significantly over the past two to three decades. There has been a significant shift from an asset maintenance focus to a service focus, a trend which is reinforced in the GAM.