Every company has assets, but not every company has an asset life cycle management plan. A life cycle management plan requires the development and implementation of a road-map to realize value from physical assets. This is done through optimizing cost, risk, and performance across all stages of the life cycle. The steps described below can be used to create a management plan for your company.
Developing an Asset Life Cycle Management Plan
An asset management plan defines the objective, the activities that need to take place to meet the objective, and the individual(s) that are responsible for the plan. The plan will provide expectations for individual assets or a portfolio of assets. It is important to factor in time horizons when creating the plan. Time horizons will vary for each company and many vary for different divisions of the same company.
The following sections are common in an asset management plan:
- The plan overview
- Background information
- Risk management plan
- Operating plan
- Equipment maintenance plan
- Recapitalization plan and strategy
- Capital plan and strategy
- Disposal plan
A Detailed Look at the Sections of a Plan
The Plan Overview
The overview section identifies the assets, how the assets are used in the organization, the stakeholders, and how the assets connect to other plans. It is recommended to provide a brief summary of each asset.
Describe the asset in terms of age, size, capacity, performance, condition, purchase value, and any other descriptive or identifiable information.
Risk Management Plan
Identify risks that may affect the asset. Detail steps being taken to identify, evaluate, and mitigate known and unknown risks.
Identify trends, decision-making processes, and operating strategies. Outline how operating tasks are prioritized and risks with pursuing alternative strategies.
Equipment Maintenance Plan
This section includes a maintenance schedule, a prioritization of maintenance tasks, and a forecast of estimated costs. It is important to include contingency plans should planned or scheduled maintenance be altered.
Recapitalization Plan and Strategy
The recapitalization plan describes costs and tasks associated with restoring, replacing, or renewing an asset so it can function at its original capacity.
Capital Plan and Strategy
Detailed plan for new investments which result in the acquisition of a new asset or the upgrade of an existing asset.
Identifies how an asset will be disposed once it has reached the end of its useful life. Options could include remarketing, recycling, or donating the asset. Identifying reliable service providers who specialize in your industry is also important.
Once a plan has been created and agreed upon by the stakeholders, it is important to update and maintain the plan. To ensure the company’s goals are met, current and accurate data must be available for review. If timely data isn’t available and projections are made, document the projections so the assumptions used are understood. It is recommended that the plan be reviewed and updated at least once per year, and more if deemed necessary.
Creating an asset life cycle management plan can help your company maximize the lifetime value of its assets.