Asset Class Management

Asset Class Management Planning For Your Business

An asset management plan defines the activities that will be implemented and the resources that will be applied to meet the asset management objectives and consequently the organizational objectives.[i]An asset management plan provides the direction to and the expectations for and individual asset or for a portfolio, group or class of assets.

Asset management plans should be developed to appropriate time horizons for the organization.The time horizons should meet the organization’s needs and take account of the organization’s period of responsibility and the life of its assets. With this in mind, an asset management plan template will help you define the specific activities, resources and scheduling required for an individual asset or a grouping of assets to achieve the organization’s asset management objectives. The maturity level of the asset management plan and the sophistication of the asset management system may impact which sections of the plan are prioritized over others.

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  • Asset Management Plan Overview – The overview section identifies the assets within the plan, how performance of the assets connects to organizational objectives, the stakeholders, and connectivity to other plans or standards. A brief summary of covered assets is also recommended.
  • Levels of Service - A key aspect of asset management planning is to match the level of service that assets provide to customer expectations. It provides the balance between the cost to deliver and the level required. Specific levels of service include cost, efficiency, quality, quantity, reliability, safety and responsiveness. The level of service section may include a description of how organizational goals and regulatory requirements impact service levels. Current levels of service and targeted levels of service are necessary to identify gaps that must be addressed in other sections of the AMP.
  • Future Demand - Future demand provides details of forecasted growth and asset utilization. This section also describes demand drivers, how demand changes may impact assets, demand contingency planning, and investment planning necessary to meet the demand forecast.
  • Asset Lifecycle Management - This section should summarize how assets will be managed and operated at the agreed-upon service level while optimizing total cost of ownership at an appropriate level of risk. This section is the most important part of the AMP and includes these subsections:
    1. Background Information – Provides basic asset information including age, size, capacity, performance, current condition, and current value and asset information management summaries.
    2. Risk Management Plan – Identifies risks that may affect service delivery. Includes what corporate goal or objective is impacted by the risk, how the risks are identified, how the risks are evaluated (Consequences, Probability, Detectability), and what risk mitigation plans are in place.
    3. Operating Plan – Includes trends; decision-making process; defined operating strategies and methods to meet required service levels; how operating tasks are prioritized and risks associated with alternative strategies; and forecasts of planned operating costs.
    4. Equipment Maintenance Plans – Includes trends; decision-making process, defined maintenance strategies and methods to meet required service levels; how maintenance tasks are prioritized and risks associated with alternative strategies; and forecasts of planned maintenance costs.
    5. Recapitalization Plans and Strategies – Outlines renewal expenditures – major work which does not increase the asset’s design capacity but restores, replaces or renews an existing asset to its original capacity.
    6. Capital Planning and Strategies – Describes new investment, which creates a new asset that did not exist previously or which upgrades or improves an existing asset beyond its existing capacity.
    7. VII. Disposal Plan – Identifies activities associated with the disposal of a decommissioned asset including sale, demolition or relocation. Contains future forecast of disposal assets including timing and costs, and cash flow forecast of income/expenditures from asset disposal.
  • Financial Summary - This section should include and summarize all the financial requirements resulting from the activities in the previous sections. The financial summary represents an important link to the other parts of the organization and establishes the value of asset management to the organization by integrating the financial impact of the activities into the company’s financial and strategic plans. The summary should include cash flow forecasts for one to five years and provide the necessary detail on how expenditures are to be treated (capital versus expense) in order to determine optimal funding strategies and timing.
  • Continuous Improvement – This section should summarize the current and future asset management practices and provide details on the planning and monitoring of the asset management plans and any improvements for the asset management systems. It should provide a demonstrated link back to the deficiencies noted in constructing the other sections of the AMP.

Writing, Reviewing and Maintaining the Plan


Once the assets are selected and the approach defined, it is time to begin writing the AMP. The key is to always keep the objectives in mind and to rely upon the most current and complete data available. Where assumptions must be made, be sure to document those assumptions. In many cases some sections of the template may provide summary data with references to the exact locations where the data or the analysis is maintained. For efficiency purposes it is very likely that the AMP will include many such references to specific locations within the asset management system.

Each section of the AMP may be written by different subject matter experts but should be coordinated by a single point of accountability. The entire team should review the AMP for consistency and accuracy. It may also be helpful to have an independent party review the plan for additional insight and understanding. Finally the plan should be viewed as a living document that is to be updated and maintained in accordance with the established parameters.

5 Steps to Building an Effective Asset Management Plan and Asset Planning


An asset management plan serves as the cornerstone for an effective asset management system. These plans provide a road map for organizations to understand their objectives and long-term asset management strategy.

Step 1. Complete an asset inventory - You can’t effectively manage your assets if you don’t know what assets you have! Before constructing your plan, you must take a close look at your assets by conducting a complete asset inventory. This will serve as the basis of your plan. In the inventory, include:

  • What assets you have
  • Where they are
  • What their values are
  • When they were built or bought
  • What their expected life-cycles are

Step 2. Calculate life-cycle costs - In order for your plan to be as accurate as possible, you need to calculate your assets’ entire life-cycle costs, not just how much they cost at initial purchase. During an average asset’s life, there are many opportunities for added costs, like maintenance, capital, condition and performance modeling and even disposal costs. Remember: your asset management plan is only as accurate as your life-cycle costs.

Step 3. Set levels of service - Use levels of service to outline the overall quality, capacity, function and safety of the different services your assets provide. The requirements of maintaining that service will dictate the operating, maintenance and renewal activities that need to occur moving forward. To access levels of service, think about:

  • The level of service you’re currently providing
  • How that level of service is expected to change
  • The annual cost of current service
  • If there is funding to support any change in service
  • If your current level of service is meeting to needs and expectations of users

Step 4. Apply cost-effective management - Are you managing your assets in a proactive or reactive manner? In most cases, proactive management is more cost-effective in the long-run than reactive management. For example, if you wait until there is a bad pothole on one of your streets before performing road maintenance, you can end up spending more money than if you proactively conduct road maintenance over time. You’re practicing cost-effective management when you do the most cost-effective maintenance, repair or replacement at the right time during the entire asset life-cycle.

Step 5. Execute long-term financial planning - Your asset management should naturally translate into long-term financial planning. A long-term financial plan will help you determine which of your objectives are feasible, which are important and which can maintain your priority assets over the long term.

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