Asset Management is not Managing Assets

Asset Management is not Managing Assets

Asset Management

In the last 10-15 years at the latest, asset management has lived “a double life”: on the one hand, it has been the traditional term used since the 1970s for planning procedures in maintenance management (such as PMS), and on the other, it has been the modern management discipline that emerged around the turn of the century. Misunderstandings in the use of this term often have negative consequences, as many managers of road authorities pay little attention to asset management because they imagine it to be (only) a planning procedure for operational maintenance management.

It is therefore of fundamental importance to explain the main difference between asset management as a management discipline on the one hand and planning procedures on the other.

While planning procedures, such as pavement management systems or bridge management systems, concentrate on the respective assets, i.e. the pavements or bridges, the focus of asset management is clearly elsewhere, namely on the respective organization.

Already the definitions of the fundamental terms, namely asset and asset management, in the standard ISO 55000 unmistakably indicate the focus on the organization:

An Asset is an “item, thing or entity that has potential or actual value to an organization

Asset Management is “the coordinated activity of an organization to realize value from assets”

While the results of a PMS evaluation must be identical for every organization in case of the same input data and the same models, the asset management system always assumes an individual organization. It first identifies their unique context, i.e. the relevant stakeholders with their objectives, the most important constraints and boundary conditions such as laws and technical rules, as well as the available personnel and their qualifications. Asset management systems are therefore always different. The confusion of these two meanings of the term asset management and the misunderstandings associated with it are a globally known phenomenon that has a negative impact on the spread of “modern” asset management.

Aware of these problems, the International Organization for Standardization (ISO) decided in 2017 to highlight the differences between the two meanings in the position paper: “Managing Assets in the context of Asset Management” [1]. In this context, the term Managing Assets is consistently demanded for planning tools (such as PMS). The position paper begins with the formulation of the objective: “This document addresses a simple question: Do you mean Asset Management or Managing Assets? The differences between “asset-oriented” managing assets and “organization-oriented” asset management are then listed.

Here are some important findings from this document:

Managing Assets (things you do to assets) can be done with or without a structured organizational strategy and context. An organization gains more value from Managing Assets within a context of organizational purpose and strategy that steers this activity (and becomes Asset Management).

Asset Management has a broader focus than Managing Assets, encompassing many organizational levels and applying to all functions or departments. The terms and concepts are explained in ISO 55000 ‘Asset Management’, which shows how the application of broader Asset Management approaches can help you extract most value for stakeholders.”

In addition, attention is drawn to the risk of arbitrary use of the term asset management:

“With the broad acceptance of Asset Management as a discipline there are many cases of other activities being rebranded as Asset Management and it is important the value that Asset Management brings from a broader organizational view is not lost.”

  1. ISO, Technical Committee 251 Asset Management: Managing Assets in the context of Asset Management, May 2017