Building management professionals aren’t just tasked with managing their facility's assets. They’re also tasked with developing strategic plans for managing those assets in the future. The most successful building management teams use a systematic approach to monitoring, maintaining and planning for their facility.
Strategic asset management planning should start with understanding the life cycle of an asset. Equipment and machinery won’t last forever, so it’s important to have an understanding of where each asset resides within the cycle to avoid unplanned asset downtime. This way, you’ll be able to see at-a-glance which equipment you should prioritize for replacement and budget accordingly.
Here are the four key stages of the asset life cycle, what they mean and how you can use them to your advantage.
The 4 Asset Life cycle Stages: Explained
Stage #1: Planning
“Planning” is the very first stage of an asset’s life cycle. In this stage, building managers take observations of current resources and equipment conditions. They may also verify the resources needed to move forward with replacing an asset. Here are a few examples of what a building manager may do during the planning stage.
Assess whether or not current equipment meets production needs
Ensure that necessary resources are available for use
Identify which assets are under-performing or unnecessary to operations
Check that equipment is receiving proper levels of maintenance
Estimate funding required to procure a replacement asset
Simply put, the planning stage determines the current state of equipment and the most cost-effective means of moving forward. If a machine or piece of equipment is underperforming, the next step is to research options available on the market, make comparisons and undertake demos or trials (if applicable).
Stage #2: Purchase and Acquisition
After thorough research and data collection, the building management team is ready to move forward with purchasing and acquiring the asset. In this stage, the team will define all costs and requirements associated with purchasing the asset. The end goal of this stage is to make the acquisition as cost-effective as possible.
The organization’s procurement department will work to find the best supplier and negotiate the best pricing possible. They will take into account the asset’s initial investment costs, as well as the asset’s total cost of ownership. Finally, the asset will be installed within the facility and added to the organization’s fixed asset register and building infrastructure management software.
Stage #3: Operation and Maintenance
The operation and maintenance stage is typically the longest and most substantial portion of an asset’s useful life. In this stage, operation and maintenance activities are performed and tracked, typically in a software platform. Building management teams will focus their efforts on keeping the asset in good working condition to ensure efficiency and productivity. This may be done through a robust preventive maintenance program, regular inspection schedule, specialized cleaning routine or regular routine maintenance.
The operation and maintenance stage can be broken down into the Three R’s: Repair, Rehabilitate and Replace. In other words, assets should be monitored to ensure that repairs, parts replacements and adjustments are done in a timely manner to ensure ideal functionality.
Stage #4: Renew or Dispose
As long as an asset is functioning correctly, it is within its useful life. But there will come a time when the asset’s performance significantly deteriorates. Assets that are approaching (or exceeding) their expected life expectancy will experience age-related wear-and-tear or outright failure. Equipment that fails to meet production quotas or efficiency standards ultimately impacts an entire organization’s success. In this situation, it is time to renew or dispose of the asset.
An asset management software will provide enough data over the lifecycle of an asset to inform the best way to move forward in the wake of asset failure. A rule of thumb is that if the cost to repair an asset is more than the cost to replace it, it is most cost-efficient to dispose of (aka “decommission”) the asset. Once an asset is decommissioned, the asset’s life cycle completes and begins again at stage 1.
Why do asset life cycles matter?
There are a number of benefits associated with having a strong asset life cycle management program in your organization. Here are four ways your facilities department can utilize asset life cycle data to your advantage.
Define your assets and their conditions. The right asset management program will enable you to record the installation date, condition and cost-effectiveness of each piece of equipment. This data can be used to forecast an asset’s estimated useful life and total cost of ownership.
Support a proactive approach to maintenance. Asset life cycle management helps a business to actively manage the physical health of its machinery. Proactive maintenance enables organizations to better predict future scenarios, plan for asset failure, and take well-planned steps relating to maintenance and eventual replacement.
Support regulatory compliance in your organization. With the help of a building infrastructure management software, your team can collect and utilize valuable life cycle data for each critical asset. This way, your team is notified of existing problems before they become a compliance issue with regulatory organizations (like OSHA) or accrediting agencies (like the Joint Commission).
Prioritize equipment and machinery replacements. Creating and maintaining a capital budget is an important part of managing a building. By staying up-to-date on asset conditions and life expectancies, your team can more accurately forecast funding needs and ensure maintenance reserves are sufficient.
An asset’s lifecycle plays a major role in a facility department’s budget and operational efficiency. Due to the costly nature of most equipment, it’s a good idea to continually monitor asset conditions and perform the maintenance tasks needed to keep them in proper working order.
Make the Most of Your Assets’ Useful Life
Have you ever wondered how much it truly costs to purchase, operate, maintain and dispose of an asset? This is a good metric to know, especially because your organization will invest a significant amount of money into equipment during years of ownership. Download the Life-Cycle Cost Analysis Formula, a guide to calculating the lifetime cost of a fixed asset, to discover the true cost of owning each of your assets.