An asset’s lifecycle encompasses everything that occurs from first deciding there is a need for the asset, to eventually disposing of the asset after it is no longer useful. Asset lifecycle management is a method for asset management in which asset managers can optimise their assets' useful lives and get the most out of a limited lifespan.
Welcome to the Iamdata Solutions Asset Management Monthly Newsletter - January 2023
Each asset goes through these main stages during its life:
CapEx Planning
Plan/Design
Acquire/Build
Operate / Maintain / Monitor Performance
Modify or Upgrade
Retire / Replace / Dispose
CapEx Planning / Design / Build - Council's Capital Works Management Process
All councils will have their own processes in place to plan capital renewal and replacement projects that meets their levels of service objectives.
When the Council develops a capital works program, many things are taken into consideration and the items listed for capital works must align with Council’s Strategic Plan and the needs of the community.
Here is a common Capital Works Management Process model:
Operate, maintain, and monitor performance stages
The majority of the asset's time is spent in the operate, maintain, and monitor performance stages. It is here where you can gather enormous amounts of useful information to help you manage your assets more efficiently and effectively.
Analysing the data to help make informed decisions - When to renew assets - What is the optimal point?
There are many modelling tools available to help Asset Managers assess different budget scenarios to ensure that the best budgeting option is identified to maintain the asset network at the accepted level of service. Modelling different scenarios allows us to evaluate what is likely to happen over time (usually 20 years) to the network assets if we spend a certain amount of money each year on Renewal and Replacement.
I've used Power BI to slice and dice the data in a variety of ways to get better insights into what the data is telling me. I can see which assets require investment and when, based on the asset's expiry date and Current Replacement Costs.
Modelling the data is a good exercise to do as it will provide Council with good information, such as the overall condition of the network and the budget Council requires to continue to maintain the network at the agreed Levels of Service, and, if you run a model with far less budget than required, you should be able to see how much this action is likely to cost you over the upcoming years – as leaving an asset to deteriorate past it’s optimal intervention point ends up costing more to fix.
The analysis is also a basis for stakeholder engagement. With good information, stakeholders will be able to make evidence based decisions.
As part of the modelling and data analysis, intervention points can be determined.
Intervention Points
Setting the correct intervention points will ensure Council can carry out prescribed work at the optimal point in the asset’s lifecycle. This practice guarantees the asset is not left to deteriorate to a point that would require more work and more money to bring the asset up to a serviceable level. Intervention points could be set up in the Asset Management system at Condition 6 (on a 0 to 10 Condition rating), or Condition 3 (on a 1 to 5 condition rating) to reflect Council’s actual renewal and replacement strategies. The Asset Management system should calculate the depreciation based on the intervention point, to avoid any write-offs in the Finance System.
Modify or Upgrade
The data can tell us if the asset requires a modification or upgrade. For example, if a defect audit or a compliance audit, for example, reports something that tells us that an upgrade is required which will prolong the assets useful life then it makes sense to do this relatively small cost piece of work now rather than letting the asset deteriorate further and eventually require a full replacement. Setting intervention points to catch these assets at this stage of their lifecycle could also help prolong the assets lifespan.
When it's time to Retire / Replace / Dispose of an Asset
At the end of an asset's useful productive life, it is removed from service and either sold, re-purposed, thrown away, or recycled. The decision to dispose of an asset should be based on the service deliverables. A solid asset disposal plan can reduce asset management costs and the work that you've done to determine the optimal point for this will ensure you are getting the best out of your assets for as long as possible.
Having the asset useful life and intervention points set up correctly in the Asset Management system will ensure that the asset is disposed at the optimal end point in the assets lifespan and will avoid write-offs in the Financial System.
Conclusion - Benefits of Asset Lifecycle Management
Effective asset lifecycle management can extend asset lifespans, reduce the cost to maintain the asset throughout its life, and make the asset more reliable/less likely to break down spontaneously.
I have worked on many different projects with my Local Government clients, from designing and developing Power BI Reports, to building SQL Server databases for spatial data, to managing and maintaining the GIS and the Asset Management systems. If you'd like to discuss how we might work together, then please email me at ➡️ jill.singleton@iamdata.solutions
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