From skyscrapers to manufacturing plants, across all types of industries, and in companies both large and small, facility asset management is the quiet but vital linchpin responsible for optimizing operations, maximizing asset lifecycles, and contributing to a company’s bottom line.
Facility asset management is a broad service that encompasses multiple obvious and not-so-obvious aspects of a business’ day-to-day functions. When operations are running seamlessly it’s easy to forget about facility asset management, especially when it’s handled by a third party. But when things go wrong, the important role of the facility asset manager—and how it affects business efficiency—becomes apparent. This is why it’s so important to pick the right facility asset management service for your company.
Facility Asset Management—What’s Involved?
So, what are facility assets? The precise answer can vary, depending on the organization, but facility assets are generally thought of as those that affect the day-to-day operations of the business and support occupants’ needs inside buildings and on the grounds outside of the facility.
Traditionally, these assets have been considered the tangible and physical items in a facility. However, with the expansion of technology, intangible assets such as CMMS (computerized maintenance management systems) and HVAC fault detection and diagnostics may also fall under the purview of facility asset management.
Some experts have defined facility assets as anything that needs to be maintained at least once a year or is valued at more than $5,000. While these may be good additional guidelines, relying on a dollar amount or a maintenance standard may miss some critical assets—or conversely, include less relevant ones, depending on your facility.
The official definition of a facility asset comes from ISO 55000, set by the International Organization for Standardization. This standard defines an asset as “an item, thing or entity that has potential or actual value to an organization.” Asset management is defined as a discipline that helps to “better achieve organizational objectives while realizing greater value from their assets.”
In other words, assets are items with actual or potential value to the facility that would cause disruption to operations or business objectives when not functioning. Since ISO recommendations are considered the gold standard for best practices in areas such as quality control and safety, this definition of asset management is a good reference point, so if in doubt, referring to ISO 55000 is a good bet.
Strategies, Methods, and Best Practices
Expert facility asset management is crucial to maximizing the longevity and productivity of your capital assets. To achieve this outcome, a facility’s asset management program should include the following:
Comprehensive Asset InventoryThe first step in effectively managing your assets is to have comprehensive information on each one. That means every asset is tagged and barcoded, and its identifying information is entered into a tracking system that’s accessible by all those who need it. Having up-to-date and organized records of all facility assets promotes informed decision-making. While the labor and time involved in reconciling incomplete or inaccurate data may seem daunting, the effort will be rewarded with less disruption in the long term and greater insights into your facilities’ operations.
Lifecycle Planning and ManagementLifecycle planning is a core part of facilities asset management. Being able to identify when assets are nearing the end of their life and developing strategies around asset lifecycles can provide significant cost savings for your organization.
In fact, a global report on asset management from Deloitte found that the aging of facility assets is a major risk for many companies. But this same report also found that businesses that are able to effectively calculate the lifetime of their assets spend substantially less on reactive maintenance. This is just one way that a robust facilities asset management program can bring greater predictability and value to an organization.
Experienced asset managers know how to analyze annualized ROI to optimize facility investments. To make informed decisions on asset replacement and repair, facilities managers should assess the totality of every asset’s cost: from design, procurement, installation, and startup; through operation and maintenance; and finally, to decommission and removal. In this way, assets can be compared equally, and plans can be made accordingly.
The Power of Analytics to Inform Decisions
Digging into historical and performance data to discover trends, make predictions, and engage in proactive problem-solving can be powerful. By analyzing historical asset performance, trends and patterns can be identified, enabling proactive recommendations, preventing costly breakdowns, and extending the lifespan of the facilities’ assets. Relevant data should be drawn from all sources, including the manufacturer’s history, as well as the asset’s performance and maintenance records.
Compliance and Regulations
Whether it’s safety standards, environmental regulations, or industry-specific mandates, being well-versed in the regulatory landscape and ensuring that assets and operations align with legal requirements must be a priority in facilities management. Failing to comply with environmental and other regulations can have serious repercussions, such as a damaged reputation among customers, and even—in rare cases—legal costs.
It’s essential that every asset in the facility—and the facility as a whole—comply with ICC, OSHA, EPA, and other government regulations. Regular training of in-house technicians is a must to ensure that they are up to date on regulations and keep stringent records.
But it’s not enough for your team to be in compliance, you must also ensure that your third-party vendors and service providers are compliant. Assets serviced by third-party vendors who are non-compliant can come back to bite you. To avoid this scenario, facilities managers should communicate regularly with vendors about compliance issues, and gain as much insight as possible into a contractor’s record. Be prepared to switch providers if there are serious or continuous non-compliance issues—your reputation depends on quick remedial action.
Technology-Aided Predictive Maintenance
Facilities management providers can fall into the trap of reactive maintenance. But a proactive approach is best for the bottom line, as preventing an asset’s failure is less costly than repairing the asset. And predictive maintenance can yield even greater savings, as it takes the forward-looking approach of proactive maintenance to a new level.
If reactive maintenance is about the past, and proactive maintenance is about the present, predictive maintenance is all about the future. While “reactive maintenance” is essentially a synonym for “repair or replace,” and proactive maintenance involves monitoring assets for signs of wear and tear, predictive maintenance collects data about individual and aggregate assets to determine the best schedule for both maintenance and inspection.
Predictive maintenance is still a fairly new discipline, made possible by advances in data analytics and sensor technology. Technologies such as EAM (enterprise asset management) software and CMMS (computerized maintenance management systems) enable technicians to move away from reactive maintenance to a more predictive strategy of maintenance and repair.
Sometimes referred to as CBM+ (condition-based maintenance plus), these technologies use real-time data from sensors, together with machine learning (a type of artificial intelligence) to give facilities managers the information they need to gain greater insight into the condition of facilities assets, allowing for repair schedules to be optimized, and minimizing or even eliminating downtime. These high-tech tools are allowing an increasing number of companies to streamline and optimize facility operations.
Four Benefits of Facility Asset Management
How do the best practices of facility asset management benefit businesses and property owners? The gap between merely adequate facilities management and vigorous asset oversight can be wide.
The principal thrust of facility asset management is to coordinate activity and efforts that will optimize asset performance. This is achieved through performance monitoring, lifecycle analysis, and predictive repairs that reduce downtime and extend the asset lifecycle.
At its best, facility asset management goes beyond maintaining the status quo to maximizing the potential of every asset. By optimizing performance, businesses can extract maximum value from their investments, directly improving the bottom line. In essence, robust asset management can transform assets from potential liabilities to long-term contributors to company value.
Improved Productivity and Cost Savings
In a Berkshire Hathaway survey of companies across multiple sectors, 70% reported losing productivity due to unexpected asset repairs and replacements. Asset ignorance is costly. In manufacturing alone, studies have shown that unplanned downtime costs companies an average of 800 hours of productivity every year.
This is why it’s essential that the facilities management service provider you use be knowledgeable in proactive and predictive maintenance. Knowledgeable facility asset managers who compile comprehensive asset inventories, embrace proactive maintenance strategies, and provide asset lifecycle management can mitigate lost productivity and reduce costs.
Risk Mitigation and Enhanced Safety
The National Safety Council estimates that the total economic costs of work-related deaths and injuries in 2021 was $167 billion. Robust facility asset management can be a proactive shield against unforeseen risks by ensuring the proper functioning of machinery and equipment and implementing safety protocols that reduce the risk of accidents and breakdowns. Additionally, managers knowledgeable in their facility’s compliance needs can ensure assets and operations align with legal requirements. This not only mitigates legal risks but also fosters a culture of responsibility and accountability.
For any facility, identifying energy consumption, emissions, and areas where efficiency can be enhanced leads not only to improved operations but also to a more sustainable and eco-friendly facility.
By managing assets with sustainability in mind, eco-savvy facility asset managers can optimize energy efficiency, which not only saves money, but is essential in order to earn environmental certifications such as LEED (Leadership in Energy and Environmental Design). LEED is a coveted and globally recognized achievement of sustainability for all building types. By optimizing their building assets and operations, businesses have not only qualified for this certification, they’ve also reduced energy use by as much as 30%.
At a time when environmental responsibility is a business imperative, facility asset management—through energy-efficient practices, waste reduction, and adherence to sustainable standards—can contribute to the company’s ethos of responsible stewardship.
Facility Asset Management is crucial for ensuring facility assets don’t just function, but also contribute meaningfully to organizational success. When power plants run smoothly, or high-rise buildings function flawlessly around the clock, that’s often due to the meticulous strategies of a facility asset management team that combines knowledge, foresight, technology, and data to redefine operational excellence.
As industries evolve and businesses navigate the complexities of a rapidly changing world, excellent facility asset management becomes increasingly important. Now more than ever, a tech-savvy, holistic approach to asset management is an essential contributor to a company’s value.