Why should you do physical asset management?

25 Mar, 2020

From “project management” to “user control”

Changing user needs, the obsolescence of buildings and infrastructures, and regulatory and budgetary constraints are pushing asset managers to implement a strategy and an asset management system based on a balance and optimization of costs, performance – desired level of services and targets to be reached – and risks in order to provide an adapted response to the new challenges of the organization, whether public or private.

In all sectors, intensive construction between 1950 and 2000 has given France a stock of physical assets whose maintenance is not always well ensured and whose renewal is still poorly controlled. Whether they are real estate, industrial, urban infrastructure, or transport assets, these assets are leading managers to review their practices: more and more of them are migrating towards methodical and structured asset management in order to maximize the value of their assets over the long term.

But why undertake such a move? What is the point of changing the way things are done?

The challenge: finding the right balance

The answer lies primarily in the need to have a panoramic view of one’s entire asset portfolio and to be able to anticipate equities at any point in the life cycle. It is on the basis of all the needs, opportunities, and problems identified for all types of assets that decisions and actions will be better targeted. And even if, after analysis, the actions were focused on a single site, the decision to act will have been the subject of rigorous analysis and comparisons of needs across the entire portfolio.

The traditional approach based on a single-site reading thus gives way to an analysis that takes into account the objective of maximizing the use-value of the organization’s assets.

The strategy and asset management system must therefore respond to the long-term monitoring of changing needs, through the development of a Master Plan based on a reliable and scalable reference framework. This approach, and the resulting tools, is based on three essential steps: identifying work requirements and their characteristics, associating risks with them and arbitrating in order to select investment projects and regular maintenance actions with the best impact on the value of the assets.

The asset manager must move from a culture of “project ownership” to a culture of “use control”.

Jean-Pascal Foucault

The objective: to generate value

In other words, asset management is a process of optimization, of arbitration between conflicting parameters whose role is to ensure a balance between various actions generating operating, maintenance, renewal, construction, and disposal costs. The manager aims to produce value for his or her organization by ensuring that the costs to be incurred meet the organization’s mission, its political intentions, and its vision of the future.

The benefits of this approach are multiple: for example, improved financial performance, improved decision-making and quality of service to users, risk control, demonstration of regulatory compliance, improved sustainable development and societal accountability of the organization.

All of these benefits ultimately lead to an improvement in the organization’s brand image, notably through user satisfaction and trust.

The way: move forward now!

Faced with the constant evolution of uses, obsolescence, regulatory and financial constraints of heritage, the strategy of continuing to build and accumulate physical assets is no longer adapted to the current stakes of ecological, digital, and economic transitions. The heritage manager must move from a culture of “project ownership” to a culture of “use control”.

Their actions are therefore part of a sustainable approach to understanding, controlling, maintaining, and optimizing the decisions and actions needed to generate value, offering a response adapted to the changing needs of an organization in order to understand their causes and control their effects.

What would be the risk of doing nothing?

Keywords: physical asset management, real estate assets, uses, optimization, risks

Date of the article: 10/02/2020

Editors: Maxime Butez, Jean-Pascal Foucault

Source: Norme internationale ISO 55 000 – Gestion d’actifs – Aperçu général, principes et terminologie – AFNOR

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