MRO Magazine

Asset Management – What is it and where did it come from?

Over the last few years, a new term has become more popular in the world of maintenance and reliability and its asset management.

May 17, 2021 | By Cliff Williams

Photo: WrightStudio / Adobe Stock

Photo: WrightStudio / Adobe Stock

Often, it is difficult to tell the difference between asset management and maintenance and reliability, as they often seem interchangeable. This begs the questions, “are they the same things, what is asset management?”

To answer these questions we need to understand where the term “asset management” came from and what it entails. Asset management is not a new term, but its context has changed. An internet search 10 years ago would show links to financial institutions or plans. Today, those still show up, but spread amongst them are links to organizations or articles about “effectively manage existing and new assets to deliver value.” When adding “holistic” or “physical” to the search, the number of financial links drop off dramatically. So why the change?

The events that prompted the change in context, started in the U.K. during the 1980s and 90s. It was when the U.K. government privatized industries (steel, utilities, infrastructure and railways) that had previously been government owned. By the late 1990s into the early 2000s, problems started to occur within the utilities and infrastructure in the U.K. These problems were related to the failure of assets. It was recognized that this could not continue, and there appeared to be a systemic problem related to how the assets were being managed.

Asset related failures ultimately led to the issue of Publicly Accessible Specification for the optimal management of physical assets or PAS55 in 2004 – issued by the Institute for Asset Management and the British Standard Institute, which was revised in 2008. Numerous other countries were involved in the 2008 revisions, which led to the realization that no real international standard for asset management existed.


Therefore, the idea of an ISO standard was formulated and a technical committee set up in 2010 to start the process of developing an ISO standard. It took until 2014 and over 30 countries as creators or observers for it to come to fruition. The standard, published in early 2014, was made up of three parts.
– ISO 55000 Asset management – Overview, principles and terminology
– ISO 55001 Asset management – Management System – Requirements
– ISO 55002 Asset management – Management systems – Guidelines on the application of ISO 55001

In 2018, there was a revision and version ISO 55002 – 2018 now exists.
It was the publication of the ISO Standard that prompted changing context, and the introduction of asset management into the world of maintenance and reliability. Many ISO development committee members lived or had lived in the maintenance and reliability space, therefore, it was natural for them to introduce the new standard to their audience. The response varied around the world. In the U.K. and Australia, the countries that had adapted the PAS 55 philosophies the most, viewed it as the next logical step in the asset management process.

In North America, which had a limited uptake of PAS55 or its philosophies, there was confusion. Some organizations presented it as the next step in maintenance and reliability, some substituted maintenance and reliability with the term asset management, and some embraced the philosophies and approaches described in ISO 55000.

The situation in Canada has certainly swung towards the ISO 55000 end of the spectrum. Governments and bodies such as the Federation of Canadian Municipalities have identified this approach as being the desired philosophy for asset management. In 2017, the Government of Ontario enacted O REG 588/17 Asset Management Planning for Municipal Infrastructure, which follows many of the principles presented in ISO 55000 and requires municipalities to develop asset management plans (AMP).

What is asset management?
Asset – something that has potential or actual value to an organization. (ISO 55000).
You can see this does not restrict the definition to tangible assets, such as equipment and tools, but includes intangible assets such as reputation, intellectual property, knowledge, systems, and even human assets. This is where we realize that maintenance and reliability is not synonymous with asset management. Maintenance and reliability are an important part of asset management, but there is more, as becomes apparent when we see the definition of asset management.

Asset management – the co-ordinated activity of an organization to realize value from assets (ISO 55000).

The key takeaway is that it implies all activities required to realize value (goal setting, finance, personnel, procurement, design, marketing, administration hiring, systems), and maintenance and operations. Therefore, asset management is an organization’s operating philosophy.

To understand asset management better, we need to see it is built upon four fundamentals as per ISO 55000.

Value – The reason that assets exist is in order to provide the maximum value to the organization and its stakeholders.

This can only be achieved by ensuring that what you are trying to achieve, with your asset management goals and objectives, clearly support your organizational objectives. To do this there will need to be a clear definition of value in response to stakeholder needs, and the whole lifecycle management approach is used to derive value.

Alignment – This ensures consistency of purpose and direction from the organizational objectives, through the asset management policy to the activities, plans, and decision making, in enabling the achievement of the objectives.

This requires the integration of the various functions or departments of the organization into the decision-making processes that are driven by a risk-based, informed approach in support of the organizational goals.

Leadership – Leadership and workplace culture are determinants of the realization of value (ISO 55000).

This requires that the leadership create a culture where employees are educated, empowered, and engaged with the skills knowledge and information to carry out their clearly defined roles and responsibilities.

Assurance – This is how the organization can demonstrate effective governance by ensuring the assets are fit for purpose and will fulfill the required purpose.

This requires that processes exist to monitor the capability of the assets to meet purpose and measure that performance with a view to continual improvement. This is done in the context of demonstrating the capabilities of the asset management activities in delivering value as described in the organizational objectives. MRO
Cliff Williams is author of the bestselling maintenance novel ‘People – A Reliability Success Story.’ He is a maintenance and asset management educator, and a keynote speaker at conferences around the world, who believes success is achieved through people. Currently Cliff shares his knowledge and experience as an advisor on maintenance and reliability for people and processes, and asset management with TMS asset management and is a facilitator for PEMAC’s Asset Management Program.


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