• J.D. Solomon

Why Does Your Asset Management Program Lack Asset Values? (and why it matters!)


Woman pointing at you with money falling around her. Get your asset management program on track!
Determining replacement asset value (RAV) is just as important as performing condition assessments.

Asset management for facilities and infrastructure has fallen into the leadership realm of gearheads and data managers. The result is asset management programs that are years (or decades) and hundreds of thousands (or millions) of dollars into their programs and still cannot produce realistic replacement values for their assets.

Does it matter that we have spent most of our attention on data management systems, integrations with GIS, condition assessments, and preventative maintenance programs? You bet it does.


Asset management is fundamentally about the total cost of ownership. Regardless of how good your conditions are or how detailed your job plans are, there is no way to understand lifecycle costs if you do not know what your assets are worth.


The most meaningful asset management performance benchmarks are related to a percentage of replacement asset value (RAV). You are guessing at performance metrics and the total amount of resources dedicated to improving your program if you do not know your cumulative RAV. You are further lost in the wilderness if you do not know the difference between book value, insurance replacement value, and RAV as it is defined in reliability & maintenance practice.


The next time you review your asset management program, remember to spend equal time and money dedicated to establishing a consistent valuation of your assets. After all, the first three questions of asset management are related to understanding what you own, the value of what you own, and its condition. You are wasting your time if you do not understand all three equally.

 

JD Solomon Inc provides services at the nexus of facilities, infrastructure, and the environment. Contact us for more information on asset management planning, asset management implementation, and third-party program reviews.