Money, Money, Money

Asset Condition Assessment – Long Term Funding Planning Strategy

 There is an expression that says Rome was not built in a day. Well, neither will you’re Asset Management System. It needs to be viewed as a long-term project and, as such, will require planning for Long Term Funding. To use another expression, the person who moved the mountain was the person who moved the first stone, so the way to accomplish your Long Term plans is to plan in smaller chunks.

Short term, Medium term, and then long term.

Short Term

This can often be described as picking low-hanging fruit. Small innovations and changes reap a lot of significant benefits in a short period of time. This needs to be done so that management and employees can gain confidence in what is being planned and can start to see the benefits of how things can be improved with little impact on resources or finances.

Things such as

• Employee Training
• Equipment Servicing
• Quality Fixes

Short-term plans can uplift morale and enthuse everyone with excitement and anticipation for what is still to come and can provide momentum for approval of further medium and longer-term plans.

Medium

Medium-term works on extending what has already been achieved to ensure that the short-term issues do not reoccur

• Extended Training
• Quality Control initiatives
• Asset Service Contracts to approved contractors

Long-Term

Where short and medium-term plans have been successful, long-term plans and ultimate funding requirements become much easier to achieve and get approved. Working on the back of success breeds more success with strategies to

• Implement Permanent Solutions
• Achieve Long-Term Targets and Goals

 Asset Condition Assessment – Long-Term Funding

Long Term Funding can be viewed under the headings of

• Full Economic Cost
• Replacement and Refurbishing Cost
• Long Term Annualised Renewal Costs

Full Economic Cost

The Foundation concept includes all direct and indirect costs affecting the organization, from which effective financial decision-making can be made

Replacement and Refurbishment Cost

The full cost to replace an asset in its current operating environment is key to good financial decision-making

Long Term Annualized Renewal Cost

This provides the baseline funding for sustained performance normally calculated on an annual reoccurring basis. It tells the Asset Consumption Story simply, effectively, and in big-picture terms and sets the stage for Levels of Service discussions and business risk-based decision making.

Asset Condition Assessment – Summary

We have worked our way through the eight elements that are necessary to calculate the Condition Assessment of the Assets under our care. It is a lot of work and a lot of information that needs to be collected and collated, but it comes with huge benefits for ourselves and our organization.

Short-term pain for long-term gain.

If we are serious about the health of our assets, then Condition Assessment becomes a critical factor that needs to be addressed as part of our Asset Management Philosophy going forward. It cannot and must not be ignored. It is vital to ensure that our assets are continuously healthy. Healthy assets will take us forward on our journey. Unhealthy assets will have us searching for reverse gear.

The wheel is turning, and in our next topic, we will move on to the next element of the asset life cycle, which is addressing the subject of Replacement, Valuation, and Disposal of assets. This one is entitled ‘Time to say Goodbye. Don’t miss the next chapter.

For more information, email us at info@strobe-al.co.za or visit www.strobe-al.co.za