When investing in new assets, most organizations consider the total cost of ownership based on that assets’ predicted life.
What’s more, they use that predicted life to make decisions regarding asset care and replacement and to inform capital plans.
The reality is that predictions about the life of an asset can be difficult to get right, especially over a long period of time when operating conditions are subject to change. For example, increases in production or a change in materials can put added pressure on an asset and significantly shorten its effective life. So, while you may have planned to replace that asset after twenty years, you may find that you need to replace it after just ten or fifteen years. Even worse, it may need to be replaced urgently, irrespective of any other plans you had for the required capital.
The good news is that you can reduce the occurrence of urgent and unplanned replacements by assessing the life of your assets on an ongoing basis.
Chances are your organization is already collecting data on the current health of your assets as part of routine inspections and continuous monitoring. What may be missing is a structured approach to using this data to update your asset care and replacement plans. This is where Asset Strategy Management comes in. It provides a process to help you assess the health and life of your assets and connect that information to your asset care and replacement plans.
This proactive approach to asset care and replacement yields several benefits, including:
- Opportunity to extend the life of assets – If you can assess early on that assets are aging faster than anticipated, you may be able to increase maintenance activities to extend their life
- Greater control of capital plans – If you cannot extend the life of an asset through maintenance, you can at least update its replacement age and factor this into your capital plans
- Reduced risk of failure – Through better planning and control of capital, you’ll be in a better position to replace assets before they fail
To learn more about Asset Strategy Management and the other benefits it can deliver to your bottom-line, download our executive brief on the key business benefits of implementing an ASM program.
