1.3Asset management

Return to Contents of Part 2

The principal objective of asset management is to enable an entity to meet its service delivery objectives efficiently and effectively. It involves guiding the acquisition, use and disposal of assets, and managing the related risks and costs over all phases of the asset life cycle.

To be effective, asset management needs to be considered as a comprehensive and multi-disciplinary activity that takes into account a range of factors such as:

• the asset life cycle and asset management principles;

• the needs of the users of the asset;

• the policy and legislative environment;

• the entity’s corporate management and planning framework;

• technical adequacy and commercial viability;

• external or market factors (commercial, technological, environmental or industry implications);

• the competing demands of stakeholders (in some instances); and the need to rationalise operations to improve service delivery or to enhance cost-effectiveness (in some instances).

Managers responsible for assets have recourse to a range of techniques to assist them. These include value management, demand management, economic appraisal, life cycle costing and risk management (see Glossary for definitions). Risk management is particularly important as it underpins many of the key decisions made about assets.