Why do you need it?
For
- Effective asset planning
- evaluation of alternatives
- acquisition new assets
- replacement existing assets and to
- compare life cycle costs.
and the outcome is…
- Efficiency
- cost-effective asset acquisition
- reduced demand new assets
- lower program costs
- Improved service delivery
Why control your assets?
- Determining Strategic Focus
- Link to Business Assets
- Insurance
- Litigation
- Disaster Management
- Leasing Control
- Security
- Due Diligence
- Maintenance
- Economic Rationalism
In your organisation who accepts responsibility for asset control?
Who takes account of such issues as…
- Future Technology
- Business growth or decline
- Competitors’ likely competitive investment
Have you a Strategic Asset Plan?
- Requirements Statement
- Market Analysis & Options Analysis
- Strategy Framework
- Base Case Benchmarking
- Market Analysis
- Comparative Analysis
The most important part of an organisation is its people. The second most important part is the tools those people are given and these tools are the most neglected part of 90% of organisations
Did you know…
- Plant & Machinery represents 64% of the fixed assets of the top 100 Australian companies
- Do you think your organisation is any different?
Assets impact on…
- Strategic Focus
- Relocation Objectives
- Business Objectives
- Help Desk
- Preventive Maintenance
- Purchasing
- Disposals
- Human Resources
- Audit Control
- Technology Needs
- Stocktake Procedures
Have you thought about?
- Disposals
- Human Resources
- Audit Control
- Technology Needs
- Stocktake Procedures
and then there is effective accountability
- Which identifies those responsible for assets
- This responsibility encompasses all phases of the life cycle
remember…
- Effective accountability mechanisms
- establishes culture
- assets maintained and protected
- maximise their outputs or service potential
What then, is the “right” strategy for the replacement of capital assets?
The 5 Step Process
- Identification of need
- Decision as brand, type, etc
- Acquisition by cash, finance, etc
- Ongoing Operation
- Disposal
Identification of Need
- Define the task
- Define the specification
- Define the end product
Decision, brand, type, etc or “Lifecycle Costing”
Consider:
- Initial purchase cost
- Training cost
- Commissioning cost
- Maintenance cost
- Downtime cost
- Staff training cost over time
- Capital loss on sale of asset
Funding
- Cash
- Finance Lease
- Operating Lease
- Other method
Ongoing Operation
- Intangible
- Relates to unreliability
- “Frustration” cost
Disposal
- The final equation can depend on the disposal realisation
- Short term assets are most affected
- Disposal can have a negative return
So where do we begin?
- Planning essential
- Not reactive
- Demand Forecast Models
- current market share
- increased market share
- bench marking
- technology
So where do we begin?
- Know your assets
- Asset Register
- Know what your assets are worth
- Know how well they suit their purpose
Asset planning decisions are based on an evaluation of alternatives which consider the ‘life cycle’ costs, benefits and risks of ownership
The Criteria
- Suitability & Fitness for Purpose
- Capacity and Utilisation
- Maintenance
Suitability & Fitness for Purpose
- Ability to deliver intended utility
- Location
- Creditability
- Working Environment
Capacity & Utilisation
- Ability to meet demand
- Design capacity utilisation
- Design capacity for future upgrade
Maintenance
- Physical Deterioration
- Maintenance cost
- Management of Breakdown
…you now need to manage your assets to achieve the best bottom line and…
…you have choices, but how will you exercise them…
To Sum up…
Accountability MUST be established for asset condition, use and performance
To Sum up…
An effective internal control structure must be established for asset management
Have you a Strategic Asset Plan?
Develop a project understanding including
- Needs Assessment
- Locational Criteria
- Financial & Business Objectives
- Capital and Operating Budgets
- Operational Criteria
- Qualitative Criteria
Your Requirements...
Accounting Standards
Your Needs...
- Asset Tags
- Asset Register
- Insurance
- Security
- Determine Strategic Focus
- Link to business strategy
- Litigation
- Disaster Management
- Leasing Control
- Security
- Due Diligence
- Maintenance
- Even end of life is important
- effective asset disposal
- consideration of alternatives
- alternatives should be evaluated in cost-benefit terms
- effective management minimises holdings
- maximises returns
So what do you need to know?
- Individual items > $ threshold
- Individual items < $ threshold but deemed portable/attractive
- Leasehold improvements
- Bulk Assets
- Finance/Operating Leases
- Intangibles (intellectual)
- Real property improvements
So what do you need to know?
- Degree to which assets “Sub-settled” to sheet home costs
- Tracking maintenance cost
- So what do you need to know?
- Attributable Relevant Values
- Replacement or Indemnity Value
- Market Value for the Existing Use
- AAS27
- Realisable Value
So what do you need to know?
- Real Property
- Asset information
- Title Details
- Improvements
- Local Authorities and References
- Disposal Information
- Lease Arrangements
- Registered Owner
- Local Management Office
So what do you need to know?
- Intangibles
- (additional information)
- duplicated security location
- duplicated security access
- The Asset Register
- Asset Class
- Department
- Hierarchy
- Common Attributes
- Location
- Value
End of life and disposal decisions must be based on analysis of the methods which achieve the best available net returns within a framework of fair trading