In this article, we introduce the three major asset management models: the Concept Model, the System Model, and the Capability Delivery Model. We will explore their roles in ensuring that organizations can optimally manage their assets to achieve their business objectives. Each model provides a distinct perspective and framework for asset management, allowing businesses to make better decisions about how to operate, maintain, and optimize their assets.
The Concept Model provides the foundational framework for asset management. It sets the overall principles, standards, and regulations that guide asset management practices and defines the relationship between different stakeholders involved in asset management.
Stakeholders play a critical role across all asset management models—Concept, System, and Capability Delivery—occupying the upper levels and guiding decision-making. They influence and regulate operations, ensuring alignment with organizational goals and external expectations. The Stakeholder Circle exists around the Concept Model, impacting all decisions made within the model.
Stakeholders are both internal and external, such as:
They provide requirements that shape asset management strategies and operations. These requirements are documented in the Statement of Stakeholder Needs, which outlines the mandatory needs and expectations from different groups.
Expectations may cover:
The Stakeholder Circle ensures these needs are met throughout the asset management process, guiding both short-term decisions and long-term strategies.
Another essential aspect of the Concept Model is the Plan-Do-Check-Act (PDCA) cycle developed by Dr. Walter Shewhart.
By applying this cycle, organizations can ensure that asset management processes are continually improved and refined over time.
The Concept Model is based on four guiding principles that synthesize stakeholders' objectives.
Every organization must ensure that its assets deliver specific, measurable results aligned with its goals. This principle emphasizes the importance of defining what the asset is used for and monitoring whether the desired outputs are achieved, typically outlined in agreements. Output measurement must be consistent and aligned with organizational objectives to ensure clarity and success.
Asset management is about maximizing the value an organization can gain from its assets. This principle highlights that assets should be viewed through the lens of their capabilities—what they can do, how they contribute to organizational value, and how they are utilized. These capabilities depend not only on the asset itself but also on the competencies of the people and the processes supporting them.
This principle deals with understanding the risk and ensuring that assets are likely to meet organizational goals. It balances the likelihood of asset failure with the impact of that failure, considering financial, risk, and quality factors. Ensuring the right level of assurance helps organizations make informed decisions about how much risk is acceptable in their asset management practices.
A learning organization continually adapts and improves. This principle emphasizes the role of culture and leadership in evolving an organization’s relationship with its assets. Employees actively engage in asset management processes, striving to enhance productivity, improve quality, and contribute to decision-making. A learning organization fosters ownership, development, and proactive participation.
The four fundamentals of asset management, as defined by the ISO 5500X standards, guide the Concept Model and ensure effective asset management practices.
Assets provide value to the organization and stakeholders. Asset management transforms organizational goals into actionable plans, using asset capabilities to fulfill their intended purpose. Leadership and culture are key to realizing this value.
Alignment ensures that asset management decisions support organizational objectives and stakeholder expectations. It synchronizes strategies and actions to maximize asset contribution to business goals.
Leadership drives a culture that integrates asset management across the organization, empowering employees and fostering continuous improvement. Strong leadership ensures alignment between strategic goals and asset operations.
Assurance ensures that assets meet organizational objectives reliably. This involves managing risks, monitoring performance, and confirming that assets deliver the expected outcomes.
While the Concept Model explains how asset management works, the System Model focuses on what happens when people operate assets. ISO 55001 defines the requirements for the asset management system, and this model serves as a guide for assembling and connecting its components.
It also illustrates how stakeholders’ needs, organizational goals, and asset management objectives are interconnected. To better understand this, we also examine the Organizational Systems Model, which shows the interrelationship between various organizational management systems.
It consists of interconnected elements within an organization, coordinating the contributions of various functional units. It links an asset management plan with the technical requirements set by ISO standards and other regulations. Its primary purpose is to establish policy, goals, processes. The system also integrates tools and processes to ensure that activities achieve the desired outcomes.
The Asset Management System impacts the entire organization, stakeholders, and external parties within the value chain. The model includes key requirements outlined in ISO 55001, such as:
These elements ensure that asset management activities align with the organization’s overall goals and objectives.
At the heart of the System Model is the relationship between leadership, organizational objectives, and asset management goals. Leadership is responsible for:
Asset management objectives are derived from organizational goals and are documented in the Strategic Asset Management Plan (SAMP) as outlined in ISO 55000. These objectives guide asset management efforts and ensure alignment with broader business strategies.
Performance monitoring is crucial to the System Model. They track the accomplishment of goals, Key Performance Indicators (KPIs), and Key Result Areas (KRAs). Key activities in performance monitoring include:
Regular assessments help organizations meet stakeholder requirements and refine asset management practices as needed.
ISO 55001 states that an organization must determine:
Key elements of the management system must be audited every two years. The process includes:
Here is a comprehensive illustration from the Asset Management Council that shows how to unlock value in asset management:
The key to monitoring and evaluating the system is to collect data and turn it into practical information. A methodology and techniques must be established to verify and evaluate the data, accompanied by data quality requirements.
The System Model guides data-driven decisions that align with organizational and asset management goals. Each of them is characterized by the context of the decision, its objectives, alternatives, potential risks.
There are five types of decisions:
Decision-making responsibility may lie with individuals or groups, depending on the situation and organization. Decentralization implies a higher level of agreement on criteria, derived from objectives. The consequences must be evaluated in light of their impact on organizational goals and asset management.
What is the implication of KPIs in monitoring asset management decisions? A Key Result Area (KRA) is the required level of performance for an organization to be profitable and grow. Measurement is done using Key Performance Indicators (KPIs) necessary to implement the KRA.
Consider the three main areas asset management seeks to improve—cost, risk, and efficiency—for the three KRAs of a system. Our imaginary organization has KPIs related to each area and evaluates decisions based on their impact on these KPIs.
The System Model also emphasizes process management, competence, and engagement. This ensures that asset management activities are streamlined, effective, and aligned with goals. Key factors include:
These components ensure the system is robust and sustainable, supporting the achievement of organizational objectives.
Risk management is integral to asset management and derives from process management, competence, commitment, and organizational roles. The main goal is to use and maintain assets to preserve their value for stakeholders and the business. This requires understanding stakeholder needs, the nature of associated risks, and finding approaches to mitigate these risks. Risk management provides the processes and tools to support decision-making for future asset performance.
>>> Read more about the Concept Model and the System Model in The Asset Management Anatomy <<<
The Asset Management System Model generates several key documents to guide asset management and decision-making:
The Asset Management System Model exists within a larger system—the Organizational Systems Model. This model shows the relationship between various organizational objectives and the systems they generate.
For example:
In the Organizational Systems Model, individual goals and their systems must align with all organizational goals. Combined, they form a holistic picture of the organization.
Together, the Concept Model and System Model provide a solid foundation for asset management. The Concept Model sets the principles, standards, and objectives for asset management, while the System Model structures the organization and processes to ensure effective implementation.
In the next part of this article, we will explore the Capability Delivery Model and discuss how it connects with the earlier models to provide a comprehensive approach to asset management.
