What is an asset management plan?

What is an asset management plan?

Asset management is an important process that helps organizations streamline the use of their resources, ensure compliance, enhance financial performance, reduce operational costs and increase productivity. This process is only effective when you have a workable plan.

An asset management plan is the tactical outline of how an organization manages its assets resourcefully, including finances, buildings, IT resources and equipment over a specified period to realize its objectives. It ensures the effective use of resources while minimizing costs and risks.

However, the effectiveness of your asset management plan depends on its implementation. This is why you need reliable asset management software to automate the process of identifying and tracking your assets.

Overview of an asset management plan

As mentioned, an asset management plan (AMP) is a strategic roadmap that guides an organization on how to use its resources efficiently to achieve its objectives. Create a plan that aligns your company’s resources with the set standards of service. It should help you manage every asset’s lifecycle for maintenance and optimization.

For instance, you should be able to monitor your IT resources to know which software license agreements are still valid or have expired. Otherwise, you could be spending money on programs that are no longer useful to your business.

A good asset management plan should define what happens when a software license expires. For example, if the software is still useful to your company, its license should be renewed immediately to ensure compliance.

How to create an asset management plan

Creating a good AMP involves several important steps, including making an inventory of all your assets. Document each asset based on its:

• Value
• Date of acquisition
• Location in your company
• Quantity
• Expected lifecycle

Then, calculate each asset’s lifecycle, including its acquisition, maintenance and disposal costs. Set your preferred service levels and describe the services offered by each asset.

Next, define the required maintenance of your assets to keep them effective. Lastly, create a financial plan that will optimize the utilization of each asset while reducing your operational costs.

Developing this plan manually can take a long time and cause many unnecessary errors–finding the right management software to help you automate the process.

What are the elements of an asset management plan?

An effective AMP covers the following six key elements:

Asset inventory

As discussed above, start by making a register of all your assets and define them by their characteristics, including type, developer, age and location. This makes it easy for you to access the information about all your assets quickly.

Risk assessment

This involves determining the potential risk involved in every situation. For instance, you should know how much risk an asset poses to your employees, customers or business. There are two main risk variables: Likelihood of Failure (LoF) and Consequence of Failure (CoF).

Standard of service

This involves determining the level of service you’re likely to get from an asset. The level of service depends on the physical condition and performance of an asset; it can also be defined through customer satisfaction.

Condition assessment

The condition of an asset is calculated using the value of the estimated LoF. Please note that the KPI can vary depending on the type of asset.

Decision criteria

The decision to use an asset depends on the cost of the asset, operational impact, potential risks and adaptability to different projects.

Financial planning

You need a workable financial strategy that will help you maximize the utilization of the available assets cost-effectively and ensure they remain valuable for a long time.

Flexera can help

An asset management plan helps you acquire, maintain and utilize assets cost-effectively while minimizing potential risks. If you need reliable software to help you develop a workable asset management plan, try Flexera!