11/9/22, 2:21 PM Life Cycle Engineering’s Asset Management System Framework: Using Asset Management Capabilities to Create Value

Value — Life C…

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Can you trust your data
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The Keys to an ISO 55000-Compliant System
to check your data Overview of an Asset Management System
integrity
The discipline of physical asset management is rapidly evolving as companies rush to understand
How to Align an Industry the implications of the ISO 55000 Asset Management Standard. Each business has its own
4.0 Strategy with your particular reasons, but they tend to all arrive at the same question: will the commitment to
Asset Management
establishing an asset management system provide a sustainable competitive advantage? If
Strategy
businesses use an asset management system to optimize cost, risk and performance across the
Preparing for Post-COVID asset lifecycle, will they achieve the necessary value from their assets?
Demand
Has the Role of the To evaluate whether implementing a system is worth it, it’s necessary to understand an asset
Reliability Engineer management system’s key components. LCE’s Asset Management System Framework (Figure 1)
Changed? establishes the critical linkages between the elements of an asset management system and the
Six Attributes to Look for value that the system can produce. From an ISO 55000 perspective, leadership, policy and
When You Hire Your Next strategy are overarching elements necessary for establishing the organization’s commitment to an
Maintenance Planner effective asset management system. These elements define governing principles and describe
Corrective Action for ISO how asset management will contribute to meeting organizational goals and objectives.
55000
Is it Time for an After-
Action Review of your
Business Continuity
Management Plan?

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11/9/22, 2:21 PM Life Cycle Engineering’s Asset Management System Framework: Using Asset Management Capabilities to Create Value — Life C…

Figure 1. Integrated Framework for the Asset Management System

The ISO 55000 standard focuses thoroughly on what is required. However, the standard does not
prescribe the how. This lack of clarity on how to implement an asset management system leaves
many questions unanswered. Fortunately there are resources available that can guide companies
through the implementation process. Within the LCE Asset Management System Framework the
crucial guidance on “how” is contained within the Asset Management Capability block. It is this
critical step that defines the plans, processes, procedures and organizational knowledge that are
foundational to creating an asset management system.

The Phases of the Asset Life Cycle

The ISO 55000 Asset Management Standard clearly establishes the expectation that assets will
be managed throughout their lifecycle. LCE’s Asset Management System Framework integrates
the Asset Management Capabilities processes, procedures and knowledge into the asset lifecycle
stages. The LCE implementation methodology comprises more than 90 key processes and eight
critical knowledge domains that are associated with each individual lifecycle phase.

Identifying knowledge domains associated with key processes and procedures provides additional
clarity to the asset management capability system view and can be easily mapped back to the
asset lifecycle phases. In addition, the knowledge domains facilitate an organizational view of the
processes and procedures, making it easier for companies to organize and deploy implementation
activities. The key knowledge domains are:
Leadership & Change
Capital Delivery
Reliability Engineering
Work Management
Materials Management/Supply Chain
Operator Care
Shutdown, Turnaround and Outage
Management
eAMS/CMMS

When fully implemented, the resulting asset

management capabilities define a best-in-class
asset management system designed to achieve maximum, risk-based value from your physical
asset portfolio.

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11/9/22, 2:21 PM Life Cycle Engineering’s Asset Management System Framework: Using Asset Management Capabilities to Create Value — Life C…

Asset Management Capabilities

Asset Management Capabilities can be mapped to the four phases of the asset life cycle, as
described below. This mapping will provide a basic understanding of the key processes and
procedures that are associated with each of the phases and should highlight any gaps that may
exist.

Definition: The Business Case phase produces the business case, the
single most important document in helping an organization’s leadership
evaluate the return on physical asset investments. It defines the
problem statement, the stakeholder requirements and resulting
business opportunity, if solved. The business case is more than just
financial justification.

Process: The key processes associated with the business case phase include strategic planning,
capital planning and evaluation, lifecycle cost analysis, and auditing. Figure 2 below depicts a
generic business case development process for investing in physical assets. Note that the
process begins with defining asset management objectives and concludes with a hand-off to a
project management process. These processes must also connect to the asset management
objectives and select activities within the asset management plans.

Figure 2. Business Case Development Process

Tools: The primary tools center on forecasting and analysis. Most businesses rely on
spreadsheet-based applications that are often supported with some level of electronic work flow
for approval and post-audit activities. Other critical tools support the risk assessment and planning
that are necessary for developing a risk management plan that is a key component within the
asset management plan.

Definition: The Create or Acquire phase of the life cycle is where the
decisions made have the greatest impact on the total cost of ownership
of an acquired or created asset. This is also where the greatest
collaboration of a cross-functional team is needed to ensure that
intended benefits will be realized. Detailed engineering through
commissioning occurs in this phase.

Process: The front-end-loading process is the transition from the

business case to the Create or Acquire phase as depicted in Figure 3.
This process contains the activities that ensure the business objectives in the business case are
realized throughout the asset life cycle.

Figure 3. Front End Loading

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11/9/22, 2:21 PM Life Cycle Engineering’s Asset Management System Framework: Using Asset Management Capabilities to Create Value — Life C…

Important deliverables pass from stage to stage as the process moves the acquired or created
asset from an idea onto the shop floor.
Conceptual Idea: Determine the background and objectives, such as interaction with other
goals, and procedures and plans.
Feasibility Study: This study should outline the planning period, stakeholder interest,
accountability and responsibilities for asset management, and details of asset management
systems and processes.
Functional Design: The functional design stage includes a description of asset configuration,
identification of assets by category, justification for assets, proposed levels of service,
customer-oriented performance targets, other asset performance targets, and justification
for target levels of service.
Implementation: The implementation stage puts the project plan in motion, including
resources, milestones and budgetary constraints, asset age and condition. Additionally,
there should be a focus on detailed infrastructure performance measures.

Tools: Some of the tools used during this phase include process flow diagrams, RAM analysis,
failure mode and effects analysis, risk and failure analysis and project management and tracking.

Definition: The Operate & Maintain phase is where value is created.

The newly commissioned assets function to provide the solution
defined in the business case. This is also the longest phase by duration
of the asset life cycle. Once this phase of the life cycle is reached, only
about 15% of the total cost of ownership can be influenced without
recapitalization of the asset..

Process: Since this phase is predominantly performance evaluation and improvement, the major
focus is on evaluating effectiveness of the controls to mitigate or eliminate predominant failure
modes and identifying waste within the value stream. The work management process, as depicted
in Figure 4, and reliability knowledge domains and associated processes are integrated to ensure
planned work is evaluated for accuracy and unplanned work is evaluated to identify new
predominant failure modes and effectiveness of current controls.

Figure 4. Work Management Process

Tools: Since this phase of the life cycle is focused on the assets meeting their function, the tools
used are focused on continuous improvement. Value stream mapping, visual management, and
kaizens are all lean tools focused on eliminating waste. Within the realm of reliability engineering,
there are root cause analysis tools such as cause and effect, fault tree, sequence of events, and
event causal factors. There are also audit and surveillance tools to evaluate the effectiveness of
work management, operations, material management and reliability engineering. Performance
evaluation relies on various metrics and key performance indicators to drive improvement.

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11/9/22, 2:21 PM Life Cycle Engineering’s Asset Management System Framework: Using Asset Management Capabilities to Create Value — Life C…

Definition: The Dispose or Replace phase occurs when the disposal, de

replacement of an asset is necessary following the end of an asset’s
service life or change in asset requirements due to rationalization. If
unplanned, this phase can have a significant negative impact on an
organization’s financial statement.

Process: By breaking down the total scope into manageable pieces,

activities, timelines, and resources can be developed to structure the
disposal or replacement project. The same program management tools
used during the Acquire or Create phase apply in this phase, along with
the specific components identified in the business case. Therefore the processes are the same,
just in reverse.
Tools: As with the processes, the tools would be the same.

Conclusions
Companies considering the strategic decision to implement an asset management system as
defined by the ISO 55000 Asset Management Standard will undoubtedly have many questions.
The most significant question is how to define and design the system. The standard refers to the
need for operational planning and control processes without providing further insight into how to
define and implement such processes.

To help companies understand these requirements the Life Cycle Engineering Asset Management
System Framework provides an excellent model for understanding the critical system design
elements. The Asset Management Capabilities block represents over 90 processes and
procedures that, taken together, define the foundation of an asset management system. These
processes and procedures are defined within knowledge domains and applied across the asset
lifecycle. With over 30 years of implementation experience, LCE continues to help businesses
develop their own asset management systems designed to achieve maximum value from their
physical asset portfolio.

© Life Cycle Engineering, Inc.

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843.744.7110 | info@LCE.com

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