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By Dave Clifton
Content Strategy Specialist
Facilities maintenance is a broad description of what it takes to run buildings and workplaces. Under this general umbrella, there are specific focuses that contribute to the broader goal of well-run facilities. Among the most important is facilities asset management. While the building itself may be an asset, this practice looks at the essential components within the property that allow it to function as-needed for the people who work there.
As a segment of broader facilities maintenance, asset management is something worth exploring for the benefit of new facilities managers and growing companies. Small companies that rent modest office space may not have much to worry about in the way of asset management. Conversely, enterprise organizations that own the entire building likely have significant budget and manpower dedicated to asset management.
It takes surface-level knowledge to understand why facilities asset management is important, yet broad resources to execute on it properly. Here’s what every facility manager needs to know.
What are facility assets?
There are several ways to define facility assets. Small companies tend to define them by cost in relation to budget—anything over X thousands of dollars is an asset. Midsized companies often shift this to include life cycle investments—anything that requires substantial investment over time. Enterprise businesses further expound on the definition and include leased assets, 12-month liabilities, FASB-reported capital investments, and depreciating assets.
What does asset management include, exactly? It differs for every company and organization, but assets generally fall under specific categories:
- Facility-related assets (HVAC, lighting, break room appliances)
- Personnel-related assets (vehicles, uniforms, mobile devices)
- IT-related assets (copiers, printers, data infrastructure, software licenses)
Though not a hard-and-fast collection of rules, most facility assets observe three traits. They are: 1) high-value, 2) depreciating, and 3) essential. They’re the kinds of things you want to manage proactively, not reactively.
What is facilities asset management?
Facility asset management is sometimes also called lifecycle planning, which can make it a little easier to understand. The goal of facilities asset management is to create a framework for the complete cradle-to-grave oversight of high-value assets. It involves a plan to acquire, operate, maintain, renew, and retire assets.
Asset management butts up against several other integral aspects of broad facilities management. For something like a building’s HVAC unit, asset management can dictate service level agreements (SLAs). For software licenses, it may affect budgeting. For something like a vehicle, it can affect accounting practices. Focus on asset management contributes to more informed management of facilities, operations, and finances for the company as a whole.
Key benefits of facilities asset management
Aside from the obvious decision-making power it affords to broader facilities management, the benefits of facilities asset management empower managers at a granular scale. Life cycle planning allows facility managers to anticipate costs, plan for maintenance and upgrades, and minimize total cost of ownership at the asset level.
The air conditioning roof stack on your building is 13 years old and needs extensive repairs that total $5,000. A comparable new unit is $12,000. Do you repair or replace? Good asset management will yield the best answer. A facilities manager will be able to see important variables like the total cost of ownership over the last five years, life expectancy of the unit, efficiency ratings, and more. Asset maintenance provides the ability to look beyond repair vs. purchase costs, to the full scope of ownership costs.
The same goes for budgeting and planning. A company licenses software on a two-year contract, to the tune of $10,500. Asset management means being able to plan for this cost two years into the future, anticipate the upgrade process to the next iteration of the software, and determine if demand for licenses has grown or shrunk within the organization.
Some terms to get to know
- Asset class: Groups of similar assets, tracked for accounting purposes.
- Capital improvement: High-dollar cost to preserve a vital building function.
- Capitalized asset: An asset that has reached its break-even point from investment.
- Depreciation: The current value of an asset below the initial investment cost.
- End-of-life date: The planned date of asset retirement based on operable life.
- Enterprise asset disposition: Disposal of an asset through reselling or destruction.
- Enterprise asset management (EAM): A digital platform for asset management.
- Ghost asset: An asset still on the company’s books, but no longer in service.
- Life cycle management: The total plan for an asset, from acquisition to disposal.
- Planned obsolescence: The decision to retire an asset before its end-of-life date.
- Total cost of ownership: The total cost to own, maintain, and use an asset.
Keep facilities consistent with demand
Facilities need to serve the people who operate within them, right down to the individual assets they use and rely on. From top-of-the-line copy machines, to roof stack HVAC units, to high-value software subscriptions, each of these assets and many others like them fall under the realm of facilities asset management. It’s up to facilities managers to track, manage, and maintain them where appropriate, with a plan to ensure they continue to serve people seamlessly.
Keep reading: Selecting the right facilities management software.