What is asset management and what role will it play over the next century?
Fellow NPMA Asset Management professional, Mr. Brandon Kriner, CPPM, joins the Asset Leadership Network podcast to discuss the emphasis asset management will play over the next 100 years.
The International Standards Organization defines Asset Management as the coordinated activities of an organization for the purpose of generating value from assets.
As described in the podcast, asset management professionals typically fall within three different areas – Financial, Compliance, and Operational.
Financial
The Financial aspect of asset management loosely focuses on what assets does an organization have, what is it worth, and how it is accounted against the financial balance sheet.
Compliance
The Compliance aspect of asset management has interested in federal, state, local and organizational regulatory requirements for safeguarding the assets.
Operational
The Operational aspect of asset management has interest in how the organization utilizes the assets. Operations is essentially where the rubber meets the road, as it focuses on the day to day processes and actions to maximize an organization’s assets.
Assets are often broken down into two categories: personal property and real property.
Personal property is comprised of tools, equipment/machinery, and materials (consumables). When discussing assets, personal property is the most common type that comes to mind.
The passage of the CHIPS and Science Act of 2022 marks a significant investment to strengthen American manufacturing, supply chains, and national security. As a result, organizations will have an influx of projects and funding requiring efficient use of assets to maximize performance. The current administration reported construction of new manufacturing facilities has increased 116 percent over the last year.
“The CHIPS and Science Act will establish a technology, innovation, and partnerships directorate at the National Science Foundation (NSF) to focus on fields like semiconductors and advanced computing, advanced communications technology, advanced energy technologies, quantum information technologies, and biotechnology.”
Although more opportunities for procurement and utilization of assets exists, it should be noted the National Defense Industry Association Vital Signs 2022 report finds workforce productivity has decreased, partly because to a shrinking workforce. This means that our current workforce is doing more with less, unless a significant surge in employment occurs.
As reported by Devon Bistarkey, in the Defense article titled U.S. Manufacturing Ecosystem Key to Economic Growth, Innovation, Competitiveness:
“Known manufacturing chokepoints across sectors — including skilled labor, machine tools, critical chemicals and a reliance on foreign resources — are impacting operational readiness.”
Real property is often defined as land, and most things attached to the land, such as buildings, structure (to include linear) and vegetation.
Of particular interest, the topic asset management for real property is facing increased attention as organizations seek to reduce their footprint, modernize their hybrid work environment, and operate in a changing climate environment. Climate change issues such as droughts and flooding place increased emphasis on an organization’s asset management plan.
On a Federal level, the current administration has made significant investment to enhance the nation’s:
- Removal of lead pipes
- High-Speed Internet Access
- Better Roads and Bridges
- Investments in Public Transit
- Upgrade Airports and Ports
- Investment in Passenger Rail
- Network of Electric Vehicle Chargers
- Upgrade Power Infrastructure
- Resilient Infrastructure
- Investment in Environmental Remediation
Additional tenets of real property include:
- Comparing benefits of Leasing vs. Owning real property assets
- Optimizing use of real property, especially as societal shifts towards a more hybrid work environment
- Modernization of current assets for the workforce of the future
The aforementioned implications are examples of asset management’s increased impact and importance over the next century.
Check out the podcast episode below ⬇️