GFMAM The Value of Asset Management to An Organisation
The purpose of this document is to provide information on the value asset management can provide an organization.
Value of Asset Management
Asset management realises value from the use of assets. In the International Standard ISO 55000, asset management is defined as “the coordinated activity of an organization to realise value from assets”.
Organizations realise value from assets in the achievement of its organizational objectives, and what constitutes value will depend on these objectives, the nature and purpose of the organization and the needs and expectations of the stakeholders. Asset management involves the development of a desired balance of performance, cost and risk, to achieve the organizational objectives.
Value relates to the organizational objectives as do performance, cost and risk. The International Standard ISO 31000 defines risk as “the effect of uncertainty on objectives” and likewise performance is any positive effect on objectives and cost is any negative effect on objectives. As value can be both financial and non-financial, the same applies to performance, cost and risk.
Outside the discipline of asset management, other professions have been applying the concept of value creation. The European standard EN 1325 defines value as a “measure which expresses how well an organization, project or product satisfies stakeholders’ needs in relation to the resources consumed”.
In the attempt to develop a clear view to what value asset management can bring to organizations, effort has been taken to structure the concepts of value realization from ISO 55000 while seeking inspiration from the discipline of value management. This has resulted in the development of The Value Model, as described in the following chapter.