Capital Investment in Assets is a hot topic in Asset Management!

train open door alexandre-debieve-585763-unsplash.jpg — Capital investment

This is a hot topic in Asset Management today!
Where can you get the best ROI from a capital investment in your assets? It’s a tricky question with many angles to consider.

With limited CapEx available, Reliability Engineers and their VP of Operations are cautious about using CapEx to invest in their existing and ageing assets. They also know that they must invest to keep these assets healthy, and extend asset life and working capital. Long term planning is essential. You may need 5 years to upgrade and replace an inefficient or obsolete asset class.

Some thought-provoking questions to consider —

Does your organization have an Asset Management Strategy?

Is your Asset Management Strategy connected to the strategy of your business?

Have you assessed the criticality of your assets? Have you checked out asset obsolescence? What’s your replacement and / or upgrade approach? Do you know how healthy each asset is?

Have you determined each asset’s needs so you’re doing the right maintenance on the right piece of equipment at the right time? Not too often, not too late.

Does your organization consider upgrades by asset class? for example, electric motors, telephone poles, or mobile fleet? These are expensive assets that may require years to upgrade and replace.

Do you have a Strategic Asset Management Plan (SAMP)? an Asset Management Plan (AMP)? an Annual Management Plan? that your organization uses to forecast CapEx and OpEx for labour and material spend.

What is your planning horizon in number of years for CapEx? How do you know how much capital you’ll need annually for the next 5 years? How do you justify this need for CapEx? How do you track the ROI on capital investments throughout the life cycle of the asset?

Do you have complete and up-to-date data on your assets to make such decision? You’ll need it. Gut feeling is not good enough.

ISO 55000, the standard for Asset Management provides great guidance to answering these tough questions.