Historical Development of Asset Management - Essay Example

SEE ATTATCHMENT: CREATIVE WRITING: ASSET MANAGEMENT 4. Historical development of asset management Asset management isa concept that started gaining a lot of interests many decades ago in the United Kingdom. Management of asset was introduced as a result of changes in office technology and building management. Due to the complexities that emerged due to major changes, a lot of emphases started being laid on the importance of efficient asset administration in the organizational context. As a result of the dynamics, significant changes had to be made. The idea of assets management grew in the 1990’s recession period. A majority of the organization started focusing on how they could cut on their costs and normalize asset management globally1. According to an online publication, the public sector has been a leader in asset management practices for a long period. The private sector has been lagging behind with players having little interest in the theory. Consequently, there was a lot of mismanagement of resources in the private sector in comparison with the public sector that was achieving sanity at the time. Government agencies had been empowered to investigate public corporations that were mismanaging funds. The agencies were mandated to carry out an audit of the resources that had been allocated to public companies to detect discrepancies that were costly. They made an inspection of government institutions such as the police department, public hospitals, and local authorities among other areas that the government played an imperative role. A task body was formed in the United Kingdom to try and establish the importance of asset management to the strategic plans of an organization and its contribution to profits. The finding of the report indicated that although technical skills contributed significantly to the performance of an organization, the role of asset management towards the success of an organization could not be ignored. Consequently, the importance of asset management is one of the factors that stirred the University that investigated correlation Between asset management and the performance of an organization. The study unearthed shocking findings of the notion of asset management. It was created that a majority of people were unaware of the roles asset management played to the success of a business entity2. Despite the fact that the research came up with incomplete evidence, similar studies were carried out in the 1990s.Meaningful recommendations were arrived at that saw companies adopt cost cutting measures in production processes. In addition, new methods of managing physical assets were suggested. Space management became a new phenomenon as a result of the implementation of the recommendations3. Asset management can be applied to shift the paradigm in achieving sustainable low-carbon outcomes in future environment projects in a number of ways. In the current years, efficient carbon emission strategies have been widely proposed. For instance, more than $100 million was recently allocated by Mellon Capital towards controlling carbon emission. The company went into a partnership program with other organization in a bid to ensure carbon emission levels are reduced. Such collaborations indicate achievements that can be made if organizations pull their resources together towards a common goal4. In the United Kingdom, asset management industry is estimated to be worth about $87 trillion. The contribution of GDP to the economy of the United Kingdom is very vital. It is anticipated to continue increasing in the future periods. Interestingly, the value of assets in the UK is almost at par with that of the US. Additionally, the concept of the asset management has begun to receive much attention from developed countries. Environmental factors are some of the drivers that have spurred the idea of asset management to prosper. With the increased population rates and life expectancy in some countries, most of the countries have managed to enhance their economy. Improved economic growth leads to infrastructural development. Trends indicate that population growth is likely to explode. In addition, more wealth is expected to be created in the coming days. It is also predicted that the life expectancy will increase by a margin of 9%.The trends indicate that the GDP of many countries will grow. A growth in the GDP of the countries will catalyze the asset management industry. The current industry only shows 20% of the entire asset management industry. Recently, PWC released a report that suggested the asset management industry will be worth more than $100 trillion in the next five years. Conversely, all indicators symbolize that the industry is likely to be the major contributor of the GDP in the United Kingdom5. 5. ISO 55000 The introduction of ISO certification has changed the way most organizations operate. The ISO 9000 is with Quality Assurance of processes and products of an organization. On the other hand, ISO 140000 covers environmental management issues. The most recent certification that has become of the much interest is the ISO 55000.The ISO mainly deals with asset management practices that the organization has adopted especially after in the post-2009 recessionary era. Due to the attention the certification programs has received in the current years, leaders of most organizations have been on the forefront to ensure their organization receive the global honour. The correlation between the ISO 55000 is that quality practices in asset management are upheld. Unlike the other certifications, ISO 55000 should be slightly different from the rest. The role played by senior managers and the CEO in the certification program should be changed6. ISO certification analyzes a number of factors within an organization in question. As a result of the certification, a number of significant changes have been achieved in most organization. The certification advocates improvements to be in a number of areas in the body. An organization should continuously improve its leadership, operation, plans and performance evaluation programs. The asset management system consists a number of components. One of the elements of the systems is the asset management policies of an organization. Asset management policies require all stakeholders of an organization to be involved coming up with creative ways of managing assets. Unlike other certifications that senior managers and CEOs single handed take part in, the asset policies incorporate the contribution of other stakeholders to come up with asset strategies. Other elements of asset management include strategic asset management, asset management plans, and asset management objectives7. A change in management style has been discovered to create a conducive environment for the implementation of the standard. The leadership of most organization lack transparency, when it comes to adopting asset management policies. For instance, auditors are hired to detect wasteful usage of resources within an organization. However, a common practice that has been witnessed most of the auditors fail to present correct findings. The standard practice is that a majority of the leaders collude with auditors to alter their reports to give a fair reflection about the assets of the organization8. For such reasons, ISO 55000 should be quite different from other forms of certification where managers may have a lot of influence in achieving them. Moreover, there have been cases where managers have been found culpable while trying to bribe officials who conduct the assessment program9. With the advent of ISO 55000 standards, asset management will be different from other standards because of a number of valid reasons. The standard involves continuous improvement of processes and other assets of a company. Continuous improvement cannot be without involving every employee. Involving the top management alone may not produce the desired results since they are not directly participating in the production systems. Participation of employees in the programs so that they can own the process is imperative since they understand the processes better than anybody else. Consequently, their immense contribution results to effective asset management practices10. Project managers can mitigate some of the operational risks that arise during the construction of mega infrastructure through applying the principles of ISO 55000.Although it has not become a mandatory obligation for project managers to incorporate the guidelines of the of the program in their projects, it is expected they will be forced to do so in future. In addition, a majority of the governments will enact the policies to control asset management. Although it may be viewed, the introduction of the guidelines is meant to create a challenging operational environment for organizations that may not be the case. Instead, the implementation will be for the benefit of the organizations. The policies will help organizations overcome some of the problems that they experience during project implementation11. Mega projects such as road construction consume many resources. Furthermore, the materials used for construction are very expensive. Unless project managers manage the resources correctly, the projects are likely to stall due to lack of funds. Consequently, managers should ensure there is accountability when it comes to buying, usage, and disposal of resources. Projects experience an escalation of the costs of materials and assets needed to undertake a project. In addition, fluctuation of prices of the assets may make it impossible for the project team to complete the project successfully. If the team implementing the road project can comply with the guidelines outlined in the ISO 55000, then the assets will be managed according to the standard approaches. Consequently, every stakeholder will work to ensure they protect the assets of the organization12. 6. Network of choice The issue of asset management becomes a sensational matter during elections. Politicians develop manifestos outlining their asset management policies to convince the public to vote for them. Additionally, the media publicizes the asset policies of the politicians given that citizens are concerned about how the incoming government will manage its resources. In their manifestos, they outline on how they are going to improve road networks, railway transport, and water supply among other social amenities required by the public. Such ideas are very noble since development of infrastructural facilities catalyzes economic growth. Unknowingly to the public, implementation of such distribution networks has unique problems that face them in comparison to managing a single building13. Road projects are carried out by governments and other development partners. Road projects are with a number of serious challenges. Project managers are with unique problems that are shared across other types of networks. Most of the problems arise from the external environment and the internal environment. Fluctuation of prices of raw materials is a very common issue that faces almost all projects. Consequently, the cost incurred in road construction and other networks rises on a daily basis. Project managers understand that prices of building materials keep on fluctuating with time. In addition, other factors such as wages, time delays capital equipment and inflation. Such variables are uncontrollable and can cause a project to stall if project managers are ill-prepared to handle. As a result, project stakeholders must come with a contingency budget that can be utilized in case such scenarios emerge. A contingency plan is one of the mitigation measures contractors take to control particular problems that may emanate during road construction and other distribution networks. Conversely, a number of technologies that can be applied to ensure that projects are completed within the stipulated period. The Critical Path Method and the network diagrams are some of the techniques used to schedule projects14. Another factor that is a challenge to road construction is time. Untimely delivery of materials may cause the project to terminate prematurely. Time is an essential element of any activity undertaken. However, sometimes factors beyond the control of an organization may lead to a gross delay of project implementation. Restraining government requirements sometimes delay the start of road construction programs. Time delay is also an issue in other network distribution projects15. Environmental factors put a lot of pressure on implementation of projects. Projects have to adjust to changes in the political, economic, socio-economic, technological, legal and ecological environments. The external environment is very dicey and chaotic in nature. Changes in the external environment directly affect road construction and other projects. The change brought about by the external forces may adversely affect the project. For instance, an economic environment change may entail a rise in interest rates. Consequently, the cost of borrowing becomes costly hence limiting accessibility of capital to projects. Similarly, other projects are faced with the same problem16. Although road construction is expensive in nature, grants and donation will make it economically sustainable. The ISO 55000 advocates for prudent management of assets to so achieve optimum utilization. If the property of an organization in the civil engineering industry is prudently managed, some of the problems such as cost overruns will be effectively managed17. With the advent of ISO 55000, organizations have been able to achieve numerous benefits. Current trends indicate that the certification program has enhanced financial planning when it comes to capital investment decisions. Proper management of financial resources has managed to be achieved because the certification encourages the adoption of Proper asset management practices. Consequently, organizations have been able to improve their financial plans. Moreover, optimized asset management has brought better understanding and application of information needed to make prudent decisions that are also consistent. The decisions are concerned with how organizations can effectively utilize their resources in a way that can contribute towards improving the cash flows of the business. In addition, one of the objectives of ISO 55000 is to ensure that the assets of the organization are optimally utilized to achieve the core business objectives of a firm18. According to the evidence that has been provided by many pieces of literatures, a discussion of the topic of asset management is a conversation that should have been held many years ago. Leaders of organizations must acknowledge that resources are limited in nature. Consequently, the must utilize the available prudently to achieve the optimum value possible. However, profit is a function of costs incurred. Therefore, managers must find ways of ensuring that costs are kept at a minimum level to improve profitability. Organizations control vast resources. Some of the assets are very costly and, therefore, proper policies need to be developed on how they should be managed. One of the ideas that have come into fame is leasing of property. Organizations have opted to lease assets that are expensive to construct as a way of controlling cash. In the long run, they acquire the property permanently. Hence, asset management is a beneficial concept19. Bibliography Audit Commission, “Hot Property: Getting the Best from Local Authority Assets”, Audit Commission, 2000. Audit Commission, “Room for Improvement: Strategic Asset Management in Local Government”, Audit Commission, 2009. Brown, Abigail, “Incentives for Auditor Collusion in Pre-Sarbanes-Oxley Regulatory Environment. The Federation Press. Haldane, Andrew. “The Age of Asset Management?” Presentation at the London Business School, London, April, 2014. Harris, Robert, “Public sector asset management: a brief history,”Ramidus, 2014. Hastings, Nicholas Anthony John. "ISO 55000 Series Standards." Physical Asset Management. Springer International Publishing, 2015. 505-525. Hastings, N. A. J. Physical asset management: with an introduction to ISO55000. Cham: Springer, 2015. Hinze, Jimmie W., “Construction Planning and Scheduling, 2nd edition, Upper Saddle River”, New Jersey: Pearson Prentice Hall”, 2004. Hodkiewicz, M. R. "The Development of ISO 55000 Series Standards." Engineering Asset Management-Systems, Professional Practices and Certification. Springer International Publishing, 2015. 427-438. Ma, Zhao, Limei Zhou, and Wanxing Sheng. "Analysis of the new asset management Standard ISO 55000 and PAS 55." Electricity Distribution (CICED), 2014 China International Conference on. IEEE, 2014. Muir, Bob, “Challenges Facing Today’s: Supplemental Reading for CIEG 486-010 Construction Methods & Management”, PE University of Delaware, 2005. Nunnally, S. W., “Construction Methods and Management, 6th edition, Upper Saddle River”, New Jersey: Prentice-Hall, 2004. Peurifoy, Robert L., Schexnayder, Clifford J., and Shapira, Aviad, “Construction Planning, Equipment, and Methods”, 7th edition, New York, McGraw-Hill, 2006. Read More