Whether you manage a single property, multiple buildings or a portfolio of real estate holdings, the proper management of real property is critical to your success. It is imperative to have an effective asset management plan in place as part of your comprehensive capital planning process.
This is a very simplified overview of a complex topic; however, the components and building blocks of an effective asset management program can be summarized into a four-step process (that build upon each other):
Step I — Identification: A physical inventory of all assets that includes identification and recording of the information associated with each item is required. The identification process includes developing asset tagging and tracking programs and reports.
Step II—Evaluation: Next, each asset must be evaluated for its current condition to determine immediate and future needs. The evaluation process requires implementing facility condition assessment programs and regular reporting procedures.
Step III—Planning: After the evaluation phase is complete, the next step is to establish plans to address immediate and future needs. This stage requires identifying the costs associated with each item, and developing budgets for immediate needs and life-term replacement reserves.
Step IV—Preservation: This is the most complex component because it incorporates day-to-day maintenance and protection of the assets. Preservation requires implementation of an effective maintenance program to maintain and safeguard the assets, provide security and mitigate risk.
All four steps are interdependent. The overarching goal of creating an effective asset management program is “to achieve the highest possible service level for the lowest possible cost while maintaining the lowest practical level of risk.” Achieving this important business goal requires the full implementation of each of the four steps.
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About the Author:
John zumBrunnen is Founder of zumBrunnen, Inc., an independent construction and building consulting firm founded in 1989. zumBrunnen has a BS in mechanical engineering from the University of North Dakota, completed the US Army Corps of Engineers Training Program in 1972, and is a member of LeadingAge on national and state levels. zumBrunnen has 40+ years of experience in construction, property assessment, development, capital planning and reserve study budgeting. He is the inventor of the FacilityForecast® software system and a respected author and speaker in the industry.
