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What is ISO 55001? What are its Key Implementation Steps and Benefits?

26th May, 2021
What is ISO 55001? What are its Key Implementation Steps and Benefits?

Assets whether small or big are an integral part of any organization. In simple words, assets can be tangible or intangible and include everything from IT components, property, inventory, and intellectual property, owned or leased by a company to operate. The assets have a great potential to add value to any business.

ISO 55001- Asset Management System (AMS)

It is important to manage assets effectively and ISO 55001 is capable of that. ISO 55001 is the international standard that helps organisations effectively manage their assets to optimize their lifetime value. ISO 55001 is especially crucial in industries that are capital intensive and have numerous assets.

ISO 55001 provides a competent asset management framework to establish, implement, maintain, and improve effective control and governance of assets to realize value through managing risk and opportunity, in order to achieve the desired balance of cost, risk, and performance. Some of the significant improvements witnessed by organisations are:

  • 15 % reduction in Operational Costs
  • 10 % increase in Utilization / Return on capital employed

An Effective management system also focuses on creating a culture of steady improvement and can also help to:

  • Improvement in Asset performance (e.g. uptime, efficiency);
  • Reduction in the unit cost of product or service;
  • Improved reliability & availability (mean time/distance between failures);
  • Improves life cycle costs

Understanding Terms and Definitions Related to ISO 55001

Before we dive deeper into the details, let us look at the meanings of some terms and definitions for better understanding.

Asset: “Item, thing, or entity that has potential or actual value to an organisation.” (Reference ISO 55000:2014)

Value can be tangible or intangible, financial or non-financial,
Physical assets usually refer to equipment, inventory, and properties owned by the organisation.
Intangible assets refer to non-physical assets such as leases, brands, digital assets, use rights, licenses, intellectual property rights, reputation, or agreements.

Asset management: “Asset management is the coordinated activity of an organisation to realize value from assets.” (Reference ISO 55001:2014)

Asset Management Ensures

Assets exist to provide value to the organisation.  Asset management does not focus on the asset itself, but on the value that the asset can provide to the organisation.

  • That organisational objective is translated into technical and financial objectives.
  • Leadership and workplace culture are determinants of the realization of value.
  • That asset will fulfill its required purpose.

Scope and Application of ISO 55001

ISO 551001 can be applied to all types of assets as well as by all types and sizes of organisations that are looking to improve the realization of value from their assets which includes the following:

  • Physical assets
  • Information assets
  • Intangible assets
  • Critical assets
  • Information and Communications Technology (ICT) assets
  • Infrastructure assets
  • Moveable assets

Kindly note:

  • Physical assets usually refer to equipment, inventory, and properties owned by the organisation.
  • Intangible assets refer to non-physical assets such as leases, brands, digital assets, use rights, licenses, intellectual property rights, reputation, or agreements.

Documentation Requirement for ISO 55001- Asset Management System

Every organisation should document the following information in order to comply with ISO 55001

a) Strategy and Planning

Corporate service levels, policy, and objectives
Strategic Asset Management Plans (SAMP) / Asset Management Strategies
Asset Management Plans

b) Process

Asset-related processes and procedures
Process performance objectives and indicators

c) Technical and Asset-related Properties

Asset attributes, ownership, design parameters, vendor information and location.

d) Service Delivery and Operations

Service levels, performance objectives, asset performance characteristics, future operational requirements and demand management objectives.

e) Maintenance Management

Historical asset failures, betterment or replacement dates and future maintenance requirements.

f) Performance Management and Reporting

Asset performance data, continuous improvement objectives and regulatory reporting.

g) Financial and Resource Management

Historical cost, depreciation, asset replacement value, date of acquisition, materiality, capitalization rules, asset classification/hierarchies, life cycle costing, analysis, useful lives of assets, residual value, and any residual liabilities.

h) Risk Management

i)   Contingency and Continuity Planning

j) Contract Management

Asset-related contractual information, vendor information, services, objectives, third party agreements.

Key Steps to Implement ISO 55001

The International Standard can create an efficient Asset Management System that helps achieve your organisation’s goal, expand or replace existing infrastructure, and comply with regulatory requirements along with other benefits if implemented properly.

An Asset Management System is a set of interrelated and interacting elements of an organisation, whose function is to establish the asset management policy and asset management objectives, plans, and the processes, needed to achieve those objectives. Here the steps that need to be followed:

Step 1: Strategic Alignment to Organisational Objectives / Business objectives

The organisational objectives are generally produced from the organisation’s strategic level planning activities and are documented in an organisational plan/ corporate plan.

Step 2: Asset Management Policy

  • The principles by which the organisation intends to apply asset management to achieve its organisational objectives should be set out in an asset management policy.
  • Aligning the asset management objectives with the organisational objectives, as well as linking asset reports to financial reports, can improve the organisation’s effectiveness and efficiency,

Step 3: Strategic Asset Management Plan (SAMP)

“Documented information that specifies how organisational objectives are to be converted into asset management objectives, the approach for developing asset management plans, and the role of the asset management system in supporting the achievement of the asset management objectives.” (Reference  ISO 55001:2014)

A strategic asset management plan is derived from the organisational plan.

Step 4: Asset Management Objectives

  • The asset should align with the product or service needs of the Organisation.
  • The asset management objectives transform the required outcomes ( by product or service) to be provided by the assets, into activities typically described in the asset management plan(s).

For example :

  • Asset performance (e.g. uptime, efficiency)
  • The unit cost of product or service
  • Reliability (mean time/distance between failures)
  • Asset condition, performance, or health score
  • Life cycle costs
  • Life expectancy
  • Asset energy performance
  • The total cost of ownership
  • Return on capital employed

Step 5: Asset Management Plans

“Documented information that specifies the activities, resources, and timescales required for an individual asset, or a grouping of assets, to achieve the organisation’s asset management objectives.” (Reference: ISO 55001:2014)

Step 6: Implementation of Asset Management Plans

Implementation of asset management systems which includes asset management policy, procedures & plans to achieve objectives.

Step 7: Asset Performance Evaluations

The organisation shall evaluate and report on the asset performance and the following should be taken into account:

  • The asset management performance, including financial and non-financial performance.
  • The asset performance metrics and associated indicators, e.g. condition or capacity indicators.

Step 8: Asset Performance Improvement Plans

The organisation should establish, implement and maintain processes for determining opportunities and assessing, prioritizing, and implementing actions to achieve continual improvement and reviewing their subsequent effectiveness.

Benefits of ISO 55001-Asset Management System

This international standard is a holistic business improvement framework that will be beneficial in the long run. This flexible system has many benefits, they can include but not be limited to the following:

a)   Improved Financial Performance

Improving the return on investments and reducing costs.

b)  Informed Asset Investment Decisions

Helps to improve investment decision-making and effectively balance costs, and performance.

c)   Managed Risk

Reducing financial losses, improving health and safety, goodwill and reputation.

d)  Improved Services and Outputs

Assuring the performance of assets can lead to improved services or products

e)  Demonstrated Social Responsibility

Improving the organisation’s ability to reduce emissions, conserve resources, and adapt to climate change.

f)  Demonstrated Compliance

Transparently conforming with legal, statutory and regulatory requirements.

g)  Enhanced Reputation

Improved customer satisfaction, stakeholder awareness, and confidence.

h)  Improved Organisational Sustainability

Improve the sustainability of operations and the organisation.

i)   Improved Efficiency and Effectiveness

Improving processes, procedures, and asset performance can improve efficiency and effectiveness.

The 4C Roadmap to Excellence

With unmatched expertise in the industry and an analytical approach, we drive to yield the best solutions for your organization with a promise of long-term profit.

4C Roadmap

Our skilled consultant team at 4C can help you with all the necessary steps to grow your business and guide you through the implementation process. To know more about how you can strengthen your organization with ISO 55001-Asset Management System, reach out to our consultants now.