In today’s competitive business environment, maintaining the reliability and longevity of our assets is key to maximizing productivity while reducing risks and costs.
The concept of an asset lifecycle—the stages that an asset goes through from its planning and acquisition through operations and maintenance and ultimately reclamation or disposal—plays an important role in the long-term success of any organization. For reliability professionals and asset managers, understanding and effectively managing the asset lifecycle is essential to the viability of an organization’s infrastructure and operations.
Defining the Asset Lifecycle
The asset lifecycle refers to the entire span of an asset’s existence within the organization, from conception to reclamation or retirement. This lifecycle includes several stages, each with its considerations and strategies that impact the asset’s performance, cost, risk, and, ultimately, value. Typically, these stages include:
- Planning and Design
- Acquisition and Commissioning
- Operations and Maintenance
- Decommissioning and Disposal
Each stage offers opportunities for reliability professionals and asset managers to influence and contribute to decisions that affect the asset’s long-term performance, reduce risks, optimize costs, and improve operational efficiency and effectiveness. These stages may be viewed as creating the capacity to produce, maintaining and using this capacity, and finally retiring the capacity to produce.
Stage 1: Planning and Design
The asset lifecycle begins with planning and design. This is when the groundwork is laid for the asset’s functionality, purpose, and system-level integration within the organization. At this stage, demand planning is taken into account, and key overall strategic considerations are made, such as where to locate a new production facility or whether to expand an existing one.
Decisions are made about the specifications, capacity, location, and technical requirements of the asset or its component equipment. Reliability professionals and asset managers play a critical role in shaping these decisions by their input into the design for operational demands, maintenance needs, future flexibility, regulatory compliance, and any operational learnings from existing similar designs or equipment.
One technique that is ideally incorporated into the planning phase is reliability-centered design (RCD), which focuses on designing assets for efficient production and maintainability and reliability throughout their lifespan. RCD involves assessing failure modes, system interdependencies, and operational constraints during the initial design.
Integration of reliability and maintainability considerations at this early stage of planning and design, when it is relatively easy to make changes, supports the installation of assets and equipment that will perform as expected and can be maintained with minimal unexpected costs or downtime. It’s about designing and building the future capacity to produce the desired product – widgets, gasoline, treated drinking water, or transit ridership.
Reliability professionals play a critical role in shaping asset design to ensure future operational success.
This asset lifecycle stage involves big design decisions like installing one or two conveyor belts, one full production line, or two half-capacity lines. When we think of how many walls were built after large or heavy equipment was initially placed in a building that is now extremely difficult to maintain without significant retrofits to the building or even roof removal, the importance of having reliability and maintenance professionals involved in the planning and design stage is quite apparent.
Stage 2: Acquisition and Commissioning
Once the asset has been designed, the next step is acquisition and commissioning. Assets may comprise numerous pieces of equipment and can be quite complex. This lifecycle stage is when assets or major equipment are specified, purchased, delivered, installed, and tested.
Maintenance and reliability professionals are often tasked to oversee the installation to ensure the asset is set up correctly and ready for operation. This is the perfect time for thorough testing, including reliability testing, both at the factory and after delivery on-site to assess whether the asset will perform according to the design specifications.
Asset managers work closely with Supply Chain Purchasing specialists to purchase assets that meet the organization’s financial and operational goals and objectives, including demand management.
They must also assess the total cost of ownership (TCO) broadly comprised of engineering design costs, initial purchase price, installation and construction costs, warranties, and estimated future maintenance, repairs, and reclamation costs. The TCO is far more comprehensive than the total installed cost (TIC), primarily focused on the capital project engineering design, purchase, installation, and construction costs.
Asset management is a team sport, with contributions from reliability experts, operators, and purchasing specialists.
At this stage, incorporating the experience of reliability professionals, maintenance practitioners, operators, and purchasing specialists can significantly influence the asset’s future performance longevity and overall costs. At this stage of the asset lifecycle, it is evident that asset management is a team sport with contributions from many stakeholders.
Stage 3: Operation and Maintenance
The operation and maintenance stage of the asset lifecycle is the longest and most resource-intensive period, frequently lasting decades. During this stage, assets are used for their intended design purpose, and reliability and maintenance professionals work to ensure that assets are available to perform consistently, effectively, and efficiently—maintaining the capacity to produce. Operations then use that available capacity so that Operations and Maintenance teams jointly deliver the product to their customers.
One of the leading practices in this asset lifecycle stage is developing and implementing maintenance strategies based on reliability-centered maintenance (RCM) methodology and associated preventive and predictive maintenance programs. Preventive maintenance is based on inspections and parts or component replacement at set intervals.
This approach best prevents equipment failures due to consistent age or usage-based failure mechanisms. Predictive maintenance techniques are targeted at monitoring equipment health through sensors or analysis of performance data.
This approach identifies when equipment is starting to fail so that it can be repaired or replaced in a planned and scheduled manner with minimal impact on production volumes. Predicative maintenance works well for both random and age-based failure mechanisms. Failure-finding tests are often used for protective devices to see if the components are in a failed state.
Preventive and predictive maintenance strategies ensure assets deliver consistent, reliable performance.
Reliability professionals closely monitor the asset or equipment’s performance using performance indicators such as uptime, reliability, availability, mean time between failures (MTBF), and mean time to repair (MTTR).
Regular reviews of these performance indicators and collaboration with Operations teams to identify if the product produced deviates from its specifications or throughput levels no longer meet requirements can identify opportunities for improvement or where further investment may enhance asset performance and value.
Another essential factor in the operate and maintain phase of the asset lifecycle is the management of spare parts and inventory. Ensuring that the required spare parts in the right quantities are available when needed can reduce downtime and extend the overall lifespan of the asset.
This is particularly important in industries with complex integrated production systems and machinery or critical infrastructure where an unexpected component or part failure can result in substantial risk and financial loss.
Stage 4: Decommissioning and Disposal
Eventually, all assets will reach the end of their useful life. Sometimes, they are sold to other production organizations, who may find that they are a better fit for their strategic objectives, but frequently, these assets are decommissioned. Disposal activities commence, effectively retiring the asset’s ‘capacity to produce.’
Decommissioning and disposal are managed carefully to maximize the value of the assets, minimizing any environmental impact and compliance risks. Decommissioning involves safely retiring the asset from service. Disposal may take the form of reclamation, repurposing, or salvage with recycling or selling parts and materials.
Decommissioning and disposal are about safely retiring assets while maximizing value and minimizing risks.
Reliability professionals contribute to end-of-life decisions and when determining the timing of decommissioning. They will consider and calculate decision inputs such as the asset’s remaining useful life, the overall costs of continued operation and maintenance, and any known regulatory or environmental considerations.
Some assets and equipment, especially in sectors like energy or manufacturing, may also require compliance with strict environmental and safety regulations during decommissioning. Disposal plans or funding may have been developed and allocated in these industry sectors at the initial acquisition and commissioning lifecycle phase – often called an Asset Retirement Obligation (ARO).
It Is not uncommon to discover that fifty or more years later, the original ARO no longer meets current environmental standards and should be thoroughly reviewed and updated before proceeding.
During this asset lifecycle stage, it is also important to capture knowledge and data from throughout the asset or equipment’s lifecycle. This information can inform future asset management decisions, provide insight into asset performance, and improve the planning and design lifecycle stage for future assets. In many cases, the lessons learned during this phase of the lifecycle can be applied to managing future assets with an eye to overall TCO.
Effective management throughout the asset lifecycle is critical for maximizing overall organizational value through maximizing asset performance, reducing risks and costs, and supporting the long-term reliability of the assets.
For reliability professionals and asset managers, understanding the four stages of the asset lifecycle—from planning and design to acquisition, operation, maintenance, and disposal—provides valuable opportunities to enhance operational efficiency and extend the asset lifespan.
A holistic approach to asset lifecycle management enhances reliability, efficiency, and organizational value.
Focusing on applying key reliability methods such as reliability-centered design, reliability-centered maintenance, preventive and predictive maintenance strategies, and efficient decommissioning and disposal allows organizations to significantly improve the value they derive from their assets.
Integrating an asset lifecycle management approach enables physical assets to contribute to the organizational bottom line while meeting high standards for health and safety, environment, performance, and reliability. Ultimately, a coordinated and holistic approach to asset management goes far beyond maintaining machinery.
As the GFMAM Asset Management Landscape says, it’s about the ‘coordinated efforts of the organization to deliver value from assets’ well into the future.
Susan Lubell P. Eng CFAM MMP CAMA is the Principal Consultant at Steppe Consulting Inc. and the author of Root Cause Analysis Made Simple – Driving Bottom Line Improvements by Preventing One Failure at a Time. She specializes in asset management and reliability strategy, cost-effective maintenance programs, and operational excellence within 24x7x365 asset-intensive companies. In her industry association roles, Susan serves as the elected Chair of World Partners in Asset Management (WPiAM) and is a past president of the PEMAC Asset Management Association of Canada.
