Asset Management and Key Principle to Practice

Asset Management and Key Principle to Practice

What is Asset Management?

Asset management is the process of maintaining and managing assets in a cost-effective manner. Asset management companies usually perform the job on behalf of the stakeholders. The asset management process 

holds immense importance during the execution of large scale projects where the management of investments becomes extremely difficult. 

Strategic Asset management opens doors to a wide range of benefits. These include improvements to the productivity and efficiency of a business, increasing its return on investment. 

What are the Fundamental Principles of Proper Asset Management?

The principles of asset management are applied to assets of all types. These vary from real estates, such as buildings to productive assets like manufacturing plants. Although the techniques and practices followed in each type might vary, asset management principles stay the same. 

The asset management company in charge of the job keeps the project stakeholders informed throughout the phase. The stakeholders then judge each activity and give their feedback accordingly.

To unleash the maximum of its benefits, one must have an in-depth knowledge of asset management principles. Some of the important ones implied by asset management companies are described below.


The Life Cycle Principle

This principle of asset management looks into All the available assets. They are carefully analyzed before deploying them in the project. The principle ensures that assets pass through a discernable life cycle, enhancing the effectiveness of asset management.

Failure Principle 

The failure principle of asset management follows the usage and an environment that work to breakdown all the assets. The step is executed, so that failure of assets in any later stage of project execution does not hamper its progress. Asset management classified asset failure when it fails to perform in its operating environment. 

The Failure Modes Principle

One of the essential principles that asset management companies take into account is the failure modes principle.

The principle states that not all assets fail in the same operating environment. Instead, different factors eventually carve the way of the assets to failure.

The Probability Principle

Assets have different lifetimes. Not all assets of the same age and type used in a project will fail at the same time. Hence, Asset management companies make a reasonable effort towards implying the probability principle during the process of asset management.  

Every asset used in a project requires maintenance throughout its lifecycle. Asset management’s cost of ownership principle monitors the investment made into running the lifecycle of the asset.

Consequently, this ensures that the investment made balances out the overall asset performance and level of service. 


For effective asset management, the company must follow the asset management principle of structured methods and action plans. Such principles of not only unlock doors of benefit but also increase the ROI.

Furthermore, this allows decisions taken by the asset management companies to be consistent, repeatable, and transparent.


Most of the asset management companies throw a heavy focus on implying the systemic principle. The reason behind this is to examine assets while keeping them in their working environment properly.

If this is not done, the performance of an asset can never be correctly assessed, or performance-optimized.

Risk Protection

Risks are the inevitable part of any projects being executed. Therefore, the asset management companies must look for all the possible risks keenly. Following this, they should also make sure that adequate investments are made to avoid the risks.

Overspending on protection against the risk of ignoring them during the project may result in trouble. Not only will the assets be threatened, but the overall performance of the organization will also be hampered.

Optimization of assets

One of the critical goals of asset management is Optimization. Asset managers seek a way to achieve the maximum possible objectives through the available resources.

Good practice of asset management companies includes the personnel taking into account all costs, benefits, risks, and performance factors associated with assets. Besides, the asset managers consider all the possible factors before deciding where and when the asset should be used.

Although the principles might seem easy to imply, it is indeed a daunting task to perform. Hence it is vital for the individuals seeking asset managers to hire expert professionals from the field.

The person is trained in implementing all the principles of assets management, systematically without compromising on quality.

Moreover, they are also responsible for devising plans for work orders, inspections, and preventive maintenance.

Many asset management companies keenly perform condition assessments to enhance asset life. Asset management is the one solution that efficiently counters all the needs of the asset stakeholders.

Basit Mehtab

M Basit Mehtab is an SEO Analyst and Content Writer. He has 3 years of experience in Digital Marketing. Working as an SEO Analyst in Very renown company called Clustox

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