Asset profiling is a useful tool in developing generic profiles aligned with individual assets that share similar characteristics to determine the life-cycle costs, including the capital and operational components.
Estimations of life-cycle cost incorporating maintenance regimes, are, depending upon the nature of the assets, based upon assessment of the design specifications by engineers, quantity surveyors or other relevant experts.
Asset profiling provides a robust and defensible methodology for developing budget estimates and is built into capital management planning. This methodology provides assurance to an entity’s executive as to the likely resource demands for both its existing asset base and for proposed acquisitions. The New Policy Proposal capital bid process is strengthened by having life-cycle costs supported by a sound methodology and expert, independently sourced calculations.
Asset profiling can be illustrated through a fictitious example of an asset profile for a freehold building, although the methodology and examples are equally relevant to other assets which comprise a number of interrelated components. A building is made up of many components and associated life-cycle costs. For the purposes of the example inflationary movements and revaluations are ignored, the building will be replaced at the end of its useful life, and depreciation is maintained at a constant level based upon the original acquisition cost.
Table 2.9: Asset profile for a freehold building
|Acquisition Cost||$25,000,000||Usefule life: 50 years|
|Component||Time period (years)||Last performed||Next task date||Capital||Operational|
|Building condition assessment||5||15/03/2007||15/03/2012||10,000|
|Heating and air condition maintenance||5||31/10/2008||31/10/2013||10,000|
|Upgrade stairs, railings, handrails and guardrails||30||31/03/1985||31/03/2015||150,000|
|Replace roofing, guttering and flashing||40||30/04/1980||30/04/2020||100,000|
|Lift inspection and maintenance||3||30/04/1980||31/07/2010||10,000|
|Upgrade building automation systems||2||31/03/2008||31/03/2010||5,000|
Aggregated with asset profiles developed for other asset types, a composite financial impact of an entity's asset base can be integrated into an Asset Management Strategy and a Capital Management Plan.
Actual costs incurred against an asset profile are tracked to assess whether the original estimates that were made based on design specifications were reasonable. Adjustments to estimates and methodologies can then be made through this feedback loop.