The real cash benefit has to be communicated clearly to senior management, says one of the Principal Consultants at Codub.
Asset management is nothing new in Africa or other developing countries; infrastructure has had to be installed, maintained, operated and expanded for a long time. What’s new is the integrated, whole-life costing and risk management approach. But what does that mean to senior leaders and decision makers in this part of the world?
“How does asset management and maintenance give me extra cash?” is the typical question from senior leaders. To them these are expenditure cost centres, not part of the cash generation side of the business like marketing and sales.
Thus, a strong business case is required that not only shows the good use of money but also clearly communicates the anticipated savings from implementing asset management strategies and policies. So if you need to replace a generator that is only 3 years old and the expected life span is 5 years, you need to have solid data showing actual run hours. Also, the business impact of having a power failure must be demonstrated e.g. the revenue lost due business inactivity, which must include staff costs due to unproductivity.
If the savings aren’t immediate and obvious, people outside asset management hardly recognise them as savings at all. Thus, asset management practitioners and consultants must therefore communicate the financial benefits of asset management – that is, to help organisations and governments come to terms with the current economic realities – without technical jargon.
The full article, which was published in the May edition of the Assets Online magazine can be read here.