Subject elements
This unit comprises three Elements:
Develop strategies for systematic maintenance, repair and purchase of physical assets
Monitor the condition and performance of physical assets in the workplace
Co-ordinate financing of physical assets
Slide 2
Assessment
Assessment for this unit may include:
Oral questions
Written questions
Work projects
Workplace observation of practical skills
Practical exercises
Formal report from supervisor
Slide 3
Element 1:Develop strategies for systematic maintenance, repair and purchase of physical assets
Slide 4
Develop strategies for systematic maintenance, repair and purchase of physical assets
Performance Criteria for this Element are:
Develop strategies for managing physical assets that reflect overall enterprise business and marketing objectives
Evaluate current and potential financial objectives and constraints in developing asset management strategies
Integrate all occupational health, safety and welfare requirements into physical asset management
Slide 5
Develop strategies for systematic maintenance, repair and purchase of physical assets
Performance Criteria for this Element are:
Develop and maintain an accurate and current physical assets register as part of the asset management strategy
Incorporate maintenance and repair regimes, which minimise disruption and loss of revenue and which involve appropriate specialists
Slide 6
Physical assets
Importance of physical assets
As a provider of tourism services, how you manage your assets is integral to how well you do.
What are examples of assets in a tourism business?
Slide 7
Physical assets
Types of physical assets
Buildings
Land
Equipment and machinery
Fixtures, furniture and fittings
Vehicles
computer systems
Office equipment
Physical surroundings
Slide 8
Classification of physical assets
Infrastructure assets
These are physical assets fundamental to the existence of the facility
They include buildings, paths, roadways, car parks, the beach at a resort and the rides in a fun park
Slide 9
Classification of physical assets
Incidental assets
These are those physical assets which are not essential to the existence of the facility
They include furniture, fittings, equipment, computers and vehicles
Slide 10
Development strategy
Setting an asset development strategy
It is generally accepted that a business development strategy relies on two complementary missions:
Service mission
Economic mission
Slide 11
Development strategy
Setting an asset development strategy
What needs to be considered when deciding what asset development needs to take place in a tourism business?
Refer to questions on TM
Slide 12
Development strategy
Steps in developing a strategy
Assess what opportunities you have in improvement in your market position
Assess what opportunities you have in creating new markets
Assess trends and indicators from the economy, consumerism and social change
Slide 13
Development strategy
Steps in developing a strategy
Review your competition’s assets
Review current asset performances
Understand that assets are simultaneously securities and risks
COMPLETE ACTIVITY 1
Slide 14
Asset acquisition questions
Questions to ask when considering purchase of assets
Why do we want the asset?
Is it part of our business or strategic plan?
How long will it take to get our money back?
Will we lose money on this investment?
How will we pay for the asset? Will it be financed? If so, how?
Are there any non-financial reasons for wanting the asset?
Slide 15
Purpose of assets
Why are physical assets acquired?
To achieve the organisation’s long term strategic business objectives
To control assets, and ensure their maintenance and reliability
Overall image, social and economic status as well as operational productivity and efficiency
Slide 16
Life cycle of assets
What is the life cycle of physical assets?
Planning
Acquiring
Operations and Maintenance
Disposal
Slide 17
ROI of assets
Return on investment on assets
Many organisations make decisions on new assets and new projects by considering how long it will take to get their money back on their potential investment
Usually investments should pay back investments in no more than 3 years
COMPLETE ACTIVITY 2
Slide 18
Asset management
Asset Management
Asset management, is the way in which we look after the assets in an organisation, either:
Day-to-day - maintenance and operations
Medium to long term - strategic and forward planning
Slide 19
Asset management
Asset management activities
Planning for assets and reviewing current stock based on customer requirements
Creating or acquiring new assets
Accounting for assets and determining the actual cost of the services they provide
Operating and maintaining assets
Monitoring performance and condition of assets
Slide 20
Asset management
Asset management activities
Assessing refurbishment, renewal and replacement options
Disposing of assets that are no longer required
Auditing the way in which assets are managed and the asset management practices and procedures
Identifying and working to minimise life cycle costs of new assets
Slide 21
Asset management
Asset management strategies
Asset management strategies may include:
Maintenance
Repair
Replacement
Slide 22
Asset management planning
Benefits of strategic asset planning
Companies adopt asset management systems which provide short, medium and long term benefits.
What are:
Short term benefits?
Medium to long term benefits?
Slide 23
Types of long term assets
Tangible and intangible assets
Fixed, non-current assets are those assets owned by the facility that are intended to remain for a period in excess of one year to help generate income.
They can be:
Tangible assets
Intangible assets
Slide 24
Depreciation
Concept of depreciation
Where the value of an asset is progressively written down in the accounts over an expected life
The full amount of depreciation is:
Historical cost
Less salvage value
Equals the depreciation or “loss” which is apportioned over the useful life of the asset
Slide 25
Depreciation
Causes of depreciation
There are three causes of depreciation:
Physical deterioration
Technical obsolescence
Commercial obsolescence
Slide 26
Asset management software
Role of asset management software
What are the:
Benefits of asset management software?
Types of asset management software?
Functions of asset management software?
Considerations when selecting asset management software?
COMPLETE ACTIVITY 3
Slide 27
Asset OSH requirements
Identify OSH requirements when selecting assets
The health and safety of employees and customers is an important issue and should not be overlooked
In all ASEAN countries, legislation and regulations will exist that must be taken into account when purchasing and using assets
COMPLETE ACTIVITY 4
Slide 28
Asset OSH requirements
Occupational safety, health and welfare requirements
OHS safety and welfare requirements may include:
Routine servicing of equipment
Tagging electrical equipment
Reporting faults in assets
Recording near-misses and accidents when handling equipment
Slide 29
Asset OSH requirements
Safety
As an asset manager you are responsible for ensuring the human interface with the work environment remains safe at all times.
What are the responsibilities of a manager to ensure the safety of people using assets?
What are common safety issues?
What causes these issues?
How can they be prevented?
COMPLETE ACTIVITIES 5 AND 6
Slide 30
Asset OSH requirements
Security
In this context security is seen as a distinct component of an overall safety strategy for both the public and staff
Security policy concerns protection from invasive, deliberate (eg theft) or negligent actions of others
Protect people first then property
Slide 31
Asset OSH requirements
Asset Security
What are examples of asset security?
COMPLETE ACTIVITY 7
Slide 32
Asset Register
What is an asset register?
Asset Register requires the identification and registration of all physical assets
The registration process involves the use of an asset information system
The asset information system is a database of asset information and is generally referred to as an Asset Register
Slide 33
Asset Register
Assets register
Assets register may be used to:
Record, track and manage assets
Provide complete, accurate and timely data
Provide information for internal management and external financial reporting purposes
Slide 34
Asset Register
Assets register information
The purchase price
The date and place of purchase
The manufacturers serial number
An estimate of disposal value and estimated life
The depreciation rate used in the accounts
Slide 35
Asset Register
Assets register information
The current value
The insurer and its insurance value
The reference number of the organisation
The maintenance schedule
The location of the asset
COMPLETE ACTIVITY 8
Slide 36
Equipment data cards
Equipment data cards
An equipment data or inventory card is a record of information describing a physical asset.
Type of plant or equipment
Location of plant or equipment
Energy source
Age
“Condition” of plant or equipment
Forecasted or expected lifespan of plant or equipment
Slide 37
Equipment history recordsEquipment history records
The equipment history record logs the inspections of equipment and its repair history
Used to decide when to replace rather than repair plant and equipment
Determine whether a repair is under warranty
Evaluating the need for spare parts and backup units
Establishing if the equipment has reached the end of its useful life
Slide 38
Maintenance request forms
Maintenance request forms
Information required on a Maintenance request form include, but are not limited to:
Date
Description of problem
Department responsible
Name of person reporting problem
Urgency
Slide 39
Inventory control
Inventory control
Inventory control is making a list of all assets that are owned and controlled by an organisation.
What is the purpose of preparing an inventory control list ?
Slide 40
Asset primer
An asset primer
An asset primer is a basic listing of assets common to the tourism industry with monitoring and checks required to be undertaken on a regular basis.
Review Asset Primer in TM
COMPLETE ACTIVITIES 9 AND 10
Slide 41
Maintenance and repair planning
Maintenance
Maintenance is all work that concerns effective preservation of facilities, equipment and systems so that they can perform at a level that is satisfactory to needs
Slide 42
Maintenance and repair planning
Maintenance and repair
To ensure that these machinery, equipment and tools can meet or exceed their “lifespan’, assets need to be maintained and used in the appropriate conditions and specifications
This will maximise the usage time and minimise cost for replacement
Slide 43
Maintenance and repair planning
Role of management in maintaining assets
The manager has the following responsibilities when maintaining assets:
Planning
Estimating
Programming
Review
Corrective action
Slide 44
Maintenance and repair planning
Categories of maintenance
Preventive and predictive maintenance
Routine maintenance and minor repairs
Major repairs
Emergency repairs
Alterations and improvements
Housekeeping
COMPLETE ACTIVITY 11
Slide 45
Maintenance and repair planning
Scheduling of maintenance
Scheduling is the allocation of labour power, materials and equipment, at specific times and locations, for accomplishment of prescribed maintenance work.
What must be taken into account when scheduling maintenance?
When is the best time to schedule maintenance activities?
Slide 46
Maintenance and repair planning
Scheduling of maintenance
Consider scheduling as synchronisation of:
Labour available
Materials available
Contingencies allowed for sudden emergencies
Minimised impact
Most efficient cost
Minimised customer awareness
Minimum downtime
Quick start-up and return to operability.
COMPLETE ACTIVITY 12 Slide 47
Maintenance and repair planning
Timing of maintenance
Long-term
Weekly
Daily
What maintenance activities take place at each of these time intervals?
COMPLETE ACTIVITY 13
Slide 48
Environmental considerations
Environmental sustainability asset management practices
Energy conservation
Garbage and chemical disposal
Maintenance
Facility cleaning
Fittings
Slide 49
Environmental considerations
The Environmental Protection Authority (EPA)
The EPA is responsible for protecting the environment from pollution by minimizing and controlling wastes and noise
It does this through a range of statutory and non-statutory processes and programs, the cumulative effect of which is to change community behaviour in relation to the environment
Slide 50
Environmental considerations
Environment law
In many countries environment law has been continuously evolving to cover ever wider areas of activity.
Environment law is generally developed in the form of codes, acts and quality standards.
What are examples of environmental law in your country?
Slide 51
Monitor the condition and performance of physical assets in the workplace
Performance Criteria for this Element are:
Establish and implement systems to ensure that the condition and performance of physical assets are regularly reported and discussed within the enterprise
Establish and implement systems to identify timely replacement of physical assets
Make assessments of physical asset performance based on safety, operational efficiency and customer service quality
Slide 53
Monitor the condition and performance of physical assets in the workplace
Performance Criteria for this Element are:
Identify problems promptly and take appropriate action
Identify the need for and access appropriate specialist assistance when required
Slide 54
Monitoring assets
Monitoring asset performance and conditions
As manager it is your overall responsibility to see that systems are set up to ensure that the condition and performance of physical assets is regularly reported and discussed within the enterprise.
How can this be achieved?
Slide 55
Monitoring assets
Asset monitoring system
An asset monitoring system collects and reports information on the condition and performance of assets.
What asset monitoring systems can be used?
What is asset performance measured against?
Slide 56
Monitoring assets
Asset monitoring system
The performance of the asset is evaluated against the level of service provided to the customer.
This can generally be measured in terms of:
Reliability
Availability
Capacity
Meeting customer demands and needs
Slide 57
Monitoring assets
Systems to monitor condition and performance of physical assets
Systems to monitor condition and performance of physical assets may include:
Integration of reporting into day to day operating procedures
Regular management reports
Internal and external inspections and audits
Regular staff feedback
Analysis of maintenance costs over a period of time
COMPLETE ACTIVITY 14
Slide 58
Monitoring assets
Preventative Maintenance Program (PM)
The most effective way of ensuring assets are maintained well is to have a Preventive Maintenance program.
What is the purpose of a PM?
What are the benefits of a program?
How can a PM be introduced in the workplace?
Slide 59
Monitoring assets
Preventative Maintenance
Preventative maintenance should be ongoing and included in everyday operations.
Preventative maintenance is designed to prevent breakdowns and complaints and is vital in maintaining the investment.
What are examples?
Slide 60
Monitoring assets
Planned Maintenance
Planned maintenance is maintenance that is carried out during quiet periods, overnight or when areas are closed.
What are examples?
Slide 61
Monitoring assets
Selecting assets for a PM program
Selecting assets for such resource-dedication is subject to the following factors: Criticality of the equipment to overall operability of the
facility Cost of repair or replacement if it fails Cost of downtime History to date of the asset’s performance Manufacturer’s recommendations Likely way it will fail Cost of monitoring versus costs of doing nothing The resources available
Slide 62
Asset management software
Computerised maintenance management software (CMMS)
CMMS is designed to be a database of assets and their profiles, recording maintenance histories and reporting on cost, efficiency and effectiveness trends.
What software programs exist in your country?
COMPLETE ACTIVITY 15
Slide 63
Asset observation
Importance of asset observation
How can you involve staff in asset observation?
What should they monitor?
How can they monitor?
How can they report faulty assets?
COMPLETE ACTIVITY 16
Slide 64
Energy management
Energy Management
The principles of energy management are to reduce the amount and cost of energy tourism organisations.
Energy management is:
An analysis of uses of energy, which
Makes recommendations for reductions or changes in usage, if required
Is a quick, cost effective way of savings in energy
An in-house process involving all departments
COMPLETE ACTIVITY 17 Slide 65
Maintenance administrative processesEstablish maintenance administrative processes
Most administrative tasks relating to maintenance issues relate to asset control, managing costs and contracts and reporting back.
Controlling equipment
Maintenance manuals
Maintenance schedules
Collating other records
Slide 66
Identify asset replacement
Identify need for asset replacement
Replacement describes the situation where an asset cannot be repaired or refurbished and must be replaced.
How can you identify when assets need to be replaced?
How can you report faulty assets?
What is the process involved in replacing expensive assets?
Slide 67
Identify asset replacement
Replacement, refurbishment or augmentation
Assets can be:
Replaced
Refurbished
Augmented
Slide 68
Identify asset replacement
Replacement, refurbishment or augmentation
Considerations:
Initial cost
Annual and periodic maintenance and operating costs
When capital will be needed and whether it is likely to be available
Possible increases in effective life or expected life
Benefits to customers
Slide 69
Identify asset replacement
Replacing major equipment
What must be considered:
During planning phase
When purchasing
When removing old equipment
When installing new equipment
Training of staff
What activities take place?
COMPLETE ACTIVITY 18
Slide 70
Monitor asset condition and performanceMonitor the condition and performance of physical assets
EXAMPLE
Provide an example of how can monitor the condition and performance of physical assets in the workplace
COMPLETE ACTIVITY 19
Slide 71
Identify problems and take action
Importance of TQM
The best way for managers to identify problems in a timely manner comes down to their own 'Total Quality Management' initiatives.
What TQM initiatives can be implemented?
Slide 72
Identify problems and take action
'Total Quality Management' initiatives
Inspecting
Assessing
Recording processes
Determining protocols and responsibilities
Apportioning or delegating responsibilities
Tuning operability as a whole
Slide 73
Identify problems and take action
Support mechanisms to identify problems
Build up staff communication mechanisms
Create a sense of ownership among staff of quality operability
Avoid culpability track-downs if some asset fails
Keep the incident records up to scratch
Have your contractors and emergency service listing up to date, including out of hours numbers
Note customer comments and whether an asset investigation is required
Slide 74
Identify problems and take action
Support mechanisms to identify problems
Keep on to environmental risk assessments
Develop performance indicators for major assets and, via your PM program, assess whether they’re trending up or down
If a staff member reports a potential problem then list it as a “to do” immediately
Use CMMS systems as monitors
Keep a “nightmare list”
Slide 75
Identify need for specialist assistanceConsiderations
What are examples of considerations when deciding on specialist assistance?
What types of assistance is available?
What are the benefits of using specialist assistance?
Slide 76
Identify need for specialist assistanceOutsourcing asset management
What are:
Advantages to outsourcing?
Disadvantages to outsourcing?
Slide 77
Identify need for specialist assistanceTypes of appropriate specialists
Whilst the range of various outsourcing options is endless, these may include:
Trades people
Professional cleaners
Contractors
Manufacturers
Assessors
Slide 78
Identify need for specialist assistanceIn-house or outsourcing asset management
What are examples of:
Commonly outsourced asset management items
Commonly in-house asset management items
Combinations of the two
COMPLETE ACTIVITY 20
Slide 79
Identify need for specialist assistanceEnsuring quality in outsourced repairs and maintenance work
In-house observation and supervision
Independent technical audit
Plain language explanations
Written reports of work done
Uninterrupted jobs
Bonus and penalties
Work warranties
Asset performance
Slide 80
Co-ordinate financing of physical assets
Performance Criteria for this Element are:
Prepare accurate work or equipment specifications to guide the acquisition process
Estimate acquisition costs based on evaluation of current, accurate and relevant data, including supplier quotations and estimates
Make appropriate decisions on the acquisition of physical assets in accordance with enterprise policies and procedures
Slide 82
Co-ordinate financing of physical assets
Performance Criteria for this Element are:
Select methods of financing to meet in accordance with enterprise policies and procedures
Implement the financing process in accordance with enterprise policies and procedures
Make and keep accurate records of all financial agreements and related documents
Slide 83
Prepare asset specifications
What is a ‘Specification’?
A specification refers to the manner in which a good or service is to be provided
This includes constituents, construction, appearance, performance of a material or apparatus or the standard of workmanship required in its manufacturer
Slide 84
Prepare asset specifications
Work or equipment specifications
Work or equipment specifications may relate to:
Description of equipment or work to be provided
Standard of equipment or work to be provided
Purpose of equipment or work to be provided
Design or capability requirements
Slide 85
Prepare asset specifications
Specifying the asset
It is important to specify the asset required in detail.
Detailed specifications are used in the tender process and to obtain quotations and prices.
Work and equipment specifications should detail:
The intended use of the asset
The limitations of this intended use
The material that to be used and its quality
Slide 86
Potential service provider questionsQuestions for potential service providers
What is your experience in this line of provision?
What qualifications does your company have?
What qualifications and training do your workers have?
How does the company ensure its workers work well?
Do you use subcontractors?
What is the TOT (Turn Around Time)?
Slide 87
Potential service provider questionsQuestions for potential service providers
Have you done what I asked? Have I got what I needed?
What if you don’t meet your promises?
How do you assess your costs?
What warranties do you provide?
What’s the cost?
Slide 88
Types of specifications
Types of specifications
Specification are normally based on:
Functional – what is it used for, its prime purpose
Performance – how does it perform
Technical – what is it made of, engineering and construction features
Slide 89
Benefits of specifications
Benefits of good purchase specifications
Provides knowledge
Reduces misunderstandings
Reduces time
Enhances competition
Sets a standard
Gives instructions
Provides verification
Are specific
Guarantee price conformity
Outlines warranties Slide 90
Inclusions in specifications
Inclusions in a specification
Characteristics of an item in terms of quality, size, weight, production, age, degree and preparation
A precise listing and regime of the tasks you want done
Name and description of product or service
The performance requirement
The intended use of the product or service
Quality, durability and cost limitations
Test or inspection procedures
Slide 91
Inclusions in specifications
Inclusions in a specification
Warranty or service requirements
Frequency of use related to product or service
Size, weight, amount and number of items
Energy usage specifications
General instructions
Source
Specific bidder instructions
Payment methodology Slide 92
Inclusions in specifications
Inclusions in a specification
Bonus and penalty scenarios
Agreed mechanisms for performance assessment
Equipment to be supplied by parties
Report methodology
Duration of contract
Early severance conditions
Procedures for contract variations
Required qualification levels of labour
COMPLETE ACTIVITY 21
Slide 93
Estimate acquisition costs
Estimating costs to acquire assets
Costs are estimated on:
Evaluation of quotations
Tenders from external suppliers
Appropriate maintenance agreements
In-house advice from appropriate departments
Slide 94
Estimate acquisition costs
Major steps in the purchasing cycle
Recognising the need to purchase goods or services
Preparing specifications
Collecting current, accurate and relevant data relating to items and prices
Selecting a supplier
Ordering the goods or services
Receiving the goods or services
Slide 95
Estimate acquisition costs
Current, accurate and relevant data relating to items and prices
The whole purpose of the tender process is to gather current, accurate and relevant data used for estimating costs.
This information can be gathered from:
Quotations from suppliers
Current maintenance contracts
Published or advertised prices
Previous contracts and costs
Slide 96
Tendering process
The tender process
Collect tender information
Evaluation of tender information
Rating essential and negotiable requirements
Identify criteria used to evaluate delivery response times by supplier
Identify different ways to purchase goods
Slide 97
Selecting a contractor
Choosing a contractor / supplier of assets
What are considerations you would have?
What are the benefits and dangers of contractors?
What are questions you would ask when identifying suitable contractors
What are critical requirements you seek in contractors?
What are contractual considerations you would identify?
COMPLETE ACTIVITY 22
Slide 98
Making acquisition decision
Different ways to purchase assets
Off-the-shelf products
Custom built
Used equipment
COMPLETE ACTIVITY 23
Slide 99
Making acquisition decision
Identify supplier progress payments
What payment requirements do suppliers have in place when selling major assets to your organisation?
What payment methods would they accept?
Slide 100
Making acquisition decisionIdentify early costs
Testing or compliance costs
Transportation costs
Site preparation costs
Installation costs
Training costs
Specialty training may be required
Make-ready costs
Tooling, parts and suppliers
Spare parts costs
COMPLETE ACTIVITY 24 Slide 101
Identify methods of financing
Purchasing decision considerations
Before purchasing decisions are made, it is necessary to consider the following:
Return on investment (ROI) you get from capital
Net profit margin you make out of cost centres
Asset turnover
Liquidity ratios
Gearing
Employee ratios
Slide 102
Identify methods of financing
Types of assets
Current
Non-current (fixed assets)
Intangible
Investments
Slide 103
Identify methods of financing
Methods of financing
In summary, the different methods of financing include
Purchasing
Leasing
Hiring
Slide 104
Identify methods of financing
Purchasing, leasing and hiring
When are they best used?
What are the advantages and disadvantages of each?
What are considerations / processes involved in using each method of financing?
COMPLETE ACTIVITY 25
Slide 105
Making a final financial decision
Factors for consideration
Will the asset significantly improve customer satisfaction?
Will the asset rectify a problem or issue that is substantive in nature?
Is acquisition desirable or essential?
Is it creating diversification, improved efficiency or expansion in your market niche?
Is the membership supportive of the acquisition?
What are others in the industry doing?
What is cash flow and overall liquidity like?
Slide 106
Making a final financial decision
Factors for consideration
What investments exist to reinforce a decision?
How many “volatile” factors exist
What is the ROI of the asset as a % of the facility’s turnover?
What is the asset’s percentage internal rate of return?
What is its pay-back period estimated to be? (purchase)
What is its ROI relative to loan payments? (purchase)
What is its ROI relative to lease payments? (lease)
Slide 107
Evaluation techniques
Evaluation techniques
Property managers are often required to purchase plant, equipment, furniture and fittings.
To do this effectively they use three different techniques to evaluate various options.
Pay back period
Net Present Value (NPV)
Internal Rate of Return (IRR)
COMPLETE ACTIVITY 26
Slide 108
Implement financing process
Responsibility of financial processes
Who should be responsible for the financial arrangements of acquiring assets?
What considerations must be taken into account when financing assets?
What assistance can be sought from others?
Slide 109
Implement financing process
Seeking assistance when acquiring assets Your accountant Your auditor Your management and executive team Local government business development advisory units Peak body industry advisors Government business advisory services Bureau of Statistics Local commercial land agents Your financier or broker Other facilities not in direct competition to you
Slide 110
Implement financing process
Investment decision considerations
Pay back period
A discounted pay back period assessment
A percentage internal rate of return
The net present value of the investment
A sensitivity analysis
Market analysis
COMPLETE ACTIVITY 27
Slide 111
Keep accurate records
Importance of keeping accurate records
It is usual business practice to retain and file originals of all financial agreements and related documents.
These should be able to accessed promptly and easily from secure locations.
What documents should be kept?
How should you maintain / store them?
Slide 112
Keep accurate records
Service Contracts
A contract is a legal document, which is an agreement between the buyer and seller.
It consists of a set of terms and conditions, which both parties agree to follow.
What information should be kept in a service contract?
Where should they be kept?
Slide 113
Keep accurate records
Maintenance records
Maintenance scheduling
Maintenance checklists
Manufacturers’ specifications
Fault reports
Backlog reports
Work orders
Slide 114