Asset and Facility Management – Spot the Difference

Asset and Facility Management – Spot the Difference

Asset and Facility Management – Spot the Difference

Asset Management has many roles and faces today. In modern business world, some are fascinated by its proliferation and complexity, similar to the admiration of a multitalented artist, who is all-in-one screenwriter, director and producer of the latest blockbuster. There are also others, who view modern Asset Management as the mythical Hydra that has spread all over and hijacked various management disciplines. Then, there are some clients and end users who are ... puzzled.

The evolution of Asset Management (AM), Facility Management (FM) and Property Management (PM) throughout the past few decades has led to significant integration of their professional functions and sharing of business concepts. A concise comparison of AM vs. FM current identity will be useful to end users or clients of asset management services, as well as to professionals managing multiple physical assets and interested in integrating real estate, infrastructure, technology and people.

There are three major factors that determine differences between AM and FM:

  1. The asset category to be managed;
  2. The organizational/corporate goals of the asset's Investor/Owner;
  3. The assigned scope of responsibility.

First, let’s underline that this analysis does not explore financial sector’s wealth and financial assets management on behalf of their owner.

Second, non-financial assets in any enterprise could be classified in two major categories according to their purpose of use:

  1. Assets that are used to carry out primary business functions (real estate, infrastructure networks, production machinery and equipment, plant facilities, tools, etc.) They are within the scope of responsibility of AM.
  2. Assets that are used in support business functions (buildings, infrastructure, vehicles, workplace facilities, mobile devices, IT equipment etc.) They are within the scope of responsibility of AM and FM.

Once the playground is set up, let us focus at the concise comparison between AM and PM.

Differences

Asset Manager (of Physical Assets)

  • For the Facility Manager, the leading objective is optimal work environment
  • Facility Manager’s scope of work are all assets which are utilized by support business operations of a company/organization
  • Facility Manager's priority is to improve the User’s primary business productivity and efficiency
  • Facility Manager is focused on End User/Occupier workplace needs and demands while optimizing operational (OPEX) and capital expenditures (CAPEX)
  • Most of corporate social responsibility initiatives are managed by FM

Facility Manager

  • For the Facility Manager, the leading objective is optimal work environment
  • Facility Manager’s scope of work are all assets which are utilized by support business operations of a company/organization
  • Facility Manager's priority is to improve the User’s primary business productivity and efficiency
  • Facility Manager is focused on End User/Occupier workplace needs and demands while optimizing operational (OPEX) and capital expenditures (CAPEX)
  • Most of corporate social responsibility initiatives are managed by FM

A. Client’s Agenda and Priorities

The differences between the roles of AM and FM derive from the varying agendas of Investor/Shareholder and User/Occupier, respectively their priorities.

Asset Investors prioritize their goals as follows:

  1. Value – minimize Replacement Asset Value ratio (RAV), thus maximize Return on Net Assets (RONA)
  2. Capital spending – achieve optimal Capital Expenditure level while balancing Risk and Performance
  3. Operations & Maintenance – target optimal MTBF (mean time between failures) and maximize primary business process reliability. Operation & maintenance of support business assets is FM's responsibility.
  4. User/Occupier – maintain effective user feedback in order to achieve the first three objectives.

Users prioritize their agenda in a significantly different order as compared to Investors:

  1. User/Occupier – ensure that FM services are optimal cost/quality ratio and directed to supporting high productivity of primary business and end users
  2. Operations & Maintenance – operate and maintain the property/asset in support of the Occupier’s core business activities and end users demand for continuous, effective and safe workplace environment
  3. Value – preserve and maintain the value of the asset/property based on whole lifecycle consideration
  4. Capital spending – secure optimal level of capital spending in order to achieve the first three goals


The hierarchy of objectives and tasks is one of the major differentiators between AM and FM.

B. Operations

On operational level, Asset Managers prime interest on a daily basis is in enhancing effectiveness and efficiency of assets performance by systematic maintenance management and reliability engineering of physical assets and properties. In AM, the complex equation of “realizing value from assets” while balancing “their associated performance, risks and expenditures over their life cycles” (J. Woodhouse), does not include management of soft services directed to the Employee, Visitor, walk-in Customer, End User.

Unlike Asset Managers, on operational level, Facility Managers provide on a daily basis multiple services to the employees working in their sites and to visitors (or customers).  On operational level, FMs manage, besides "hard" (technical) services, ever-growing "soft" services in the areas of hospitality, accommodation, workplace, logistics, business services etc. I would point just few FM services directed to the employees, users and visitors: secretarial and reception services; help desk services; catering and vending; event management, provision of work wear, occupational health services, workplace design and ergonomics, signage and decoration, office supplies and reprographics, travel and fleet management, security, the full spectrum of business support services – marketing, legal, professional real estate services, accounting and many others. In other words, FM is directed to improving End User/Occupier productivity and provide adaptive workplace environment in order to meet the changes in competitive marketplace and stakeholders demands. Any visitor of a property/facility is within FM responsibility since he/she is an end user of FM services (not of asset management services).

The systematic management of all decision making processes taken throughout the whole lifecycle of any asset is the cornerstone of AM. AM Decision Making consists of:

  • Cost-based Decision Making
  • Risk-based Decision Making
  • Performance-based Decision Making

The decision making process in FM integrates one more important component to the matrix – End User Service-based Decision Making.

The Common Ground

As management disciplines AM and FM have common fundament – the concepts of whole asset lifecycle and total cost of ownership/occupancy. Asset Managers align assets with the primary production/service processes and set up Return on Assets targets for the whole organization/company. Based on these targets, Facility Managers develop and implement the asset management strategy for all support processes of the primary business/organization activity.

The daily operations and responsibilities of FM and AM share similar objectives and standards. On operational level FM and AM manage number of hard services in the areas of maintenance, safety, logistics, supplies and technical infrastructure. Both Asset and Facility Managers use shared management concepts like Asset Registers, Criticality Condition Index, Asset Replacement Value, Total Cost of Ownership; they utilize similar analytical techniques, methods, procedures, IT solutions. AM and FM perform corresponding management functions as strategic planning, risk management, service management, financial planning and control, performance management, quality management, change management, project management, energy management, outsourcing, benchmarking etc.

If the only tool you have is a hammer, all problems look like nails.

This brilliant thought by Ab. Maslow describes that status, which every manager would like to avoid. If we use Maslow’s metaphor, decades ago, professionals dealing with physical assets and the built environment had one heavy toolbox with instruments for problem solving and decision making. Nowadays, Asset Managers and Facility Managers use an impressive, modern laboratory of management, where everyone has to share common tools and means. Differences arise from differing agendas and goals of the various stakeholders and the actual shareholders.

© Mundus Services

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