Series: Asset Management 101 – The Blueprint.

A fundamental concept within the field of infrastructure Asset Management is that of an ‘asset’. I appreciate this may seem like an overstatement of the obvious; however, as an Asset Manager, defining an asset will occupy a significant amount of your time, regardless of the size of the estate you manage.

Before we go any further, imagine I asked you: “What is an asset?” What would you say? Write your answer down now.

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The Gold Standard Definition

The “official” definition comes from ISO 55000, the international standard for asset management. It defines an asset as:

Source: ISO 55000:2014 (Clause 3.2.1)

“That’s not very descriptive,” you might retort. “I’m still no clearer on what an asset actually is.”

This broad definition is deliberate. It allows us to move beyond just thinking about physical “kit” and consider everything that helps us achieve our organisation’s goals and generate ‘value’.

The Institute of Asset Management (IAM) posits that the management of an asset isn’t simply about the object itself, but about the realisation of value from that object throughout its entire life—from the moment of need to the moment of disposal.

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Physical vs. Digital: Tangible and Intangible

So, is an asset always a physical thing? No.

Assets can be anything that generates value, and these can be both tangible (physical) and intangible (non-physical).

• Tangible: A physical heat source, such as an Air Source Heat Pump (ASHP).
• Intangible: While we don’t “own” people, the specialist skills and knowledge of the engineer who services that pump are a vital intangible asset. Without that intellectual capital, the physical pump cannot provide value.
• Data: The information that the pump controller feeds back into a Building Management System (BMS) or via an Internet of Things ‘IoT’ sensor is also an intangible asset.

In essence, an asset is anything your organisation considers to be of value. As an Asset Manager, you are the steward of that value.

The key is to remenber that in the modern estate, an ‘asset’ is rarely just a piece of machinery. To build a true ‘Line of Sight’, we must categorise assets across the key domains above. The table below is a helpul reference:

Asset Type	Definition	Industry Example
Physical (Tangible)	Hardware/Infrastructure	Air Source Heat Pumps, Bridges
Information (Digital)	Data and Records	BIM Models, Sensor Data, Registers
Human (Intangible)	Knowledge and Skills	Engineering Expertise, Maintenance Training
Financial	Monetary Capital	Budget, Grants, Cash Flow

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What is ‘Value’?

The concept of ‘Value’ has been raised multiple times, so let’s address it. Again, write down what you think defines ‘value’.

The Collins Dictionary defines value as:

Put more succinctly for this beginners’ guide, value is any metric by which an organisation receives a positive return. In the UK infrastructure sector, this “return” isn’t just financial; it is often Social, Environmental, or Reputational.

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The Asset Manager’s “Holy Trinity”

ISO 55000 offers a more robust explanation of how we balance this return. It suggests that value is the optimum balance between three competing forces:

1. Performance: The “gain” or benefit provided (e.g., a pipe delivering clean water).
2. Cost:What you spend to get that gain (e.g., electricity, labour, parts).
3. Risk: The “potential for loss” that threatens that gain (e.g., the pipe bursting).

The Professional Definition: Value is the optimum balance of what the asset does, what it costs, and the risks involved.

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Takeaways

Now, look at what you originally noted down for “asset” and “value.” Would you change your answer?

Understanding these definitions is key to your effectiveness. Being able to categorise an asset and understand its importance will ensure the decisions you make support the goals set out in your Strategic Asset Management Plan (SAMP) and individual Asset Management Plans (AMP).

Remember;

• Value is Subjective: One company’s asset is another’s scrap. Value depends on your specific organisational goals.
• Assets are Not Just “Kit”: Data, reputation, and technical knowledge are often more valuable than the hardware they represent.
• Systems Matter: Often, a single pump isn’t the asset; the entire water treatment system is the asset, because the system is what delivers the value.
• Value is a Balancing Act: In Asset Management, value isn’t just a price tag; it is the optimum balance between what an asset does (Performance), what it costs to keep it running (Cost), and the likelihood of something going wrong (Risk). This “Holy Trinity” ensures that every decision provides a net gain—whether that gain is financial, social, or environmental.

In the next part, we’ll explore the Asset Managers ‘Holy Trinity’ in greater detail.