In January 2014, the International Organization for Standardization (ISO) published ISO 55001, the new international asset management standard. This new standard is the result of more than three years of development and collaboration among 30 participating countries, including the United States, led by ISO Project Committee 251 (ISO/PC251).
The ISO 55001 standard was developed to meet a need for an asset management standard that provides a common and uniform asset management language, is translatable globally and changes the perception that such standards are only applicable to large-scale utility and infrastructure companies and physical assets.
The standards are designed to provide a common language for communicating with financial stakeholders, such as bond agencies, investors, credit agencies and insurers. There are specific requirements for identifying financial reporting needs, considering financial implications of plans and including financial performance when reporting on performance.
International Asset Management Standards
While uniform standards and common language are beneficial, the fundamental objective of the international standards is to guide and influence the design of an organization’s asset management activities. This is achieved by embedding a number of key concepts and principles within the asset management framework, such as the following:
- Focus on the value that assets provide to the organization and its stakeholders;
- Alignment of organizational objectives into technical and financial decisions;
- The importance of leadership and culture;
- Assurance that assets fulfill their required function.
While ISO 55001 is a new standard, it is based on Publicly Available Specification (PAS) 55 developed by the Institute of Asset Management (IAM) in the UK. PAS 55 methodologies have a proven track record for success within the water, electric and gas utility industries in the UK, Australia, United Arab Emirates (UAE) and, to some extent, the United States. Prior to the development of ISO 55001, PAS 55 served as the default international asset management standard since 2008.
Defining Asset Management
Overall, ISO/PC251 produced three international standards related to asset management. The following provides a high-level description of each:
- ISO 55000: Provides an overview of asset management principles, concepts, terms and definitions, as well as a description of the benefits of asset management. Under ISO 55000, asset management is defined as the “coordinated activities of an organization to realize value from assets.” The standard defines assets as “something that has potential or actual value to an organization.”
- ISO 55001: Provides the specific requirements for a management system for asset management, or a framework.
- ISO 55002: Provides guidance for the application of the requirements specified in ISO 55001.
The new international standards move the discipline of asset management in a more strategic and financial direction and are likely to add value especially in terms of increasing the exposure and understanding of asset management to a wider audience. Utilities of all sizes can benefit from the adoption and implementation of the ISO 55001 framework, which can be purchased online at https://webstore.ansi.org/.
Subject Matter Expert
Will Williams: WilliamsWD@bv.com