Asset management and facility management (FM) are terms sometimes used interchangeably but refer to distinct processes within a facilities context. Let’s explore their differences and why they are often mistakenly considered the same.
Asset Management
According to the trade organization Institute of Asset Management (IAM), asset management involves balancing costs, opportunities, and risks against the desired performance of assets to achieve an organization's objectives.
When it comes to facilities, this entails tracking, maintaining, and maximizing the value of an organization’s physical assets. These can be organized by type, such as the following:
- Facility-based assets, such as an HVAC system, lighting, or a building.
- Employee-related assets, such as vehicles or mobile phones.
- IT-related assets, such as workstations, copiers, or data infrastructure.
For large or complex equipment, management strategies often involve frequent asset performance evaluations using data and analytics to determine the quality of an asset’s utility throughout its life cycle. These include:
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Preventative (Proactive) Maintenance. This generally involves regularly scheduled testing protocols to determine if equipment is working correctly. This approach is designed to reduce equipment repair costs, minimize downtime, and extend useful life by uncovering potential problems before they arise.
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Predictive Maintenance. This is similar to preventative maintenance, but uses equipment condition monitoring to collect data to help determine the probability of operational issues occurring in the future. When a piece of equipment’s functions move out of expected ranges, automated notifications alert asset managers to address the potential for a future fault and resolve the problematic conditions before the repair is needed. (For more on different maintenance approaches, see "The Difference Between Proactive & Predictive Maintenance & Why It Matters.")
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Cost-Benefit Analysis. When repairs to equipment or facilities are required, asset managers will evaluate if the asset’s remaining useful life justifies the costs. In cases where the repair cost exceeds the remaining value of the asset, typically, the decision is made to replace the asset instead.
Facility Management (FM)
FM is a discipline focusing on the management of buildings, spaces, equipment, and infrastructure. It includes various activities such as maintenance, security, waste management, energy management, cleaning, and more.
Importantly, asset management is a process that often falls within the broader scope of facility management, and thus, the terms can be mistakenly applied to one another.
The primary goals of FM are to ensure that the physical environment of a building or a facility is well maintained, safe, and optimally functioning for the people who use it. As such, FM helps support employee performance, customer satisfaction, and organizational agility.
Facility managers oversee a facility's day-to-day operations and other more strategic initiatives. For example, suppose a retail company selling outdoor equipment includes an in-store climbing wall. In that case, FM professionals could be responsible for the wall’s construction, safety, and maintenance as part of the delivery of the customer experience. Furthermore, if the company has climbing walls throughout its retail fleet, it will be up to the FM team to ensure the customer experience is consistent and up to brand standards throughout all its sites.
Other FM responsibilities include compliance with all applicable regulations, such as safety standards and building codes, and managing the FM budget or spend.
Asset Management vs. Facility Management
Asset management and FM differ in several ways. Here are some of the key distinctions:
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Focus. Asset management centers on the function and utility of particular assets, while facility management is concerned with the management of the physical environment一which can include equipment and other assets.
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Goals. Asset management aims to maximize the long-term value of an organization’s physical assets. The purpose of facility management is to ensure that the physical environment performs to a high standard for the people who use it.
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Metrics or Key Performance Indicators (KPIs). Asset management is often measured by metrics such as return on investment, the total cost of ownership, and asset utilization. In contrast, facility management uses a variety of metrics depending on the facility and its purpose. These can include KPIs related to work orders, program status, asset condition, maintenance, or total FM program spend.
Integrated Facilities Management Includes Both Asset & Facility Management
An Integrated Facilities Management (IFM) solution, such as NEST’s, provides a holistic approach to FM that includes all of the capabilities across asset management and FM discussed here. Although asset management is more discreet in its focus than FM, the health of standalone assets can have adjacent effects that impact an FM program's productivity overall.
For example, equipment failure could force a site closure causing reduced productivity or sales. In short, within a facilities context, looking at asset management alone is only half the story.
NEST deploys smart work order technology, more than 27,000 Independent Service Providers (ISPs), powerful analytics, financial consulting, and a 24/7/365 operational command center to effectively manage all the moving parts of today’s FM functions.
Together, these processes and tools can improve operational efficiencies, uncover cost savings, and optimize program spend across an entire FM program一including asset management.
To find out more about how NEST’s IFM solution provides industry-leading asset and facilities management, contact us today.
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