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ASSET MANAGEMENT:
WHAT IS IT? FROM WHENCE DID IT COME?
WHY NOW?
PART ONE OF THREE
By Rick Draker
"It is well known that the quality of food a person eats is highly correlated with life expectancy and resistance to disease. A similar relationship exists between the raw materials that a company consumes and its long-term financial health. Find a company in financial difficulties and you are likely to find one that is ordering materials it does not require, paying too much for what it orders, or accepting defective materials...." (Harmon and Jacobs, The Vital Difference, 1985, Chapter 8).
The above quote exemplifies what asset management (physical, financial, and cultural assets) is intended to prevent. It is utilized to varying degrees by private manufacturers, the health industry, government, and the education sector.
What is it?
Simply defined, asset management is a combination of a vision, an operating philosophy, and a defined methodology to be used by an organization in managing an asset. Managing an asset may include procedures and criteria for the acquisition of an asset, the lease of an asset, the sale of an asset or the utilization of an asset, the maintenance of an asset, and, ultimately, the disposition of an asset.
An Asset Management Plan or program (AMP) typically consists of text and sometimes graphics which set out an organization's policies, criteria, and procedures for dealing with an asset from acquisition through disposal or retirement.
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