Author : Mary-Anne Bowring
Corporate asset management can be defined as the process of acquiring land or assets, developing or leasing them up to become ‘stabilized assets’ and/or changing the tenant mix to improve income and then managing and maintaining the assets well to improve total returns before disposal to reap the rewards to reinvest.
The aim is to improve the total returns and therefore deliver asset appreciation, and this starts with driving a rent premium and reducing cost leakage – by tight management of what industry jargon calls the ‘gross to net’. Assets form a crucial component of any business operation, i.e., the premises from where the business operates, but the discipline of asset management in property is all about the holistic lifestyle approach to the driving value of property portfolios. In terms of the balance sheet in a set of company or asset accounts, corporate assets can be of two types, tangible or intangible.
Tangible assets are those with a fixed or definite monetary value. Property Assets as well as machines, tools, vehicles, real estate, and other similar things in which the company has invested.
Assets that have value but cannot be measured are intangible assets. These include for example the Build to Rent (BTR) brand which is intellectual property (IP) and through brand loyalty and the promise of service delivery will drive rent premium as well as software license agreements, organization’s capital, databases, and operational data.
When a company spends its time and other resources on protecting assets that do not generate any revenue, it may seem like an illogical move. But as the company grows, the importance of asset management increases proportionally. Not having a proper plan to protect the organization’s assets can become a financial hassle. This is why at Ringley we have an Asset Business plan for each property that our team of Asset Manager look after. This sets the ESG goals for the asset, as well as tracks revenue growth and performance quarter by quarter as well as key costs, staff and compliance issues.
Why Corporate Asset Management is Crucial for Businesses
A well-defined corporate asset management strategy not only helps a company chart a successful growth map and achieve financial success effectively and efficiently. It can also help the company race towards its goals and expand its operations. The same is true of the building level Asset Management Plan – and every developer that intends to develop, hold, improve returns and dispose of a property should have one.
An ill-defined corporate asset management strategy can act as a major roadblock to planning everything from launch marketing for the new build to rent a building, to how to drive the rent premium, through to branding, refurbishment, refit and ESG strategies, tenant mix, and all the other components of what needs to drive total returns.
Corporate asset management is not a recent concept, but it is vital for all serious property players. Corporate asset management can help resolve an organization’s most pressing concerns when applied correctly. It also paves the path for more efficient growth. Asset management provides value to both the organization and all its stakeholders.
Importance of Corporate Asset Management for plant and equipment installed
There are many reasons why a property company must focus on developing an effective corporate asset management strategy.
Corporate Asset Management makes it easy for organizations to keep track of plant and equipment. The benefits of this are to ensure that repairs are 100% right 1st time (Contractors repair the right item), items can easily be identified by scanning the QR code (including extra details if set up well of what an item of plant or asset actually does, when it was fitted, useful life expectancy, etc…). The types of assets that may be QR coded and logged could include light fittings, smoke detectors, TV/Satellite redistribution, CCTV cameras, and streetlights.
Faults become easier to analyze as does planning for the end of useful life. Records can be shared to enable third-party collaboration and it is easy to check if an item is certified safe to use or to immediately answer questions whilst on site: e.g., service history? Is next inspection due?
2. Makes Identification and Management of Risks Easy
One of the key features of corporate asset management is identifying and managing risks arising from the use and ownership of specific assets. An organization will find it easier to plan a formal CapEx (Capital Expenditure plan) and deal with end-of-life planning and renewal of plant items or assets when they have good information. For instance, when they know the status, location, and value of each asset, a company will be better placed to make timely and accurate business decisions. These decisions will be based more on hard facts and less on hazy instincts.
3. Eliminates Ghost Assets from the Inventory
It is not uncommon for companies to record damaged or replaced assets in their books. A strategic corporate asset management plan will instantly identify and eliminate this anomaly from the records leading to further efficiency. This is the process of audit: audit of assets can be carried out against the plant/equipment on site or as part of working through the planned preventative maintenance plan, i.e., when uploading inspection reports and job sheets to check serial or make/model numbers to keep the integrity of the asset register.
How to Develop a Strategic Corporate Asset Management Plan
A strategic plan is imperative for any company to manage its assets effectively. Here’s how to do it right.
1. Carry out a Comprehensive Asset Inventory
As a, you must have an accurate count of all its assets. To do so one must take the following into account:
· Total number of assets you are holding
· The location of each asset
· Plant item installation date (if known)
· Make model manufacturer of each asset
· The expected life cycle of the assets (google manufacturers manual)
· Whether the assets are currently in use or not
2. Calculate Lifecycle Costs
For your corporate asset management plan to be accurate, you must compute the entire lifecycle cost of an individual asset. Calculating only the initial purchase cost is an erroneous way of computing lifecycle costs because you might likely miss out on the costs towards maintenance, disposal, repair and various other factors. Also to keep the asset management plan up to date factoring in inflation is important as the replacement value will change. One also has to keep an eye on improving methods, materials as over time smarter equipment may replace the originally installed equipment.
3. Set the Levels of Service
After computing the lifecycle costs, the next step is setting service levels. Again this means one eye on the manufactures guide and maintenance and operation advice as well as statutory requirements such as legislation and British Standards, Approved Codes of Conduct or Best Practice Guides. It means outlining the overall quality, capacity, and the role of different functions that the assets provide. An organization can identify and apply the steps that must be taken to ensure that the assets are in excellent condition.
The organization can decide on the maintenance regime needed to keep the assets in good condition.
4. Practice Long-Term Financial Planning
Ideally, a company’s asset management plan must easily translate into a long-term financial plan or the budget set up to run the building(s). The budget helps the managers identify the most feasible objectives and focus on those which must be prioritized. By realising the resource capabilities of each asset and facilitating efficient and optimal functioning of these capabilities, financial managers can make business operations more productive and amortise the cost over a number of years by collecting into a reserve fund.
Benefits of having an Asset Management strategy in place for a property
The key benefits of using the right corporate asset management strategy:
1. Improves Asset Acquisition Process
By monitoring the company’s assets through their life cycle, the company can plan preventative maintenance to extend the life of plant and machinery. In simple terms not oiling and greasing parts and regular adjustments will decrease the life of an asset.
2. Enhances Compliance
There are only two ways to manage the plant or assets in a building:
1) To appoint and then trust contractors are doing the right thing, at the right time and hope that all is in order treating each plant item in isolation and not comparting costs and performance of plant or assets in one building to another.
2) To examine the regime of maintenance required, keep detailed information about the installation, use, and expected lifecycle of each item of plant or assets. The reporting process can be made considerably easier by using App technology and QR codes to monitor things along with a diary view to know what needs to be done when – so you don’t miss or fall foul of legislative compliance or best practice. Thereby keep yourself safe should an incident occur and you be subject to investigation by either the Fire Service or Health & Safety Executive. A good Asset Management Plan combined with the PPM register will be mapped to government regulations.
By implementing smart corporate asset management strategies, organizations can direct their valuable resources to manage risk as part of their daily activities. It is commonly seen that most organizations tend to have a conventional approach to plant or asset management or have a “what we have always done” approach. However, these approaches are not based on understanding the business objective of a specific item or plant ‘the asset’ or the risk it poses. A smart corporate asset strategy can provide a framework to reset your corporate asset management approach from generic activities to targeted and more dynamic strategies.
Mary-Anne Bowring FIRPM FRICS FARLA FCABE Founder/Head of Asset Management
Strategic partnerships, holistic delivery/ opportunities, growth, value engineering, thought leadership
Ian Barber MD BTR Mobilisation & Leasing
Runs HQ & site lease-up teams. Drives rent pricing, mobilisation, marketing, happy residents!
Jon Curtis MRICS Head of Building Engineering
Chartered Building Surveyor. Lectures on EWS1 & building safety. Runs CapEx programmes.
Kate Robinson MIRPM MD Blocks/FM Management (London Region)
Master plan setup, ops and staffing and resident engagement. ISO45001 champion.
Lee Harle Partner Ringley Law
Plot conveyancing. Debt litigation. Group Company Secretary.
Anthony Kingdon MIRPM AssocRICS MD Blocks/FM Management (North Region)
Stakeholder engagement. Mixed tenure specialist. Budget management. Plant audit, PPM compliance.
Chris Georgalis MRICS Head of Commercial Valuation
Chartered Valuer. Rental valuations: retail, leisure. IRR modelling and valuations for secured lending. Compulsory purchase & rent reviews
Nichola Pughe MRICS Head of Residential Valuation
Chartered Valuer. Rental development & mixed use valuations, IRR modelling. Leasehold enfranchisement specialist
Libby Chen MSc Compliance Manager
Operational Plant & Equipment strategy PPM Compliance lead, Asset tagging Client major projects
Dipesh Parekh Director PlanetRent
Customer centric, vertically integrated PropTech/fin-tech solutions.
Leana Aristodemou MIRPM MARLA AssocRICS Strategic lead: ESG & Asset Business Plan delivery
Financial modelling, valuation analyst to support underwriting & fund reporting.
Natalie Birmingham Helpdesk Support Manager
Trainer & Helpdesk Manager: people, systems,contractors. ISO45001 supply chain accreditation.
Steve Norman Planning Director
Land due diligence (opportunities & constraints) Has contributed to a number of award winning schemes.