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The ultimate guide to asset management KPIs

|Asset Management

The ultimate guide to asset management KPIs

By Rachel Scott and Jarrod Chesher

In order to effectively manage your assets, it is necessary to track key performance indicators (KPIs). This article will provide an overview of the most important KPIs for asset management, as well as how to track them. 

For insights into applying these KPIs effectively, read our article: Performance management frameworks - why you need them.

Technical KPIs

Utilisation

This measures how much your assets are being used and can help you determine if you are utilising your assets efficiently. There are a number of ways to measure asset utilisation, but the most common method is to divide the total number of hours that your assets are in use by the total number of hours that they are available to be used.

Reliability

This measures how often your assets are working correctly and can help you determine if your assets are reliable. There are a number of ways to measure asset reliability, but the most common method is to divide the total number of hours that your assets are in use by the total number of failures (this will give you the Mean Time Between Failure). 

Learn more about reliability metrics in our comprehensive guide: Introduction: Failure Mode Effect & Criticality Analysis (FMECA)

Warning: this assumes a constant failure rate, and this is usually not the case. Refer to "Practical Reliability Data Analysis for Non-Reliability Engineers" by Darcy Brooker for more guidance on reliability methods.

OEE

Overall Equipment Effectiveness is a measure of how effective your assets are at converting input into output. It is calculated by multiplying availability, performance and quality.

Throughput

This measures the rate at which your assets produce output. It can help you determine if your assets are being utilised efficiently and if they are capable of meeting demand.

Availability

This measures the amount of time your assets are available to be used. It can help you manage your asset's downtime.

Maintainability

This measures how easy it is to maintain your assets. It can help you determine if your assets are reliable and if they will be able to meet your needs over the long term.

Production capacity

This measures the amount of output that your assets can produce. It can help you determine if you have the capacity to meet your production needs and if your assets are cost-effective.

Product quality

This measures the quality of the output that your assets produce. It can help you determine if your assets are producing high-quality products and if they are meeting your organisational objectives.

Operability

This measures how easy it is to operate your assets. It can help you determine if your assets are user-friendly and if they will be able to meet your needs over the long term.

Interoperability

This measures how well your assets work with other assets. It can help you determine if your assets are compatible with other assets and if they will be able to meet your changing organisational needs.

Asset performance

This measures how well your assets are performing. It can help you determine if your assets are performing at the required capacity and can inform requirements to implement mitigations or augment your asset base.

Asset condition

This measures the condition of your assets. It can help you to understand progressive degradation in your asset portfolio.

Safety

This measures how safe your assets are. It can help you determine if your assets are safe to use and if they are mitigating WHS risk So Far as Reasonably Practicable (SFARP). Refer Work Health and Safety ACT (2011).

Security

This measures how secure your assets are. It can help you understand how resistant your assets are to compromise, whether malicious or unintentional.

Financial KPIs

Profit

This measures the amount of money that your assets generate after expenses have been deducted. It can help you determine if your assets are cost-effective and if they are meeting your business objectives.

Asset value

This measures the market value of your assets. It can help you to determine asset acquisition, replacement, repair and disposal strategies.

Asset lifecycle costs

This measures the total cost of owning and operating your assets over their lifetime. It can help you to compare various asset and non-asset solutions to meet your business needs.

Cost per unit of output

This measures the cost of producing one unit of output from your assets. It can help you compare how your assets are performing against one another.

RONA

Return on Net Assets is a measure of how profitable your assets are. It is calculated by dividing net income by total assets.

ROI

Return on Investment is a measure of how profitable your assets are. It is calculated by dividing net income by total investment.

Payback period

This measures the amount of time it takes for your assets to generate enough revenue to cover their costs. It can help you design your asset acquisition and sustainment strategies.

Internal rate of return

This measures the rate of return that your assets generate. It can help you determine if your assets are profitable and allows you to compare with other assets that provide the same capability.

Net present value

This measures the present value of all future cash flows from your assets. It can help you to compare the current value of different assets, considering their future contribution to the business.

Risk KPIs

Asset risk

This measures the risk of your assets. It may consider the technical risk of your assets being unable to perform in the future (e.g. due to obsolescence), the safety risk of your assets (e.g. nuclear reactors), or the financial risk of your assets (e.g. a single supplier with a monopoly in the discipline increasing sustainment costs). There are many ways to measure risk (see IEC 31010 - Risk assessment techniques).

Asset liability

This measures the amount of money that your assets owe. It can help you determine if your assets are sustainable within your current operating budget.

Insurance costs

This measures the cost of insuring your assets. It can help you understand the ongoing cost of managing your asset based on its risk of being lost, stolen or damaged.

Asset coverage ratio

This measures the amount of assets that are covered by insurance. It can help you determine the level of risk being carried by your organisation due to the possibility of assets being lost, stolen or damaged.

Conclusion

Key performance indicators (KPIs) are essential measures that help you assess how well your assets are performing. By understanding and implementing the right mix of technical, financial, and risk KPIs, you can make more informed decisions about your asset management strategy and ensure your assets are meeting your organisational objectives.

Choose the KPIs that align best with your organisation's goals and regularly monitor them to drive continuous improvement in your asset management practices. For more insights into implementing these KPIs effectively, contact us.

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