What Is an Asset and How Do We Manage Them?
To avoid bias in the use of terminology, i.e., not favoring one professional society over another, the author is adopting the use of definitions from the Business Dictionary. The Business Dictionary defines an "Asset" as:
1. Something valuable that an entity owns, benefits from, or has use of, in generating income.
2. In Accounting: Something that an entity has acquired or purchased, and that has money value (its cost, book value, market value, or residual value).
3. Asset type can be (a) something physical, such as cash, machinery, inventory, land, and building, (b) an enforceable claim against others, such as accounts receivable, (c) right, such as copyright, patent, trademark, or (d) an assumption, such as goodwill.
4. Asset value shown on their owner's balance sheet are usually classified according to the ease with which they can be converted into cash."
And the Business Dictionary further defines "Asset Management" as:
"Prudent administration of investable (liquid) assets, aimed at achieving an optimum risk-reward ratio."
Applying these definitions, we can clearly see that within any organization there are five asset categories, more clearly shown in Figure 4.
Figure 4: Five Asset Classes in any Organization
Worth noting is that in most organizations these asset classes are owned, controlled and managed by functional or line managers. This fact becomes critically important when we realize that in any organization "it takes assets to create more assets". For those organizations that have adopted a matrix management structure, these functional managers are going to be responsible for allocating their scarce or limited pool of assets (resources) to project work. And, that is while at the same time being held responsible for performing their on-going functional responsibilities.
To be clear, once the funding for the project has been approved (Decision Support Package) a notice to proceed (NTP) must be issued at the ends of Phases 2, 3 or 4. The project sponsors then start working with the support of the Project Manager/Project team, while the functional or line managers provide (i.e. control) the existing assets (resources). Hence, the latter are responsible for allocating resources in a manner that produces the deliverables from the project in the most cost-effective manner, while trying to satisfy as many stakeholder needs, wants and expectations as possible within these constraints.
All of this means that the "project charter" needs to be a formal delegation of authority, no different from the contract between an owner and contractor.
We have now established a clear understanding of what an asset is and who is responsible for managing those assets. Hence we can explore what options we can choose from for using the existing pool of assets (resources) to deliver or produce more assets for the organization. This is currently referred to as "benefits realization" but more accurately and completely defined as: "creation, acquisition, expansion, repair, maintenance, upgrading and eventual disposal" of organizational assets.
Now let's change the focus from the delivery system itself to the issue of which is the "best" delivery system to use, and what "added value" does the end-product produce. The answers will solve many of the problems we see in the world today.
9. Business Dictionary Definition of Asset (n.d.) businessdictionary.com/definition/asset.html last accessed 02/10/19
10. Business Dictionary Definition of Asset Management (n.d.) businessdictionary.com/definition/asset.html last accessed 02/10/19
11. Guild of Project Controls (n.d.) Module 1, Figure 4, last accessed 02/10/2019 planningplanet.com/guild/gpccar/introduction-to-managing-project-controls