What Constitutes an Asset?
While it might seem straightforward, it can be complicated to answer the question: what constitutes an asset? An asset is defined as something that has potential or actual value to an organization. The system must decide how granular to go with the definition of an asset. Should a unit or a collection of parts be the asset or should the individual components each be considered assets?
Flip the images below to reveal more about the asset:
Pump
Entire pump is the asset or, the pump, motor, and controls are individual assets
Pipe
Entire length of pipe is an asset, or a portion of pipe is an asset. A portion of a pipe could be a uniform length or common endpoints, such as valves and hydrants.
Water Storage
The whole tower or tank is an asset, or the shell, inlet/outlet pipes, vents, drain, etc. are individual assets. When considering storage assets, be sure to consider which pieces of the storage vessel are critical to compliance and what may cost more due to additional safety requirements needed for replacement.
Infiltration Planter
Entire structure including plants is an asset or each plant is an asset, underdrain is an asset, walls are an asset, soil is an asset, etc.
What is an infiltration planter?
An infiltration planter is a green asset designed to capture stormwater and infiltrate it directly into the ground. Oftentimes, infiltration planters are made with bricks or concrete and do not have a base. They work by slowing down stormwater runoff, most often from impervious surfaces, to allow pollutants to naturally filter before absorbing into the ground soil. Learn more about Infiltration Planters here.
Each system must decide how to define their assets and how best to classify them. Finding a balance between too little and too much information can be challenging. You should not include everything in the asset inventory. That could result in many inconsequential items that do not need in depth tracking. Conversely, you should not oversimplify your assets. Not including critical assets and components will limit the cost and maintenance data needed to efficiently manage the system. It is possible to revise the definition of an asset over time, but the ideal option is to thoroughly consider the question at the beginning, so revision is not necessary.
When identifying what to include and what not to include in the inventory, carefully consider and document the criteria used to determine if something is an asset or not. If necessary, the selection approach can be modified over time, but be sure to document the changes, adjust previous assets based on new definitions, and update processes for adding an asset to your inventory.
Click on each option below to see examples of how your system can define what constitutes an asset. Feel free to use these as they are or adapt them for your utility.
Monetary limit
A system might decide that any asset with a value less than a specific dollar amount (perhaps $500 for a small system, $3,000 to $5,000 for a medium system and $5,000 to $10,000 for a large system) will not be included in the inventory. These items can be managed as “supplies” or maintenance management items. The dollar value should be selected by the system to ensure neither too few nor too many assets are included in the inventory.
Work Order or Maintenance
It is recommended that any asset that can have a work order written on it be included in the inventory. If the item would just be replaced, without a work order, it is more than likely a supply or maintenance managed item, not an asset. Items that are maintained by others also fit this definition and should be included.
Segments of Assets (very large assets)
Very large assets need to be divided into smaller segments to better manage them. A forest, a stream, wastewater collection piping, or water distribution piping are all examples of assets that may need to be segmented. The system must decide how best to segment the asset into smaller pieces. Some potential options are by GPS coordinates, by valve to valve or manhole to manhole, by physical landmarks, or by set lengths.
Replacement/Restoration frequency
A system might decide to exclude items that have very short useful lives. Because the vast majority of assets are very long lived in water, wastewater, and stormwater, those with very short lives (say 2 years or less) may not be worth managing as an asset and thus should be excluded. Each system can decide what time frame constitutes a “short lived asset.”
Numerous Assets in a Category
If the system has lots of assets of a single type, such as meters, valves, hydrants, manholes, trees or inlets, these assets can add up collectively to a considerable amount of money even if each of these assets individually does not amount to the threshold dollar level set by the system to define an asset. In this case, these assets should be included in the inventory.
Impacts System's Ability to Meet Level of Service
A system should include all assets that impact its ability to meet the Level of Service. Some of these assets may not be owned by the system. Those assets may not be managed in the same ways as owned assets, but the system needs to have an awareness of those assets and the ability to influence decisions made about those assets. A system may want to review the strategic plan, the source water protection plan, the stormwater BMP plan, or other guiding documents for the system to help identify these assets.
Criticality
Assets may be included in the inventory even if they do not meet the threshold dollar value of an asset if they are highly critical to the system and their failure would cause a major disruption to the system. In these cases, it is important to have careful management of the item to ensure sustainable operation.
While the best-case scenario is to have all integral assets in the inventory, that goal can be challenging to achieve.
- Every system will have missing or incorrectly identified assets in the inventory.
- Assets are oftentimes buried, located on private property, or owned by others, which makes them difficult to initially identify.
- Records can be incomplete or inaccurate, and staff turnover or retirements might limit historic knowledge.
Strive to create the best inventory possible given the resources and personnel available. Your staff can improve the inventory over time.