Towards quantification of asset management optimality

Abstract

Asset Management as a field of science is relatively new, starting only in the late 60s/early 70s as terotechnology. In its existence it developed from tools and concepts to improve profitability towards a more holistic and integral management system orientation, formalized by ISO55k. Asset management is highly quantitative, in systematically comparing cost, performance and risk of decision options to find the best balance. Yet, no absolute measure exists for determining asset optimality. It is also hard to find any quantification at all justifying the implementation of asset management or even certification. This seems a strange omission. In this paper, it is demonstrated that for assets some form of absolute optimality can be defined. This asset optimality can be expanded to express the optimality of the asset portfolio, and thus the optimality of the asset management system, though barriers exist to do so, like subjective value judgments, uncertainties in the assumptions and complexity of the portfolio. Neither of these barriers however seems fatal to the applicability of the concept on asset management systems. Suggestions for further research include a more precise specification of optimality and research with regard to the applicability on diverse types of assets. This could be beneficial in the debate on the value of asset management.