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Asset Hierarchy - The Importance of Breadth vs. Depth

I happened upon this great 'meme' this morning and had to literally laugh out loud. Mr. T

Definitely something I wish I could say walking into a meeting about asset hierarchies with my clients. Alas, we have to use more professional terms to help people understand the importance of the breadth versus the depth of their hierarchies.

I can't begin to tell you how many clients and organizations I've worked with that are very proud of how deep their asset hierarchies are and have component level information that rivals NASA in terms of detail. The question that needs to be raised, and I temper this response by saying that every organization is unique and has their own type of requirements, who is maintaining this level of detail and at what cost?

It's not always about the depth of your asset hierarchy, it's about the breadth. If you have refined detail about your assets that go 7 levels down a hierarchy, how much is this information costing you to maintain? Frankly, is it being maintained?

The second, and I mean the second, you have information in your CMMS or IWMS that is not accurate, you're starting down a bad path. You won't see the impact on the balance sheet immediately, you'll see the impact in the hearts and minds of the people who maintain your assets. If they don't 'trust the system' you're going to start sliding downhill fast. After all, if they don't trust the system, how are you going to trust that they are actually updating and maintaining the level of reporting you require to ensure asset function?

My advice to those who have a bloated hierarchy of assets, understand what it is you're trying to accomplish in a more holistic way. Any time I engage with clients on this topic I immediately ask them to 'think with the end in mind'. This is an important thing to consider as ultimately if you need to report down to the component level about assets then by all means maintain this level of hierarchy. If your goal is to report on assets over a certain dollar amount (need to get the financial folks in the room to determine how your building is being depreciated to better define this) then why would it make sense to track items at a more granular level? Think about what the deferred capital planning report is going to look like - are you putting together a deferred maintenance plan to replace the components of a cooling tower or is there a better chance that you're going to replace the entire darn thing! I'm not suggesting that you don't keep information about the components associated to the asset but this can be done via a spare parts list, O&M documents and inventory associations to the asset. Point being, it doesn't belong in the asset hierarchy.

When developing an asset hierarchy, I tend to focus on a more 'virtual' or system type approach. Assets within your buildings are connected, via pipe, wire, duct, steel, concrete - they have a natural hierarchy. With this in mind, I would suggest that you create these systems as your top level, think HVAC, PLUMBING, ELECTRICAL, FIRE/LIFE SAFETY, BUILDING ENVELOPE, etc. Once you have this starting point, it's much easier to think about what 'bin' these assets should be put into. Once they are in their systems, it will be much easier to decide how deep you need to go. I tend to think that from a component level, think of the criticality of the asset and it's impact to your business and work from there. There is absolutely no need to maintain asset hierarchies down to the actuator level on a fan coil unit, however, down to the actuator level on an exhaust fan/duct may be critical. It's all about the function/impact to your organization.

When dealing with asset hierarchies, it's far more important to have a complete picture (the breadth) of your organizations asset condition and health versus refined detail about how these assets are related. As I've said, every organization is different, manufacturing for instance, will have the need for very refined detail when reporting on their production equipment. Still, the importance of having a solid foundation built on consistency across your asset portfolio is critical.

So to close things out, while it is important to have an asset hierarchy that allows you a proper picture of how a buildings assets are related, it can be wrought with potential for failure should you try to maintain this system too deep. Understanding the breadth of your organizations assets and being able to report across systems and their performance is something that will do a far better job of providing a true return on asset.