The Implementation of Asset Criticality Ranking in Asset Management
Written By, Hilman Badhi Adikara, GRC Team Leader – Robere & Associates (Indonesia)
To successfully execute its business processes, a company requires the support of high-quality assets that can uphold its performance in achieving established goals and objectives. Therefore, companies inevitably engage in asset management, encompassing processes from asset needs planning, asset inventory, asset operation, asset maintenance, asset valuation, to asset disposal, commonly referred to as the asset life cycle.
Benefits of Implementing an Asset Management System
Given the extensive range of processes involved in asset management, companies can leverage an Asset Management System as a fundamental framework to monitor each process. Furthermore, implementing an Asset Management System offers numerous advantages for companies, including:
- Supporting companies in making informed decisions, particularly in developing strategic asset management plans.
- Enhancing company performance through effective asset allocation.
- Reviewing actual asset values, including asset depreciation, to prevent performance decline.
- Simplifying budget planning for asset management.
- Optimizing asset-related risk management, especially in determining asset criticality levels.
One key reference for implementing an Asset Management System is the ISO 55001 standard. A particularly compelling aspect of ISO 55001 is how companies can establish priorities for activities to achieve their defined asset management objectives. This prioritization can be achieved through asset criticality determination, commonly known as Asset Criticality Ranking.
What is Asset Criticality Ranking?
Asset Criticality Ranking is a method used to identify priority assets for maintenance and protection. Companies can perform Asset Criticality Ranking by considering several factors, including:
- The types of assets being managed, whether physical or non-physical.
- Defining consequence criteria that may occur to assets.
- Defining reliability criteria based on the likelihood of consequences occurring to assets.
- Defining detectability criteria as a form of prediction for potential asset damage.
- Establishing an asset criticality matrix.
Companies can then conduct assessments by assigning values to the consequence, reliability, and detectability criteria. A higher Asset Criticality Ranking score will impact the handling of the asset, specifically prioritizing stricter monitoring and relatively shorter maintenance schedules to ensure optimal asset performance.
Establishing Asset Criticality Ranking
Below is an example of criteria that can be used to analyze each asset, which will then be assigned a criticality level:
| Criteria | Level 1 | Level 1 | Level 1 | Level 1 |
|---|---|---|---|---|
| Operational Failure Impact (A) | No direct impact on operational processes | Impacts operational processes within a specific Department | Impacts operational processes within a Division/Work Unit | Impacts company-wide operational processes |
| Utilization (B) | Asset used <50% within 1 year | Asset used 50% within 1 year | Asset used 75% within 1 year | Asset used continuously |
| Downtime/Repair Time (C) | More than 60 minutes | 31 - 60 menit | 16 - 30 minutes | 0 - 15 minutes |
| Likelihood of Operational Failure (D) | Rarely occurs (0 - 1 time in 1 year) | May Occur (2 - 3 times in 1 year) | Often Occurs (4 - 6 times in 1 year) | Very Often Occurs (>7 times in 1 year) |
After analyzing assets against each criterion, the values for each criterion (A+B+C+D) need to be summed up. The resulting sum then needs to be aligned with the criticality levels below.
| Criticality Level | Score | Action | |
|---|---|---|---|
| Low | 1 – 8 | 1. | Preventive Maintenance performed at least once a year |
| 2. | Asset monitoring conducted monthly | ||
| 3. | No bypass/backup process required in case of failure | ||
| 4. | No alert system required | ||
| Medium | 9 – 11 | 1. | Preventive Maintenance performed at least once every 6 months |
| 2. | Asset monitoring conducted weekly | ||
| 3. | Bypass/backup process must be available in case of operational failure | ||
| 4. | Alert system must be available | ||
| High | 12 – 16 | 1. | Preventive Maintenance performed at least once every 4 months |
| 2. | Asset monitoring conducted daily | ||
| 3. | Bypass/backup process must be available in case of operational failure | ||
| 4. | Alert system must be available. | ||
Example:
The company owns a server and operational vehicles. The company will then assess their criticality levels in the following table:
| Asset Name | Server | Operational Vehicle |
|---|---|---|
| Operational Failure Impact (A) | (4) Impacts company-wide operational processes | (1) No direct impact on operational processes |
| Utilization (B) | (4) Asset used continuously | (1) Asset used <50% within 1 year |
| Downtime/Repair Time (C) | (4) 0 - 15 minutes | (1) More than 60 minutes |
| Likelihood of Operational Failure (D) | (1) Rarely occurs (0 - 1 time in 1 year) | (2) May Occur (2 - 3 times in 1 year) |
| Criticality Level Score | 4 + 4 + 4 + 1 = 13 | 1 + 1 + 1 + 2 = 5 |
| Criticality Level | High | Low |
Based on the table above, the criticality level of the server is higher than that of the operational vehicle. Consequently, the server requires more intensive treatment compared to the operational vehicle, including shorter maintenance intervals, continuous monitoring, preparing a backup plan mechanism in case of server downtime, and providing notifications for server disruptions.
The results of the Asset Criticality Ranking assessment can benefit companies by preventing asset damage that would directly impact business processes. Additionally, the Asset Criticality Ranking results can also serve as a basis for companies in establishing their asset life cycle.
