Property Asset Management: Best Practices, Importance and Automation
Property asset management helps businesses to optimize asset use, reduce costs, and extend asset lifespan. Learn best practices and automation strategies.
Business owners have to juggle a lot. From managing inventories, to warehouses and intricate supply chains, it is a never ending task. But amidst this daily grind, one crucial aspect often gets overlooked: your property and the assets that keep your business running.
Property asset management goes beyond bricks and mortar. It includes all the valuable equipment, machinery and infrastructure you have invested in for long-term benefits. Tracking and monitoring these assets is vital for smooth operations. Even a minor, neglected leak in your office building or a malfunctioning machine on the factory floor can disrupt your entire workflow.
This guide is all about property asset management. Let's see what it actually is, its benefits, best practices and how to utilize automation technology to optimize the value of your assets.
What is Property Asset Management?
Property asset management (P.A.M.) is a strategic approach to managing an organization's physical property and its associated assets. This includes the entire lifecycle of a property from acquisition to disposal, and focusing on maximizing its value and minimizing costs.
In short, property asset management tracks and monitors the financial value of assets, assesses their performance and makes informed decisions about their maintenance and utilization. The assets can be divided into two categories, i.e. fixed and movable assets.
- Immovable/Fixed Assets: Immovable or Fixed assets are long-term tangible assets that an organization owns and uses in its operations. This may include land, commercial property or offices, elevators, etc.
- Movable Assets: Movable assets refer to those assets that can be easily moved from one place to another and are not tied to a fixed location. These assets could be portable equipment and machinery, vehicles, I.T. equipment or stationery owned by an organization.
Understanding the Difference Between Property Management and Property Asset Management
While often used interchangeably, property management and property asset management serve distinct purposes and operate at different levels.
Property management involves short-term operational decisions related to the daily oversight of residential or commercial properties by a third party. Generally, it is responsible for tasks like maintenance, rent collection, repairs, and ensuring compliance with regulations.
Property asset management, on the other hand, is long-term strategic planning. This approach focuses on maximizing the value of a property or portfolio of properties. This comprises both physical asset management, such as property maintenance and repairs, and financial asset management, including financial analysis and investment decisions.
Fundamental Components of Property Asset Management
Every business needs a robust framework to manage its property assets. Components are building blocks of that framework that ensure effective oversight, maintenance, and optimization of property assets. Let's take a look at them:
1. Asset Inventory Valuation
Property assets represent the capital investment of a business. These assets, such as land, buildings, machinery, and equipment, require substantial financial input with the expectation of long-term benefits.
Asset inventory valuation involves creating a detailed list of all physical assets and determining their current market value. For instance, a manufacturing company might stock up on its production machinery, delivery vehicles, and warehouse facilities. This process is extremely important to assess the financial health of the business, make informed decisions and comply with tax regulations.
Source: Happay
Examples of capital investment
2. Asset Reservation and Utilization
Asset reservation and utilization is a critical aspect of property asset management. It provides a system that allows employees to check the availability of equipment, tools, facilities, or other resources and reserve them in advance. The asset reservation system provides real-time updates on asset location, check-in, checkout, and maintenance status.
Managing asset reservation and usage helps organizations maximize the productivity of their assets. It identifies and pinpoints underutilized resources and allocates resources properly to meet operational needs.
3. Maintenance and Repair
Effective maintenance is extremely important for preserving the value and functionality of property assets. It is generally recommended to allocate between 1% to 4% of a property's value annually for maintenance. Exceeding 5% often indicates potential financial distress in an organization.
Property asset management plays a key role in optimizing maintenance efforts. These platforms can track various aspects of building maintenance, such as equipment life cycles, repair histories, and maintenance schedules. It helps engineers and workers to plan and schedule timely maintenance within optimal budgets.
Top 4 Benefits of Property Asset Management
Property asset management offers numerous benefits for businesses. It helps you manage your physical assets, optimize operational efficiency, reduce costs, minimize risks, and enhance the overall value of your property portfolio. Below are some of the key benefits of property asset management:
1. Asset Tracking and Management
Research shows that starting a business needs around $440,740. A substantial portion of this funding is allocated to acquiring long-term beneficial assets for a business. Property asset management systems optimize these investments by assigning unique I.D.s to each asset.
This identification system empowers organizations with tracking, monitoring, and management of individual assets. It provides real-time insights about the real-time location, condition and usage of each asset to make informed decisions about optimal asset utilization.
2. Ensure Proactive Maintenance
Every asset, from a factory machine to a company vehicle, needs regular maintenance to stay operational and productive. Timely maintenance scheduling is crucial to prevent unplanned downtime, financial losses and extended asset lifespan.
Proactive maintenance, which focuses on preventing issues before they occur, is the best approach. Property asset management system tracks and monitors the operational cycles and maintenance history of assets to enable preventive maintenance. Recent studies show that businesses who adapt to preventive maintenance strategies can reduce unplanned downtime by up to 52.7% and defects by up to 78.5%.
Two pie charts representing benefits of preventive and predictive maintenance
Source: Worktrek
3. Increased Property Value
Property asset management is a key factor in maintaining and enhancing your property’s value. For example, regular maintenance of a commercial building's HVAC system not only ensures optimal indoor comfort but also increases its energy efficiency and overall value.
Similarly, strategic upgrades like identifying energy inefficiencies and adding energy-efficient features, such as L.E.D. lighting or high-efficiency windows, can enhance its curb appeal and market value.
4. Workspace Optimization
When it comes to commercial spaces, every square foot matters. Underutilization of space can put you under financial strain, waste resources, and decrease productivity.
Asset management can analyze space utilization data and employee needs and identify areas that are underused. You can then reconfigure layouts, consolidate spaces, or introduce flexible work arrangements to maximize space utilization.
Best Practices for Property Asset Management
Here are some best practices that can help you maximize the value of their property assets, and achieve long-term sustainability.
1. Design Property Asset Management S.O.P. and Protocols
Developing S.O.P.s and official protocols for property asset management maintains consistency and accountability in an organization. These guidelines provide a clear framework for managing physical assets, from acquisition to disposal.
Here is an example of a Property Asset Management S.O.P.: Asset acquisition process
- Identify Need: Determine the need for a new asset based on factors like budget, usage, and long-term benefits.
- Procurement Process: Follow the organization's procurement policies and procedures, including obtaining necessary approvals and quotes.
- Asset Tagging: Assign a unique identity to each asset and label it with relevant information, such as asset number, description, and location.
- Record Keeping: Conduct regular physical inventories to verify the existence, condition, and location of assets.
2. Promote collaboration Among Leadership.
Property asset management is not a siloed operation but a teamwork. It is extremely important for leaders and managers from different departments to collaborate. Sharing knowledge and perspectives helps departments work together to optimize asset utilization, reduce costs, and improve overall property performance.
For instance, the finance department can provide budget insights, while operations can highlight ongoing and future maintenance needs. This collaborative approach leads to more informed decision-making and a more holistic approach to property asset management.
3. Invest in Long-Term Returns
Property asset management focuses on the long-term lifecycle of assets. While short-term cost-cutting may seem tempting, it often leads to higher expenses in the future. Suppose you are neglecting regular maintenance of a building's HVAC system. It might save you immediate costs but could result in costly breakdowns and downtime in the future.
Investing in initiatives like preventive maintenance or technological advancements may seem like a high upfront cost, but it will pay off in the long run. This is because they address potential issues before they arise, extend the lifespan of assets and bring long-term benefits.
4. Train and Empower Your Employees
A well-trained workforce is the first step towards successful property asset management. Investing in regular training and development programs to ensure that employees have the necessary skills and knowledge to manage assets.
Training should cover a range of topics, including asset inventory and valuation, maintenance and repair, asset utilization, risk management, and regulatory compliance. This will empower your employees to stay competitive and contribute to the overall success of the organization.
5. Encourage A Culture of Accountability
A recent study by the Association of Certified Fraud Examiners (A.C.F.E.) revealed that organizations lose nearly 5% of their annual revenue to fraud and theft. Establish clear rules and regulations regarding asset usage and hold individuals accountable for their actions, to minimize losses due to misuse or theft.
Additionally, implementing a system for tracking asset usage and performance can help monitor compliance and identify potential issues. These preventive measures can significantly reduce the risk of fraud, theft, and misuse of assets.
Cost of Employee Theft for Businesses
Source: redbeam
Embrace Digital Technologies: Property Asset Management Automation
Property asset management involves managing vast amounts of data, which makes it a complex task. Relying solely on manual methods like Excel or Google Sheets can be inefficient and prone to errors. This is why it’s necessary to embrace digital technologies for automation.
Automation in property asset management involves using software solutions to streamline processes, such as asset tracking, maintenance scheduling, and inventory management. It eliminates human errors and inefficiencies from the equation. Along with that, enables real-time tracking and monitoring of assets, which allows for more productive utilization of assets.
Key Feature of Property Asset Management Automation
A robust property asset management software offers several key features:
- Asset Tracking and Management: This feature allows you to thoroughly track and manage your assets. You can find equipment by keywords, type, location, or availability. Additionally, you can record detailed specifications, such as make, model, dimensions, and identification information. It even allows you to attach relevant documents, images, or videos to each asset for easy reference.
- Asset and Equipment Maintenance: Monitor the condition of your assets and schedule preventive maintenance. You can create and track maintenance tickets, record repair history, and generate reports on equipment performance. This helps in optimizing maintenance schedules, reducing downtime, and extending asset lifespan.
- Activity and Stats: Real-time dashboards provide valuable insights into asset usage, performance, and maintenance history. You can generate customized reports to track key metrics, identify trends, and make data-driven decisions.
These are just a few of the notable features offered by property asset management software. These solutions often provide a wide range of functionalities, including check-in/checkout systems, automated notifications, asset reservation systems, and integration with other business systems.
Create Your Own Property Asset Management System With Itefy
Property asset management is no longer an option but a necessity for modern businesses. A well-implemented system provides real-time insights into your property.
Following best practices, such as those outlined above, ensures your company can navigate challenges, achieve business objectives, and lay the groundwork for long-term success. To achieve this, consider a platform that offers a comprehensive suite of features under one roof, like Itefy.
Itefy's cutting-edge property asset management software empowers you to streamline every aspect of your asset lifecycle. From in-depth asset tracking to automated maintenance scheduling, Itefy equips your organization with the resources needed to achieve your long-term goals.
Frequently Asked Questions
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A real-estate manager focuses on day-to-day operations of a property, such as tenant relations, lease administration, and property maintenance. An asset manager, on the other hand, takes a broader view, and focuses on strategic aspects of property ownership, including investment decisions, portfolio optimization, and risk mitigation.
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A property asset management plan is a comprehensive document that outlines the strategies and procedures for managing a property or portfolio of properties. It includes objectives, budgets, maintenance schedules, and risk management strategies.
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Property asset management is a strategic approach to managing an organization's physical property and its associated assets. It involves the entire lifecycle of a property, from acquisition to disposal, focusing on maximizing its value and minimizing costs.