Corporate Real Estate Seminar Explores Asset Life Cycle Management

Hsieh-Min Loy
Held in Singapore, Faithful+Gould's recent corporate real estate seminar attracted some important players from this growing business sector. Participants were keen to explore and share their experiences of efficiency and best value.

I led the Asset Life Cycle Management session alongside my Faithful+Gould colleague Hannah Feddon. We explored the business case for Asset Life Cycle Management, focusing on the following key topics:

  • What role does asset life cycle management play in the sustainable environment?
  • Can effective asset life cycle management improve asset efficiency and value?
  • What is the role of asset life cycle management during asset transactions?

These issues reflect our experience and we support clients in three main areas:

  • The asset itself: assessment of condition, review of adequacy of maintenance regime, audit performance of service providers.
  • Transaction of assets: undertaking due diligence when buying or selling assets, or undertaking review of contract documents for new projects.
  • The future of the asset: assessing life cycle cost, establishing standards for facilities management and assisting in procurement of these services.

Does asset life cycle management play a role in the sustainable environment?

In Singapore, buildings account for 30 per cent of our annual energy consumption. Coupled with water, this energy translates to operational carbon, so we can already see the significant environmental impact of a building’s operational stage. And this is before we consider the embedded carbon associated with replacements of assets!

Asset life cycle management really must be considered if we are aiming for a sustainable environment... the two go hand-in-hand.

Asset life cycle management really must be considered if we are aiming for a sustainable environment. The two go hand-in-hand, with life cycle assessments often used to build the business case for sustainability.

Building a robust life cycle business case can be difficult, as the reliability of the data available varies. A uniform data structure such as the RICS New Rules of Measurement (due to be released this year), used at each stage of the project, will assist the industry. Improved data recording will increase data availability to all parties involved throughout the project’s life. This data will help us all to build robust business cases for asset investment, taking us towards a sustainable environment.

Can effective asset life cycle management improve asset efficiency and overall value?

An asset life cycle management plan enables budgets to be set, optimised and managed. This leads to increased value for money of the asset.

The main way in which increased value is realised is through the informed decision-making enabled by a clear understanding of the assets and the life cycle requirements. A good asset management plan leads to asset intelligence. This intelligence helps monitor costs, performance and compliance, maximising the value of the asset.

What is the role of asset life cycle management during asset transactions?

Currently in Singapore and the surrounding region, we have a problem when we come to assess assets which are going through a transaction. Whether we are acting for the seller or the buyer, we find lack of information is the most significant limiting factor of our review.

In order to properly undertake due diligence for assets undergoing a transaction, we would like to see:

  • Asset listings,
  • Planned and reactive maintenance records,
  • Operations and maintenance spending records, and
  • Forecast operation and maintenance expenditure.

Having this information available increases the depth of our assessment and allows us to establish where risks exist. We can then advise on any current and future financial commitments, allowing our clients to make informed decisions throughout the negotiation process.

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