Outsourcing in Asset Management

Outsourcing has become one of the catch-cries of those offering solutions and regimes aimed at lowering direct costs. In some areas this may be relevant. Within the area of physical assets there are some major considerations that first need to be taken into account.

Regardless of who has been delegated the responsibility for maintaining the asset base, there is still only one asset owner. That is the corporation that operates and owns the assets. So while it remains possible to delegate responsibility, it is still not possible to delegate the legal ramifications of these responsibilities. This has been shown dramatically in the recent events, previously mentioned, in the United Kingdom.


This indicates that there are at least two areas of asset management that need to be retained under the strict control of the asset owners.

Firstly, is the judgement as to what should be done. The determination of exactly what maintenance regimes should be applied in order to comply with the corporate requirements of the physical assets. The asset owners are the only ones that can do this successfully as they are the only ones with full knowledge of the corporate objectives in this area.

Secondly, there is a need to retain control, in some form or other, over how things should be done. This can better be explained as the standards to which a task must be completed, as well as the dates within which a task must be completed.

Contracts for outsourced maintenance cannot be managed on the basis of merely handing over assets or a series of tasks to be managed. The execution of many tasks, derived in response to the asset requirements, have small tolerances for execution They are driven by the way in which a piece of equipment fails as well as the consequences of that failure.

A failure to carry out these tasks within the timeframes that are required is a failure of the asset management function.

This carefully balanced combination of doing the right job and doing the job right is the essence of responsible asset stewardship and will be the basis on which asset managers, will be judged in the future, regardless of who they have delegated responsibility to for executing this plan.