Optimizing Capex for Asset Sustainment
Capex for sustaining assets is often treated as a secondary financial consideration. But, reinvestment in an organization’s assets is essential for business continuity and competition.
Due to today’s IoT and machine learning, optimizing asset sustainment expenditures is achievable.
The essence of asset sustainment is risk mitigation. The challenge of effective risk mitigation is to efficiently collect all the relevant inputs from a myriad of operational, outside, and financial sources. The required financial cost is best provided through the simplified use of calculating option values.
Risk lies in impairments to the organization’s business mission, health and safety dangers, and potential regulatory non-conformance. Failure mode analysis can be an effective tool to evaluate and compare competing risks of different types.
Operational risk requires comprehension of asset condition as well as the priorities of the business operation. Although tracking age of assets is good, performance tracking through IoT can provide accuracy in long-term financial forecasts. Common understanding of what a sustainment project is and is not, as well as a common project registry is necessary, too. Because data can become muddled in global organizations that have competing lines of business, a system that yields clarity through objectivity is desirable.