Asset lifecycle management: the stages, the decisions at each, and the cost that follows them
The five stages of an asset's life and what each decides, where the whole of life cost is committed against where it is spent, the information that has to pass between stages, how the lifecycle plan sits in an ISO 55001 system, and how a renew or dispose decision is made on condition, cost and risk rather than age.
Key takeaways
- Asset lifecycle management is managing an asset as one decision that runs from the need for it to its disposal, rather than as a project, then an operation, then a problem.
- The life has five stages: need, design and acquire, commission, operate and maintain, renew or dispose. Each decides something the later stages have to live with.
- Most of an asset's whole of life cost is committed by the end of design, and most of it is spent during operation. The people who will spend it belong in the room when it is committed.
- Each stage hands information on: the register entry, the hierarchy, the bill of materials, the maintenance strategy, the baselines. What is not handed on is rebuilt later at many times the cost.
- Renew or dispose is a decision on condition, performance, cost, risk and obsolescence, taken before the asset forces it. Age alone is not a reason.
An asset lives longer than any of the people who make decisions about it, and most of those decisions are made by someone who will not be there for the consequences. The designer chooses the pump that is cheapest to buy. The project hands over without the spares list. Maintenance inherits a machine it cannot get parts for and runs it to failure. Finance replaces it on age because nobody can say what its condition is. Each decision was reasonable in its stage, and the asset cost twice what it should have.
Asset lifecycle management is the discipline of treating those stages as one decision that runs from the need for an asset to its disposal. It is a core idea in ISO 55000, which defines the life cycle as the stages involved in managing an asset and asks an organisation to make its decisions across the whole of it.
This guide sets out the stages and what each decides, where the cost is committed against where it is spent, the information that has to pass from one stage to the next, how the lifecycle plan sits in an asset management system, how a renew or dispose decision is made, and the mistakes that are common enough to be predictable.
The five stages, and what each decides
The stages are a way of seeing where decisions are made and who makes them. The need stage decides what the asset is for and the level of service it must give, and whether an asset is the answer at all. Design and acquisition decides the option, the design, the supplier, the spares and the maintainability built in. Commissioning decides that it does what the need said and that the organisation is ready to run it. Operation and maintenance is where it is run and where the history is written. Renewal or disposal decides what comes next, and begins the cycle again.
Each stage has an owner, and the owner changes at the handovers. That is where lifecycle management is won or lost, because the information that has to pass across is held by the people leaving and needed by the people arriving. The operational readiness guide covers the biggest of those handovers in detail.
1Need
Decides
What the asset is for, the level of service it must give and for how long, and whether an asset is the answer at all
The need sets the envelope
2Design and acquire
Decides
The option, the design, the supplier, the spares and the maintainability built in
Most of the whole of life cost
3Commission
Decides
That it does what the need said, and that the people, spares, plans and systems to run it are in place
The cost is now largely fixed
4Operate and maintain
Decides
How it is run, the maintenance it gets, and what the condition and cost history say about the strategy
The longest stage, where the cost is spent
5Renew or dispose
Decides
Refurbish, replace, repurpose or retire, on condition, cost, risk and obsolescence rather than age alone
The next cycle begins
Cost committed, before it runs
Cost spent, over the years it runs
| Stage | Decides | Hands on | Owner |
|---|---|---|---|
| Need | What the asset is for, the level of service it must give and for how long, and whether an asset is the answer at all | A statement of need and the level of service, from the asset management plan | Asset owner |
| Design and acquire | The option, the design, the supplier, the spares and the maintainability built in | The asset register entry, the hierarchy, the bill of materials, the maintenance strategy and the data and documents to run it | Project, with operations and maintenance at the table |
| Commission | That it does what the need said, and that the people, spares, plans and systems to run it are in place | Baseline readings, as-built documents, the punch list closed, the maintenance plans live in the CMMS | Project, handed to operations |
| Operate and maintain | How it is run, the maintenance it gets, and what the condition and cost history say about the strategy | Condition, failure and cost history by asset, against the plan | Operations and maintenance |
| Renew or dispose | Refurbish, replace, repurpose or retire, on condition, cost, risk and obsolescence rather than age alone | The decision and its basis, the residual value, the lessons into the next need | Asset owner |
Where the cost is committed, and where it is spent
The bar in the figure is the point of the whole discipline. Most of what an asset will cost over its life is committed by the end of design: the technology, the duty, the materials, the access for maintenance, the spares philosophy, the control system that will be obsolete in fifteen years. Almost all of it is then spent during operation, by maintenance and operations teams who were not consulted when it was committed. Figures for the committed share vary by industry and by study, and the shape does not: steep early, flat late.
The practical consequence is who is in the room. Maintainability reviews in design, with the people who will maintain the asset present, are the cheapest money ever spent on it. A life cycle cost comparison of options at the design stage, including the energy, the maintenance and the disposal, is how the lowest purchase price stops winning by default. The life cycle cost calculator on this site lays two options out that way.
The cheapest pump to buy is chosen by someone who will never pay for its bearings.
What passes between the stages
Each stage produces information the next depends on, and the handover of that information is where most of the long-term cost of a poor project is created. The design stage produces the asset register entry and the hierarchy it sits in, the bill of materials, the maintenance strategy and the data and documents needed to operate and maintain it. Commissioning produces baseline readings, as-built documents, a closed punch list and the maintenance plans live in the CMMS. Operation produces the condition, failure and cost history by asset, against the plan. The renewal decision produces its own basis and the lessons for the next need.
What is not handed over is rebuilt later, by the maintenance team, from the drawings they can find, at a cost that is a multiple of what it would have taken the project to deliver it. The asset management plan guide and the asset register article set out what the register and the plan have to hold; the readiness guide sets out the handover checklist.
- Register entry and hierarchy position, created in design and not at commissioning.
- Bill of materials with the spares identified and the critical ones stocked before start-up.
- Maintenance strategy and the first maintenance plans, loaded and generating work before handover.
- Baseline condition readings at commissioning, so the first alarm limit has something to be set against.
- As-built drawings, manuals and the control system backup, held where maintenance can find them.
- A named owner for the asset and its data, from the day it is accepted.
The lifecycle plan inside the asset management system
In an ISO 55001 system the lifecycle sits in a hierarchy of plans. The strategic asset management plan says what the organisation needs its assets to do. The asset management plan says what will be done to the portfolio to deliver that, over a planning period, with the money. Beneath it, an asset lifecycle management plan for a class of assets, or for one significant asset, sets out the level of service, the operating and maintenance approach, the condition and performance measures, the renewal forecast and its funding, and the information to be kept. Beneath that are the maintenance plans in the CMMS that generate the work.
The lifecycle plan is where the renewal forecast lives, and the renewal forecast is what turns asset management from a maintenance budget into a long-term financial plan. A fleet of pumps with a known condition, a known cost to run and a known remaining life can be forecast as a renewal profile over twenty years, and funded on evidence rather than on whichever one failed last.
Renew or dispose: the decision, before it is forced
The last stage is the one most organisations reach by accident. An asset is replaced when it fails badly enough, or on an age rule written years ago, or because a capital budget became available. None of those is a decision. The decision answers the questions below, from evidence the operating stage should already hold, and it is taken while there are still options: refurbish, replace like for like, replace with something different, repurpose or retire the function altogether.
The cost question is a life cycle cost comparison over the remaining life of each option, brought to present value. The risk question reads the criticality and the failure history. The obsolescence question is the one that most often forces the timing in a modern plant, because a control system or a drive goes unsupported long before the steel wears out.
| Question | Asks | Evidence from |
|---|---|---|
| Condition | What is its measured condition, and what is the trend? | Condition assessment, inspection and monitoring history |
| Performance | Does it still deliver the level of service the need requires? | Availability, throughput, quality and the cost of the gap |
| Cost | What does it cost to keep against what it would cost to replace, over the remaining life of each option? | Maintenance and operating cost history, a life cycle cost comparison |
| Risk | What is the consequence and likelihood of its failure, and is that still acceptable? | Criticality assessment, failure history, the safety case where there is one |
| Obsolescence | Can it still be supported: spares, software, skills, the supplier? | Supplier notices, spares lead times, the age of the control system |
| Fit | Will the need it serves still exist for the life of the replacement? | The strategic asset management plan and the operating forecast |
An asset replaced on age alone was either replaced too early or too late. The condition says which.
Where it goes wrong
- The lowest purchase price winning in design, with no life cycle cost beside it.
- Maintenance and operations absent from the design reviews that commit their cost.
- Handover without the register entry, the bill of materials or the maintenance plans, rebuilt later by the maintenance team.
- No baseline readings at commissioning, so condition can only ever be judged against guesses.
- Operating history closed without failure codes, so the renewal decision has no evidence to read.
- Replacement on age or on a single large repair, rather than on condition, cost and risk together.
- Obsolescence of the control system discovered when the last spare is used.
- No named owner, so every one of the above is nobody's job.
Common questions
What is asset lifecycle management?
The practice of managing a physical asset across its whole life, from identifying the need for it, through design, acquisition, commissioning and years of operation and maintenance, to its renewal or disposal, so that the decisions at each stage are taken with the others in view. ISO 55000 defines the life cycle as the stages involved in the management of an asset, and the discipline is about treating those stages as one plan rather than a series of handovers.
What are the stages of the asset life cycle?
Five, in the usual framing: establishing the need and the level of service, design and acquisition, commissioning and handover, operation and maintenance, and renewal or disposal. Some models split acquisition into design, procure and construct, or add a separate utilisation stage. The stages matter less than the decisions in each and the information each passes to the next.
What is the difference between asset lifecycle management and asset management?
Asset management, as ISO 55000 describes it, is the coordinated activity of an organisation to realise value from its assets, and covers strategy, planning, risk, people and the management system. Asset lifecycle management is the part of it concerned with the stages of an individual asset's life and the decisions at each. One is the organisation's system; the other is how a given asset moves through it.
What is an asset lifecycle management plan?
A plan for a class of assets, or for a significant single asset, that sets out the level of service it has to deliver, the maintenance and operating approach through its life, the condition and performance it will be judged on, the forecast of renewal and the funding for it, and the information that has to be kept. In an ISO 55001 system it sits beneath the asset management plan, which covers the portfolio, and above the maintenance plans in the CMMS.
When should an asset be replaced rather than maintained?
When a comparison of the options over their remaining lives, using condition, performance, cost, risk and obsolescence, says replacement is the better value. Age on its own is not a reason, and neither is a single large repair. A life cycle cost comparison lays the options out: the cost to keep it running at the required level of service against the cost to replace it, each with its own remaining life, brought to present value so they can be compared.
What software is used for asset lifecycle management?
Usually an enterprise asset management system for the register, the hierarchy, the work and the costs, with the design and construction information held in engineering document and data systems and handed across at commissioning. No single system covers the whole life, which is why the handovers between stages, and the data standards they follow, matter more than the choice of any one product.
Key terms
Plain-language definitions from our glossary for the concepts this article leans on.
Standards and further reading
- ISO 55000:2024 Asset management: vocabulary, overview and principles (ISO)
- ISO 55001:2024 Asset management system requirements (ISO)
- IEC 60300-3-3 Dependability management: application guide, life cycle costing (IEC)
- Asset Management: an anatomy (Institute of Asset Management)
- The Asset Management Landscape, third edition (GFMAM)
- Asset Management Council, Australian asset management community (Asset Management Council)
Related case studies and tools
- Life Cycle Cost Calculator (tool)
- Asset management planning and the system behind it (case study)
Related reading
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