Version acquire, construct, and manage assets. The Framework for Process Improvement. History

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1 Acquire, Construct, and Manage Assets DEFINITIONS AND KEY MEASURES Version The Framework for Process Improvement Experience shows that benchmarking s potential to drive dramatic improvement lies squarely in making out-of-the-box comparisons and searching for insights not typically found within intra-industry paradigms. To enable this type of beneficial benchmarking, the APQC Process Classification Framework SM (PCF) serves as a highlevel, industry-neutral enterprise model that allows organizations to see their activities from a cross-industry process viewpoint. The PCF enables organizations to understand their inner workings from a horizontal process perspective, rather than a vertical functional viewpoint. The PCF does not list all processes within a specific organization, and every process listed in the framework is not present in every organization. Originally created in 1992 by APQC and a group of members, the framework has experienced more than twenty years of creative use by thousands of organizations worldwide. The PCF is supported by APQC s Open Standards Benchmarking research. It is continuously enhanced as APQC s Open Standards Benchmarking team further develops definitions, processes, and measures. Please visit APQC s web site periodically for updates. The PCF is available for organizations of all industries and sizes at no charge by visiting Acquire, Construct, and Manage Assets 1.0 develop vision and strategy operating Processes >>> 2.0 develop and manage Products and >>> 3.0 market and sell Products and >>> 4.0 deliver Products and >>> management and support services 6.0 develop and manage human capital 7.0 manage Information Technology 8.0 manage Financial resources 9.0 acquire, construct, and manage assets 10.0 manage enterprise risk, compliance, and resiliency 11.0 manage external relationships 5.0 manage customer service 12.0 develop and manage Business capabilities History The Process Classification Framework was originally envisioned as a taxonomy of business processes. The initial design involved more than 80 organizations from the United States and worldwide. Since its inception, the PCF has been updated several times to reflect changes in the way organizations do business. In response to feedback from users of the PCF, APQC regularly engages practitioners, consultants, and academics to develop definitions based on real-world experience with the processes. That collaborative effort resulted in this document: a listing of processes with definitions and selected key performance indicators from APQC s Open Standards Benchmarking repository. The definitions contained in this document are to be considered in conjunction with the PCF. The content in this document will be updated according to research performed by APQC and subsequent updates to the PCF. This document was created using PCF version Version November 2012

2 9.0 Acquire, Construct, and Manage Assets Definitions and Key Measures TABLE OF CONTENTS 9.1 Design and construct/acquire nonproductive assets 3 Key Performance Indicators Develop property strategy and long-term vision Develop, construct, and modify sites Plan facility Provide workspace and assets Plan maintenance work Key Performance Indicators Perform routine maintenance Perform corrective maintenance Overhaul equipment Manage facilities operations Obtain and install assets, equipment, and tools Key Performance Indicators Develop ongoing maintenance policies for productive assets Obtain and install equipment Dispose of productive and nonproductive assets 5 Key Performance Indicators Develop exit strategy Perform sale or trade Perform abandonment 5 RIGHTS AND PERMISSIONS 2012 APQC. ALL RIGHTS RESERVED. APQC encourages the wide distribution, discussion, and use of the PCF and PCF definition documents for classifying and defining processes. APQC grants permission for use and adaptation of the PCF for internal use. For external use, APQC grants permission for publication, distribution, and use, provided that proper copyright acknowledgment is made to APQC. No modifications to the look or content should be made in external venues. About APQC APQC is a member-based nonprofit and one of the world s leading proponents of knowledge management, benchmarking, and best practices business research. Working with more than 750 organizations worldwide in all industries, APQC provides organizations with the information they need to work smarter, faster, and with confidence. Visit or call and learn how to Make Best Practices Your Practices SM. Please use the following text when reusing the PCF in external print or electronic content. The PCF was developed by APQC and member companies as an open standard to facilitate improvement through process management and benchmarking regardless of industry, size, or geography. The PCF organizes operating and management processes into a number of enterprise-level categories, including categories, process groups, and over 1,000 processes and associated activities. The PCF and its associated measures and benchmarking surveys are available for download and completion at no charge at 2 Permission granted to photocopy for personal use APQC. ALL RIGHTS RESERVED.

3 9.1 Design and construct/acquire nonproductive assets (10937) Design and construct/acquire nonproductive assets creates a plan to construct or acquire fixed assets that represent economic value that is expected to provide benefit that is beyond a single accounting period. It includes developing a property/equipment strategy and long-term vision; developing, constructing, and modifying sites; planning a facility; and providing workspace and assets. Key Performance Indicators: Return on fixed assets Cost of managing fixed assets, including: accounting, tracking assets, maintaining rigorous maintenance plans, assigning responsibility for asset management, managing data gathering, and conducting physical inventory of asset base Managing total cost of ownership of assets There are several critical success factors for this process group including: easy access to reliable information for planning and forecasting; an effective, rigorous process for ensuring appropriate taxes or insurance payments; a well-defined process for tracking asset depreciation; and a well-defined process for tracking the transfer of assets within the organization Develop property strategy and long-term vision (10941) Develop property strategy and long-term vision creates a plan with regard to assets and equipment. It includes aligning property and equipment requirements with business strategy, assessing the external environment, and making build-or-buy decisions. It includes estimating the useful life of the property, machinery, and equipment. It is important to develop a reliable strategy for conducting periodic, physical inventory of assets. In addition, an organization should create a reliable process for updating the fixed-asset accounting system based on the periodic physical inventory Develop, construct, and modify sites (10942) Develop, construct, and modify sites includes the physical construction of a site or changes to an existing facility Plan facility (10943) Plan facility includes designing a facility, analyzing the budget, selecting a property, negotiating the terms for facility, and managing construction of or modification to a building Provide workspace and assets (10944) Provide workspace and assets refers to the process of acquiring workspace and needed assets and/or changing the fit/form/ function of workspace and assets. Version November

4 9.2 Plan maintenance work (10938) Plan maintenance work prepares for the upkeep of assets. It includes performing routine maintenance, executing corrective maintenance, overhauling equipment, and managing facilities operations. It also involves record changes in the economic value of fixed assets in the fixed-asset accounting system. Key Performance Indicators: Total maintenance cost as a percentage of replacement asset value (RAV) Corrective maintenance cost as a percentage of total maintenance cost Preventative maintenance cost; condition-based maintenance cost Rework percentage Unplanned machine downtime as a percentage of scheduled run time Overtime maintenance hours Planner-to-craft ratio; supervisor-to-craft ratio Preventative maintenance hours as a percentage of total maintenance hours Planned work; unplanned work Proactive work; reactive work Total downtime percentage; scheduled downtime; unscheduled downtime It is important to have well-defined, rigorous maintenance plans, as well as reliable records of property and equipment maintenance Perform routine maintenance (16472) Perform routine maintenance is the process of regularly updating and repairing assets Perform corrective maintenance (16473) Perform corrective maintenance is the process of making unplanned or corrective repairs and/or maintenance to an asset Overhaul equipment (16474) Overhaul equipment is the process of changing or replacing equipment that is necessary for operations Manage facilities operations (10949) Manage facilities operations coordinates the maintenance operations. It includes relocating people and materials, as necessary. 4 Permission granted to photocopy for personal use APQC. ALL RIGHTS RESERVED.

5 9.3 Obtain and install assets, equipment, and tools (10939) Obtain and install assets, equipment, and tools refers to ongoing acquisition and maintenance policies for productive assets. It obtains and installs equipment, designs engineering solutions for manufacturing processes, and installs and tests equipment Develop ongoing maintenance policies for productive assets (10950) Develop ongoing maintenance policies for productive assets determines how they will be managed and maintained throughout their lifecycle. It includes analyzing assets and predicting maintenance requirements, as well as developing an approach to integrate preventive maintenance into a production schedule Obtain and install equipment (10951) Obtain and install equipment is the process of procuring necessary tools and preparing them for use in the organization. 9.4 Dispose of productive and nonproductive assets (10940) Dispose of productive and nonproductive assets is the process for planning how to discontinue the use of an asset at the end of its life cycle. This process group includes developing an exit strategy, performing a sale or trade of assets, and performing asset abandonment. Record the sale of an asset in the fixed-asset accounting system and adjust the value reflected as appropriate Develop exit strategy (10952) Develop exit strategy is the plan for how to rid an organization of an asset Perform sale or trade (10953) Perform sale or trade is the process of disposing of the asset through sale or trade Perform abandonment (10954) Perform abandonment is shutting down an asset and discontinuing its use. 123 North Post Oak Lane, Third Floor Houston, Texas phone fax pcf_feedback@apqc.org Version November