Framework: An Integrated Approach to Portfolio, Program and Project
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II. STRATEGIC ASSET MANAGEMENT PROCESS - CHAPTER 3 - STRATEGIC ASSET PLANNING
3.2 Asset Planning
Asset planning is a process to identify, define, analyze, and specify the scope of alternative asset solutions that satisfy requirements. A good requirement is one that is "solution free" and describes the problem or opportunity as perceived by the customer and user. Thus, requirements are an input to this process. The outputs of asset planning are documents describing alternative asset solutions for further analysis in the investment decision making process (i.e., asset scope description). The asset planning process is sometimes referred to as a feasibility or appraisal study process.
Asset scope description defines the purpose or role, functions, specifications, and other attributes of the asset solution (e.g., features, appearance, etc.). For tangible assets, physical attributes tend to be most important. For services, processes, and other intangible assets, the important attributes tend to be more experiential in nature. The scope description also includes the cost, schedule, and resource requirements as well as risk and value attributes for consideration during the investment decision making process (see Section 3.3). In asset planning, the asset specification or product definition is only elaborated to the extent or level needed (i.e., feasibility level) to serve as a basis for effective investment decisions. Further definition (i.e., detail or production design) is usually an output of the project scope and execution strategy development process that takes place as a project is implemented (see Section 4.1).
There are two key steps in asset planning: identifying asset solution alternatives, and then analyzing their feasibility. The identification step applies the project scope development process (see Section 7.1) at a conceptual level of detail. Similarly, the feasibility analysis step applies the processes of schedule planning and development, cost estimating, resource planning, value analysis/engineering, and risk management to the scope definition at a conceptual level of detail. These planning processes, which are included in the TCM Framework project planning sections (7.2, 7.3, 7.4, 7.5, and 7.6), also apply to asset planning. Further analysis of the alternatives in regard to decision making criteria (e.g., net present value) is done later in the investment decision making process (see Section 3.3).
Asset planning and project control planning can be viewed as related processes with differing purposes. Asset planning establishes a basis for deciding to implement an asset solution (i.e., either through a project per Section 4.1 or through some direct change to asset performance). Project control planning establishes a basis for implementing project control (i.e., the project control plan implementation process per Section 8.1).
The asset planning process is iterative with requirements elicitation and analysis (see Section 3.1) and investment decision making (Section 3.3), and these are generally managed as integrated processes. Such integrated processes have been described in the literature and are used most commonly in product development, software engineering, and government acquisitions (particularly for complex or new technology). Some common integrated methodologies used in these industries (introduced in Section 3.1) include target costing, design to cost (DTC), cost as an independent variable (CAIV), quality function deployment (QFD), and activity-based cost management (ABC/M). If a balanced scorecard strategy development and deployment approach is used, the associated key performance indicators (KPIs) or measures will also be considered in asset planning and investment decision making.
While the processes are generally integrated, the goal of requirements elicitation and analysis (which is business problem or opportunity understanding and communication) differs from the goal of asset planning and investment decision making (which is optimizing solutions). Requirements define "what" an asset solution has to do while asset planning defines "how" the requirements will be met. The investment decision making process then acts as a gate, through which an alternative is either approved and passes through for project implementation or is recycled for further elaboration of requirements or planning or other disposition as appropriate. As an iterative, cyclical process (i.e., see the spiral model in Figure 2.1-3), the requirements and asset scope definition are progressively elaborated, with asset requirements moving from defining overall business requirements (e.g., goals such as desired economic value added or return on investment) to functional requirements for components of the asset solution scope.
Enterprises may also use the asset planning process to address a business requirement to update a long term capital budget as part of their business strategy development process. This process attempts to plan capital investments 2 to 10 years in advance. The scope definition of asset alternatives when they first appear in a long term capital budget is usually highly conceptual. Capital budgeting, which allocates funds to enterprise investments, including projects, is distinct from project control budgeting as covered in Section 7.3.
Unfortunately, the early cost estimates included in long term plans tend to become management expectations or de facto cost requirements. That is, succeeding updates of asset planning and capital budgeting have been anchored on prior long term plans regardless of how relevant prior plans are to the current requirements. This is an inappropriate method of target costing, which instead must start in each budget cycle with requirements (including cost) that address the current business problem.
The strategic asset planning process is generally sponsored by a business lead (i.e., the client who is investing in and/or will own the strategic asset), though much of the work is performed by the technical and planning organizations of the enterprise. In any case, the process is most effective when all the principal stakeholders with established requirements participate. Depending on the industry, the planning process work may be facilitated or led by product developers, design engineers, manufacturing engineers, or others. Cost and value engineers often play a key role and may lead the feasibility analysis step of the process, which tends to focus on cost and value issues.
Cost engineers may play a significant role in the planning process when target costing processes are used for requirements assessment and asset planning (includes DTC, CAIV, cost deployment, etc.). Using these concepts, cost is a requirement (specifically a constraint). As was discussed in Section 3.1, functional requirements and early design have traditionally been defined with little regard for cost; cost estimation was saved until alternative design completion. Using target costing type methods, the asset planning process considers the costs of meeting functional requirements as asset solution functions are elaborated and defined. In any case, cost engineers may be heavily involved in the estimating aspects of analyzing the feasibility of alternatives, particularly when ABC/M methods are used rather than simplistic (and inappropriate) cost allocations.
A key asset planning challenge is bringing creativity to the identification of alternate solutions. Soft requirements (i.e., resulting from social, cultural, political, and similar problems) can be particularly difficult to address. In some cases, conceptual prototyping and piloting are useful; these efforts can be projects in their own right and add complexity to the planning cycle. However, traditional bottoms-up, detailed planning processes and tools can stifle creativity and/or yield analysis paralysis. Therefore, a key asset planning concept is modeling (i.e., of asset performance, cost, risk, etc.), which can greatly facilitate creative solution identification and effective feasibility analysis.
3.2.2 Process Map for Asset Planning
Figure 3.2-1 illustrates the process map for asset planning. As mentioned, there are two key steps in asset planning: identifying asset scope solution alternatives, and then analyzing their feasibility. These steps generally apply the project planning processes covered in Chapter 7 to the scope definition at a conceptual level of detail (or the level necessary to make an investment decision). In addition, operations or production planning processes are also applied.
While the map is shown as a sequential process, the steps are typically iterative in practice. This is indicated on the map by the "concept improvements" loop. Furthermore, issues raised during asset planning may lead to recycle for requirements elaboration (Section 3.1). Likewise, issues raised during the investment decision making process (Section 3.3) may lead to recycle for further definition and feasibility analysis.
Figure 3.2-1. Process Map for Asset Planning
The following sections briefly describe the steps in the asset planning process.
.1 Plan for Asset Planning
As was discussed, requirements elicitation and analysis and asset planning are generally managed as integrated processes. Therefore, the planning for asset planning step is generally covered in Section 3.1 (i.e., integrated processes such as target costing and QFD address the processes as a continuum). However, as any phase of requirements assessment is completed and asset planning begins, plans for the effort should be revisited, reviewed, updated, and elaborated as appropriate.
The documented requirements (i.e., typically a requirements statement or specification) are the key inputs to planning for asset planning. Based on an assessment of these documents, the asset planning team (e.g., product development team, etc.) further identifies activities, resources, and tools for asset planning and plans for the effort accordingly. As was mentioned, many technical and planning skills and knowledge are applied during the asset planning process, and some of these resources may have to be acquired from outside of the enterprise (see procurement planning in Section 7.7). Also, modeling tools for asset planning may need to be created or modified, which may require significant resources and time. The asset planning team must also establish the general criteria and measures that will be used to rate, rank, or decide upon the feasibility of alternatives ideas during the performance of feasibility analysis.
As was mentioned, if significant prototyping and piloting are involved, these will require planning and project implementation decisions in their own right. However, if the business only requires an appraisal of the existing asset status or value, the asset planning process is simplified and may start with the analysis step.
The output of the planning step is documentation of the scope of the asset planning study effort, as reviewed and agreed to by the asset planning team and business leadership as appropriate. The scope describes the basis of the study (e.g., objective, methods, measures, assumptions, constraints, etc.) and defines what is or is not included in the study. To ensure that the asset planning team understands the requirements, kick-off meetings may be held as asset planning begins.
.2 Relate Requirements to Functionality
Documented requirements are an important input to asset planning. As described in Section 3.1, requirements define what assets (i.e., products, systems, etc.) are to do and not how they will do it. Requirements define specific and measurable asset performance requirements that can generally be categorized as business requirements (i.e., enterprise goals or drivers), functional requirements (i.e., what the asset has to do), and constraints (i.e., qualities or attributes that the asset must have).
Asset planning generally begins with the team examining each documented functional requirement (i.e., what the asset has to do), and describing the behaviors (i.e., functionality), features, or technical characteristics of any asset alternative (i.e., product, system, etc.) that might meet the functional requirements (i.e., how it must perform). Various methodologies have been developed that help teams relate the "whats" to the "hows." For example, QFD methodology uses a tool called the "house of quality," which is a matrix with requirements listed on the left, technical performance characteristics across the top, and the strength of the relationship between each requirement and characteristic rated within matrix cells. A characteristic that positively addresses one requirement might negatively impact another. The method allows for ranking the requirements and characteristics as well. This and similar methods help planners and developers ensure that the performance of alternative asset solutions (whether measured in terms of quality, cost, technology, or other measures) optimally addresses the requirements. In this step, the specific design of the solution is not developed, but its functionality and characteristics are framed.
As was mentioned in Section 3.1, all requirements are not elicited at once. Requirements are progressively elaborated, moving from defining overall business requirements (e.g., goals such as desired return on investment) to functional requirements for components of an asset as its scope is elaborated. Progressively breaking down functional requirements and functionalityfrom the highest level, to system, to unit, and so onis called functional decomposition. Functional decomposition is similar to work breakdown (see Section 7.1), but it is focused on asset functionality rather than project work.
When target costing processes are used (i.e., DTC, CAIV, cost deployment, etc.), costs, as a constraint type of requirement, can also be matrixed by or allocated to functionality to help guide effective alternative asset solution identification. ABC/M methods similarly align cost with activities, although costs for activities may or may not be requirements or targets at this stage.
An advantage of functional decomposition for complex problems is that it is a useful starting point for developing rational models that can be used to identify, analyze, and validate the performance of alternative solutions. For simpler problems, for which off-the-shelf or historical approaches may effectively apply, formally relating requirements to functionality may not add much value, but the issues must still be considered. Also, as was mentioned, if the business requirement only requires the appraisal of an existing assets status or value, the requirements and functionality assessment step may not be needed and the process can begin with the analysis step.
Having described the functionality, features, and technical characteristics of any asset alternative that might meet the functional requirements, the next step is to describe specific asset concepts (and their components as applicable) that provide the functional performance and features identified.
.3 Identify Alternatives and Develop Their Asset Scope
Two closely related steps are covered here: (a) identifying asset alternatives and (b) defining their scope to a level of detail sufficient to support feasibility analysis. The process of scope development is covered fully in Section 7.1. The step for identifying alternative asset solutions is usually led by the technical community (e.g., engineering, design, manufacturing, etc.). To bring creativity to the identification of alternate solutions, it helps to have multiple disciplines represented on the team.
The first information to obtain for this step, if applicable, is the status and performance capability of any part of the asset portfolio associated with the current business problem. This information is an output of the performance assessment process (see Section 6.1). It is possible that the capabilities of existing assets might be able to meet some or all of the strategic requirements. With this information in hand, there are many different methods that the team can use to identify alternative solutions. First, as was mentioned in Section 3.1, it is not uncommon for asset solution ideas to emerge spontaneously during the requirements elicitation and analysis steps. If these ideas are recorded, they are a useful starting point.
From there, methods include, but are not limited to, various problem-solving techniques such as: brainstorming, process analysis, benchmarking, research of historical designs or design patterns, and identifying off-the-shelf technology. For complex and/or risky concepts, prototyping or piloting may be justified (i.e., to test manufacturability, operability, constructability, etc.). The QFD process specifically highlights benchmarking competitive approaches.
No matter what method is used or who participates, there is a tendency to recycle proven ideas; however, in most cases, repeating past approaches is unlikely to lead to improved competitive performance of the enterprises asset portfolio. However, historical or off-the-shelf solutions are often appropriate, especially for sub-components of the asset that are not a source of competitive advantage for the overall asset, or where the risk of using a particular new approach is unacceptable.
The output of the concept identification step is the documented scope of potential alternative asset solutions. As was discussed, the scope description defines the purpose or role, functions, specifications, and other attributes of the asset solution (e.g., features, appearance, etc.). The scope description must be detailed enough to support feasibility analysis.
.4 Analyze Alternative Feasibility
The analysis of alternative asset solution feasibility may be conducted by a team led by the planning community (e.g., cost engineers, value engineers, etc.) or technical specialists with experience in planning methods. In the feasibility analysis step, the team applies the project planning processes included in the TCM Framework project planning sections (Sections 7.2, 7.3, 7.4, 7.5, and 7.6). While the analysis process steps are the same for asset and project control planning, asset planning is usually based on a conceptual level of asset and project scope definition.
In addition, the team must perform conceptual operation or production planning, which includes scheduling, cost estimating, and resource planning processes from an operations perspective (i.e., ongoing work) rather than a project perspective (work with a defined beginning and end).
An asset life-cycle model is often the basis for the feasibility analysis and later for investment decision making (Section 3.3). Such a model involves forecasting investment, revenues, and costs. Industry, economy, and other external factors are also part of the model.
The following sections briefly summarize each of the planning processes and discuss special considerations and/or provide examples for applying them in the asset planning process. In general, for each process, modeling is more likely to be used in feasibility analysis than in project control planning. This is because of the need to examine many alternatives, cases, and scenarios, and the limited resources and time available for analysis. When modeling is used, the team will require specialized tools and skills, including an understanding of systems analysis, operation processes, accounting, economics, probability, and statistics.
Schedule Planning and Development (see Section 7.2):
Schedule planning and development are the processes for the planning of work over time in consideration of the costs and resources for that work. Schedule planning and schedule development are separate but related sub-processes that call for different skills and knowledge emphasis. Schedule planning translates work package scope (see Section 7.1) into manageable activities and determines the manner and sequence (i.e., logic) in which these activities are best performed. Starting with the initial schedule model from schedule planning, schedule development allocates the available resources (e.g., cost, labor, etc.) to activities in the schedule model in accordance with cost and resource planning and alternative allocation criteria while respecting project constraints affecting the schedule (e.g., milestone dates). Schedule development generally includes iteratively refining the schedule planning (i.e., planned durations, means and methods, workflow sequence, or preferential logic) in a way that optimally achieves project objectives for time (e.g., milestones), cost (e.g., cash flow), and others.
For feasibility analysis, the work package scope is not well defined. The level of definition available may support only a simple bar chart schedule showing overall activities such as scope development, engineering, procurement, and construction of a facility or development and manufacturing of a product. Schedule development at this summary level may be done by using a simple model of estimated duration versus cost. Such a schedule will support very rudimentary cash flow and resource loading analysis and provide reasonable assurance that milestone date requirements can be met.
Cost Estimating and Budgeting (see Section 7.3):
Cost estimating is the predictive process used to quantify, cost, and price the resources required by the scope of an investment option, activity, or project. Budgeting is a sub-process within estimating used for allocating the estimated cost of resources into cost accounts (i.e., the budget) against which asset cost performance will be measured and assessed.
The cost estimating process is generally applied during each phase of the asset or project life cycle as asset or project scope is defined, modified, and refined. As the level of scope definition increases, the estimating methods become more definitive and produce estimates with increasingly narrow cost probability distributions. Stochastic and deterministic parametric cost models, factoring, and other estimating methods and tools are most widely used in asset planning.
With limited scope definition, the cost estimate will have very little detail. For example, only the building area and general features of the space (the payload, speed and key functions for a vehicular asset, etc.) may be defined for a building asset. Therefore, the estimate may consist only of the total cost of the building, vehicle, and so on with very limited breakdown. Estimating at this summary level may be done using a simple parametric model of estimated cost versus the identified parameters (e.g., area, speed, etc.), adjusted for major defined features.
One estimating concept that supports effective investment decision making is called activity based costing (ABC; see Section 7.3). Using ABC, costs are attributed or budgeted to the item or activity causing or driving the expenditure rather than through arbitrary or non-causal allocations. Too often, estimates allocate "overhead" costs to asset alternatives using methods such as pro-rating the overhead costs in accordance with direct costs. In fact, some asset alternatives may be disproportionate drivers of overhead costs. Such misallocation is likely to lead to many poor investment decisions.
If the business requirement is to sell, insure, or to take some other action requiring asset valuation or appraisal, estimating is generally the key (or possibly the only) analysis process applied.
Resource Planning (see Section 7.4):
Resource planning is a process to evaluate and plan the use of physical and human resources in asset investments and project activities. Most activities involve using people (i.e., labor) to perform work tasks. Some tasks involve creating an asset using component physical elements or parts (i.e., materials) as well as other items consumed during creation (i.e., consumables). Other tasks involve creating an asset using only information inputs (e.g. engineering or software design). To perform most tasks, people use tools (e.g., construction equipment, computers, etc.) to help them. In some cases, automated tools may perform the task with little or no human effort. The goal of resource planning during asset planning then is to ensure that labor, materials, tools, and consumables, which are often limited in availability, are invested in assets and projects over time in a way that optimally achieves business objectives and requirements.
As with estimating and scheduling, resource planning during feasibility analysis will not be detailed. However, the enterprise is likely to have multiple assets and projects competing for key resources, and business management must decide on the best allocation of those key (i.e., strategic) resources. Therefore, resource planning for key limited resources must be done as appropriate.
Operation or Production Planning
The preceding discussions primarily focus on scheduling, cost estimating, and resource planning processes from a project perspective (work with a defined beginning and end). However, these same basic processes are also applied for operation or production planning (i.e., ongoing work).
Depending on the nature of the operations (e.g., continuous, batch or repetitive, etc.), scheduling must consider not only work activities in a given production process or step, but the overall alignment of these processes with output capacity scheduling requirements. For feasibility analysis, operations scheduling is most concerned with overall capacity scheduling as it affects cost and revenue cash flows.
Cost estimating for operations is focused on product cost rather than fixed or capital assets. The methods of ABC are of paramount concern for operations and products. That is because operations tend to deal with many products or outputs that share common cost and resource inputs, making it more of a challenge to ascribe costs to each product appropriately. For feasibility analysis and investment decision making, it is critical to assign costs appropriately to the products being evaluated.
Resource planning for operations is heavily concerned with inventory and supply chain management, both for input and outputs of the operation. Enterprise Resource Planning (ERP) information technology has greatly facilitated resource planning for operations and provides a wealth of historical performance information that can be used for feasibility analysis.
Value Analysis and Engineering (see Section 7.5):
Value analysis (VA) and value engineering (VE), when applied as processes, are "the systematic application of recognized techniques which identify the functions of the product or service, establish the worth of those functions, and provide the necessary functions to meet the required performance at the lowest overall cost." Typically, the lowest overall cost refers to the lowest life-cycle cost. VE is focused on the development of new assets and VA on existing assets or projects. We refer to them as VA/VE in this text.
The VA/VE process is most often applied at the initial phases of asset, product, or project planning when scope definition is evolving and changes are least disruptive. VA/VE may be the most important analysis process for asset planning (keeping in mind that VA/VE relies on estimating and the other planning processes), given its focus on the function of assets. Integrated requirements assessment and asset planning processes such as target costing and QFD are often applied in conjunction with VA/VE; they are supportive of each other. For example, in target costing, as an assets function and components are decomposed, the target costs are decomposed and assigned to the components. This is similar to aspects of the function analysis step of VA/VE.
VA/VE is one of many value improving practices (VIPs), which can be any practice that has a particular strong focus and/or effect on getting the most value from the process and is performed in a way that sets the practice apart from "business as usual." Section 11.5 describes VIPs in more detail.
Risk Management (see Section 7.6):
Risk management is the process of identifying risk factors (risk assessment); analyzing and quantifying the properties of those factors (risk analysis); mitigating the impact of the factors on planned asset or project performance and developing a risk management plan (risk mitigation); and implementing the risk management plan (risk control). For asset planning, the goal of risk management is to improve the value versus risk profile of the asset.
The risk management process is applied in conjunction with the other feasibility analysis processes. For example, when risk management identifies a risk that can be mitigated using an alternative asset solution, the alternative concept is developed using the applicable planning process (e.g., cost estimating, scheduling, etc.). This iterative planning approach of assessing and analyzing risk factors and developing alternative concepts that mitigate the risks is applied until an asset alternative is selected for project implementation. Risk assessment, analysis, and mitigation efforts studies are typically applied in a phased manner consistent with the project scope development phases described in Section 7.1.
Feasibility Analysis Output
In some cases, it will be apparent that an alternative concept is not worthy of further analysis or that changes to the initial scope are needed to make the concept worthy. The planning team may drop or recycle these concepts through the alternative identification step as appropriate. Formal requirements or configuration change management is not applied at this stage as no basis of control has yet been established.
As appropriate to the plans and criteria established for strategic asset planning, the planning team will eventually conclude the feasibility analysis. The output of the feasibility analysis step is the documented scope of potential alternative asset solutions including their cost, schedule, resource, value, and risk attributes. The scope description must be detailed enough to support the investment decision making process (see Section 3.3) during which additional analyses regarding the key decision making criteria (e.g., net present value) are performed.
.5 Review Alternatives
The alternative concepts identified and analyzed need to be reviewed to verify that they meet the requirements as well as any criteria set for the planning process while ensuring that the process is still working on the right business problem. Issues identified during the review may require recycling through the asset planning or requirements elicitation and analysis processes. The review process may use techniques such as checklists, models, comparison to historical analyses, group reviews, and so on.
.6 Document the Scope of Alternatives
As was mentioned, the output of the process is the documented scope of potentially feasible alternative asset solutions including their cost, schedule, resource, value, and risk attributes. The scope description also defines the purpose or role, functions, and specifications of the proposed asset solutions for consideration during the investment decision making process. If an asset life-cycle cost or similar analytical model was developed to support the feasibility analysis, the model(s) should be documented for potential use in the investment decision making process. Finally, the results of and lessons learned from the asset planning process are also captured in a historical database (see Section 6.3) for consideration in future asset planning.
The documented scope will also be the basis of the configuration management process for any asset alternative selected for implementation. Configuration management is defined as a process to " identify and document the functional and physical characteristics of a product, result, service, or component; control any changes to such characteristics; record and report each change and its implementation status; and support the audit of the products, results, or components to verify conformance to requirements." This methodology is discussed in more detail in the asset change management process (see Section 6.2).
3.2.3 Inputs to Asset Planning
.1 Enterprise Business Strategy and Objectives. Business strategy and objectives are considered in planning for strategic asset planning and to support validation (i.e., ensure that objectives are achieved).
.2 Requirements. (See Section 3.1) A condition or capability that must be met or possessed by a strategic asset (i.e., system, product, service, result, or component).
.3 Stakeholder Input. Stakeholders may be the source of ideas for asset solution alternatives. Stakeholder input is also used to rank the importance of asset functionality, features, and attributes.
.4 Asset Performance Assessment. (See Section 6.1) Solutions may lie in the performance capability of the current asset portfolio.
.5 Benchmarking Information. (See Section 6.1) Asset solutions used by competitors or others may be considered as a source of alternative ideas.
.6 Technical Deliverables. Design information describing alternative asset solutions is developed as needed to support feasibility analysis.
.7 Historical Asset Management Information. (see Section 6.3) Historical information supports each major step of the process by providing learnings, examples, and so on from past approaches.
3.2.4 Outputs from Asset Planning
.1 Basis of Investment Decision Making. (see Section 3.3) The asset alternatives scopeincluding its cost, schedule, risk, and value attributesis detailed to the level needed to make effective investment decisions. Asset life cycle cost models used for planning can also support investment decision making.
.2 Change Information. The documented asset scope establishes a basis against which potential changes in requirements, and in the asset configuration, can be assessed (see Section 6.2).
.3 Historical Asset Management Information. The documented asset scope and other deliverables from the process are information captured in a database to support future asset planning (see Section 6.3).
3.2.5 Key Concepts and Terminology for Asset Planning
The following concepts and terminology described in this chapter are particularly important to understanding the asset planning process:
.1 Requirements. (See Section 3.1).
.2 Functions. Attributes of an asset or project that give it a purpose (i.e., allow user/operator to accomplish a task) and make it useful or desirable (i.e., to have value).
.3 Functional Decomposition. (See Section 18.104.22.168).
.4 Stakeholders. (See Section 3.1).
.5 Target Costing (including DTC and CAIV). (See Section 3.1).
.6 Quality Function Deployment (QFD). (See Section 3.1).
.7 Feasibility Analysis or Study. A study to determine if requirements can be achieved by a proposed alternative asset, project, or course of action.
.8 Project Control Planning Processes. (See Section 22.214.171.124, 7.1, 7.2, 7.3, 7.4, 7.5, and 7.6).
.9 Operations or Production Planning. (See Section 126.96.36.199).
.10 Forecasting. (See Section 188.8.131.52).
.11 Activity Based Costing (ABC). (See Section 184.108.40.206 and 7.3).
.12 Appraisal (of Value). To impartially estimate the value or worth of all or part of an asset based on examination of the asset and review of all the factors that would affect its value. This practice is usually performed by appraisers. Appraised value is typically calculated based on cost, income, or market comparisons. Some types of appraised value include fair market, liquidation, savage, scrap, replacement, or reproduction value.
.13 Modeling. The creation of a physical representation or mathematical description of an object, system, or problem that reflects the functions or characteristics of the item involved.
.14 Prototype Modeling (Prototyping). The creation of an original physical, functional version of an asset for the purpose of testing its feasibility and/or on which to pattern additional assets.
.15 Configuration Management. (See Sections 220.127.116.11 and 6.2).
.16 Value Improving Practices. (See Sections 18.104.22.168 and 11.5).
Further Readings and Sources
Asset planning is a key concept in various practice areas such as systems engineering, configuration management, quality management, product development, and project management. The following references provide basic information and will lead to more detailed treatments.
Amos, Scott, J., Editor. Skills and Knowledge of Cost Engineering, 5th ed. Morgantown, WV: AACE International, 2004.
Cokins, Gary. Activity Based Cost Management: An Executive Guide. New York: John Wiley & Sons, 2001.
Klammer, Thomas P. Managing Strategic and Capital Investment Decisions. Burr Ridge, IL: Irwin Professional Publishing, 1993.
Leo, Douglas W., Larry R. Dysert, and Bruce Elliott, Editors. Professional Practice Guide No. 13: Parametric and Conceptual Estimating. CD ROM. Morgantown, WV: AACE International, 2002.
Ostrenga, M., M. Harwood, R. McIlhatten, and T. Ozan, Editors. Ernst & Youngs Guide to Total Cost Management. New York: John Wiley & Sons, 1992.
Pietlock, Bernard A. "Cost Engineering Taking on Capital Management," Cost Engineering, AACE International, January 2002.
Player, Steve and David E. Keys. Activity-Based Management. New York: MasterMedia Limited, 1995.
Project Management Institute. The Guide to the Project Management Body of Knowledge, 3rd ed. Upper Darby, PA: Project Management Institute, 2004.
Rapp, Randy R., Editor. Professional Practice Guide No. 14: Business and Program Planning. CD ROM. Morgantown, WV: AACE International, 2002.
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