What Is Asset Performance Management (APM)?

Asset performance management as the name suggests is the management of assets wherein the business goals are prioritised along with the existing assets and their availability of them. In simple terms, asset management brings together the insights from data capture, integration, visualisation and analytics together for a common purpose – improving the reliability and availability of assets. APM is a major driver of digital transformation across industries. It aligns digital techniques in such a way that they transform reliability and business performance. This practice of managing asset performance helps organisations make sound decisions for the company. 

Performance Measurement and Control

1. Performance analysis in private sector organisations

  • Describe, calculate and interpret financial performance indicators (FPIs) for profitability, liquidity and risk in both manufacturing and service businesses. Suggest methods to improve these measures.
  • Describe, calculate and interpret non-financial performance indicators (NFPIs) and suggest methods to improve the performance indicated.
  • Analyse past performance and suggest ways for improving financial and non-financial performance.
  • Explain the causes and problems created by short-termism and financial manipulation of results and suggest methods to encourage a long-term view.
  • Explain and interpret the Balanced Scorecard, and the Building Block model proposed by Fitzgerald and Moon.
  • Discuss the difficulties of target setting in qualitative areas.

2. Divisional performance and transfer pricing

  • Explain and illustrate the basis for setting a transfer price using variable cost, full cost and the principles behind allowing for intermediate markets.
  • Explain how transfer prices can distort the performance assessment of divisions and decisions made.
  • Explain the meaning of, and calculate, Return on Investment (ROI) and Residual Income (RI), and discuss their shortcomings.
  • Compare divisional performance and recognise the problems of doing so.

3. Performance analysis in not-for-profit organisations and the public sector

  • Comment on the problems of having non-quantifiable objectives in performance management.
  • Comment on the problems of having multiple objectives in this sector.
  • Explain how performance could be measured in this sector.
  • Outline Value for Money (VFM) as a public sector objective.
  • Describe, calculate and interpret non-financial performance indicators (NFPIs) and suggest methods to improve the performance.
  • Discuss the difficulties of target setting in qualitative areas.
  • Analyse past performance and suggest ways for improving financial and non-financial performance.
  • Explain the causes and problems created by short-termism and financial manipulation of results and suggest methods to encourage a long-term view.

4. External considerations and behavioural aspects

  • Explain the need to allow for external considerations in performance management, including stakeholders, market conditions and allowance for competitors.

Performance Management (PM)

  • Suggest ways external considerations could be allowed in performance management.Interpret performance in the light of external considerations.
  • Interpret performance in the light of external considerations.

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Benefits of Asset Performance Management

  • As operations or management head, you’ll already have an insight into how and which of the organisation’s assets would fail. With asset performance management, you can track the assets better and ensure minimal risk to critical operations. Tracked through advanced digital processes, the APM is enhanced with AI-powered insights, targeted automation and analytics. The AI offers several features like remote monitoring, computer vision, and perspective maintenance. 
  • Assets for a company could be anything, from systems of decisions to digital tools. Tracking their performance is essential to understand their return on investment and if maintenance is really worth it. It will also help understand when a particular asset is about to reach its last point and what can be reversed in terms of related risk involved.

Here are some of the top benefits of including asset performance management into your business.

  • Monitoring assets the smarter and faster way
  • Predicting asset failure and planning the next steps
  • Checking asset health and initiating maintenance activities
  • Creating an asset strategy on the basis of accurate data

Both ACCA and US CMA have Performance Management as a subject. Advanced Performance Management in ACCA includes calculation and interpretation of financial performance indicators (FPIs) for profitability, liquidity and risk in both manufacturing and service businesses. The Performance Management in US CMA includes variance analysis, labour, mix and yield variances, overhead and controllable variances, sales variances, variances for the service sector and market variances, etc.

Whether you choose a purely accounting course or a management course, performance tracking plays an important part. To know more about the Association of Chartered Certified Accountants or US Certified Management Accounting course you can click on the WhatsApp button at the side of this blog and get in touch with our experts directly.

What does asset performance mean?

Asset performance management is a way of tracking operational assets while keeping their ROI in mind and planning maintenance activities accordingly. APM also helps in planning risk management activities in case of asset failure.

Why is asset performance management required?

Asset management is required for monitoring assets in a smarter and faster way. It also helps in predicting asset failure and planning the next steps.

What is the difference between EAM and APM?

Enterprise asset management includes the management of physical assets like raw materials, machinery, tools, etc. APM on the other hand is a process of tracking systems of decisions to digital tools.

What are the 3 pillars of asset management?

The pillars of asset management include people, processes and technology.

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