What’s the Difference Between Asset Management and Facilities Management?

Over the past few decades, the concepts of Asset Management (AM) and Facility Management have converged when it comes to their professional functions. However, while they are quite similar, the two occupations still have quite a few differences when it comes to day to day operations. Essentially, the key differences between asset management and facilities management are how and what types of assets are managed. Here are the three major factors that determine the differences between Asset Management and Facility Management.

1. The types of assets that are managed.

Asset Management is defined as a company or organization’s effort to measure and fulfill the value provided by all of its assets, both tangible and intangible. Facility Management, on the other hand, is restricted to physical assets that are utilized by and support the business’ day to day operations.

The Facility Manager’s priority is to improve the company’s business productivity and efficiency, while focusing on workplace needs and demands and managing corporate social responsibility.

There are two main types of physical assets:

• Immovable assets:Vertical real estate offices, retail, industrial
• Horizontal real estate, urban parks, playgrounds, sports facilities, etc.
• Infrastructure networks -power, water, roads, sewerage, transport, etc
• Movable assets:Items that are not permanently attached to the immovable assets – ie plant equipment, machinery, tools, instruments, vehicles, etc

2. The purpose of the assets that are managed.

An Asset Manager’s main objective is to maximize the return on the business’ assets. Their priority is to improve maintenance productivity and optimize equipment reliability, and their main focus is achieving the owner or investor’s profitability objectives. The Asset Manager is not usually concerned with the operating cost incurred by those assets. The Facility Manager’s main objective, on the other hand, is to ensure an optimal work environment and improve overall business productivity and effectiveness. To do this, the Facility Manager focuses on the needs and demands of the employees while optimizing operational expenses. This is a key difference between the objectives of a Facility Manager and those of an Asset Manager.

3. The assigned scope of responsibility and operations.

The Asset Manager’s main responsibility is to ensure the effectiveness and efficiency of all physical assets’ performance and production processes. The Asset Manager doesn’t typically manage or direct employees, the end user, customers, or occupiers of the building.

Unlike Asset Managers, Facilities Managers provide a variety of support services to clients, customers, and end users, including suppliers, contractors, and the Client’s customers. This means that inherently, a large portion of an FM’s job requires people skills and ensuring a pleasant workplace environment; unlike an Asset Manager’s job, which doesn’t typically deal directly with people. 

Both asset management and facilities management target improving the company’s return on capital, but the way they achieve that differs: an Asset Manager does it through asset maintenance and reliability management, and a Facility Manager accomplishes it through overall facility and end-user service management.

Main Differences Between AM and FM

Asset Managers

• Leading objective: maximum return on assets and asset utilization.
• Scope of work: all assets utilized by both primary business and support business functions of the company.
• Priority is to improve maintenance productivity and optimize equipment reliability
• Focused on achieving Investor’s profitability objectives while minimizing capital expenditures
• Corporate social responsibility activities are out of the AM’s scope of work

Facility Managers

• Leading objective: creating an optimal work environment 
• Scope of work: all assets that support the primary business of the company or organization.
• Priority is to improve the user‘s productivity and effectiveness 
• Focused on end user or occupier workplace needs and demands.
• Over 90% of corporate social responsibility initiatives are managed by FMs.

source : critical systems management blog.