Lifecycle Criteria for New Projects within Asset Management

In today's conditions, the shrinking market, the uncertainty of economic and sectoral risks, and the concern about not being able to channel available capital into the right project have caused investment to lose priority for many industrialists and entrepreneurs.

Due to the negative factors mentioned above, we can see that many investors are turning to investing their capital in land purchases, the stock market, and gold, rather than developing their businesses or creating new production environments.

It is precisely at this point that Life Cycle Analysis, which minimizes prediction and uncertainty in investment feasibility, emerges as a very useful tool.

The criteria I have detailed in the following article contain information that will change your perspective for new investment projects. While life cycle analysis has similar methods for existing assets, I will try to address the details in my next article.

First, let's start by explaining the concept of Life Cycle…

The word 'life cycle' has various meanings depending on the context.

In environmental sciences, the life cycle refers to the flow of energy and materials throughout the production system, starting from raw materials in the soil, through processing, shaping, assembly of the final product, and post-use disposal.

In the business world, the life cycle of a product refers to the period during which the product is on the market.

Within the scope of the ISO 55001 Asset Management System, Life Cycle Analysis (Life Cycle Costing – LCC) aims to holistically evaluate the entire process of assets, from design to disposal, in terms of value, risk, cost, and performance.

This topic is particularly related to strategic decision-making, investment justification, and maintenance strategies.

Especially in capital-intensive sectors and infrastructure systems, the operational phase is often long, frequently lasting several decades. Therefore, improving system performance, efficiency, or safety, and enhancing systems through continuous improvement and upgrades, renewal, and investment are fundamental tasks of life cycle management.

The Place of Life Cycle Analysis in ISO 55001

It would be accurate to associate the life cycle approach directly and indirectly with the following points:

Clause 4.1 – The context of the organization

Clause 6.2 – Asset management objectives

Clause 7.5 – Information requirements

Clause 8.1 – Operational planning and control

Clause 8.2 – Management of change

Clause 8.3 – Outsourcing

Clause 10 – Improvement

At this point, the question is: "Does the organization make decisions regarding assets based solely on the initial investment cost, or does it consider the value they will create throughout their life cycle?"

Life Cycle Stages from an ISO 55001 Perspective

The assessment should cover all of the following stages:

• Needs identification & planning

• Design & engineering

• Procurement / supply

• Installation & commissioning

• Operation

• Maintenance & refurbishment

• Disposal / disposal

Key Points to Consider in Life Cycle Analysis

Strategic Alignment

Asset life cycle decisions:

• Corporate objectives

• Asset management policy

Must be aligned with the asset management strategy.

Total Life Cycle Cost (LCC)

Cost Type	Examples
Initial investment	Machine Cost, Assembly
Operating	Energy, Consumables
Maintenance	Spare Parts, Labors
Breakdown	Production Loss
Risk	Occupational Safety, Quality
Diposal	Dismantling, Waste

At this stage, a Life Cycle Cost Analysis should be conducted to compare alternative asset scenarios.

Additionally, Cash Flow and Internal Rate of Return (NPV & IRR) analyses should be performed.

Risk-Based Assessment

For each life cycle stage, the following criteria are deemed appropriate for assessment as per Clause 6.1:

• Technical risk

• Operational risk

• Financial risk

• Occupational health and safety

• Environmental risk

Performance & Reliability Criteria

Life cycle analysis should be supported by the following indicators:

• MTBF / MTTR

• Availability

• Energy efficiency

• Quality impact

• Spare parts availability

Integration with Maintenance Strategies

• RCM

• TPM

• Condition-based maintenance

• Periodic maintenance

Maintenance strategy should be determined early in the life cycle.

Information & Data Management (Clause 7.5)

• Asset history

• Failure records

• Maintenance costs

• Energy consumption

• Change records

• Lifecycle data monitoring via CMMS / EAM

Change Management (Clause 8.2)

In the context of change management, how the changes affect the asset becomes important. In this context, the following changes can be considered:

• Modifications

• Capacity increase

• Changes in intended use.

  
  

Disposal & Sustainability

The concept of disposal is one of the most overlooked aspects in the analysis phase. This is because the lifespan of assets in the industry can be decades. The fact that equipment has a very long economic or technical lifespan does not mean there are no risks or costs associated with scrapping or disposal.

Therefore, I believe it is beneficial to consider the following issues during the analysis phase:

• Environmental impacts

• Legal obligations

• Recycling

• Waste costs

  
  

The starting point for the work to be done within the framework of the details I have explained may not always be the demand for ISO 55001 Asset Management System certification.

Since I have outlined the framework within the scope of the standard, I believe it would be useful to explain the most common nonconformities encountered from an auditor's perspective.

• The existence of LCC only "theoretically"

• Purchasing decisions based solely on price

• No documentation of the disposal phase

• Maintenance strategies detached from the life cycle