When can a contract be beneficial for asset management?

A contract can be particularly beneficial for asset management because it provides a structured framework for both managing and maintaining assets throughout their lifecycle. A well-designed contract includes terms related to not just the purchase of assets but also the ongoing maintenance, support, and possibly performance metrics, which are essential for achieving the desired operational efficiency and reliability of assets.

By encompassing both management and maintenance aspects, contracts help in optimizing asset performance, ensuring compliance with service levels, and providing clarity in responsibilities, which can lead to cost savings and improved operational readiness. This comprehensive approach ensures that the organization can effectively manage the full spectrum of activities related to the asset, from acquisition through its operational life, to potential disposal or renewal.

Focusing solely on major purchases, routine maintenance, or the initial acquisition limits the utility of a contract and neglects the crucial ongoing processes necessary for effective asset management. Thus, including both management and maintenance in contractual agreements creates a more holistic approach to asset lifecycle management.