Facilities management defying accounting standards

IFRS 16 is an international accounting standard related to Property, Plant and equipment. It defines which expenses should be treated as an expense and which should be capitalized(considered or included in a balance sheet as an asset). It states that any expense which improves efficiency, performance or output of an asset should be treated as an asset. Whereas maintenance and training expense is treated as an expense. It's important to note that if untrained employees operate an ill-maintained machine, this will result in regular breakdowns and injuries to employees and regular breakdowns will decrease the performance of an asset, life and efficiency of an asset by a significant margin. But if a well-maintained machine is operated by a well-trained employee, in this can well-maintained machine can be used for a slightly longer period of time as compared to its given useful life. That slight increase in asset life would be due to better maintenance and training of employees. But these spendings are expensed out. I believe there must be a portion of such expenses which should be capitalized as this is an enabling asset to maintain or improve its performance. As its performance should deteriorate as an asset depreciates but neutralizing or minimizing that deterioration till some extent is an improvement in assets performance and life. I think either some part of maintenance and training of employees should be capitalized or a new definition should be drafted for IAS 16.

: 10 Jul 2016 15:26 |  Tags: Kbam |  Comments (0) |  Close comments |  Report a problem

How important is Knowledge

Knowledge had been used in past to educate poeple to address current and future problems of society. People with knowledge were higly regarded. It is said that fruitfull trees are always bent to let others pluck the fruit. Poeple with knowledge were considered as the fruitful trees of their socitiey and their fruit which they let the society pick was their knowledge. This is important because according to my personal view, humans have element of wilderness without knowledge, by wilderness i mean to say unpredictablity of what they want to do and what they actually do. They are in total state of confusion which makes their future uncertain. This is because they dont possess the basic guidelines of knowledge to lead their lives. But knowlegde calms down human behaviours(most of the times), and makes them more predictable as knowledge provides some ground to start process of thinking and innovating which assists in social adn economic developement of human race. Why some socites are developed and devloping, according to my point of view one obvious reason is the aggregate knowledge they possess.

As systems and processes are developed and run by humans, they are impoacted by human behaviours as well. Unstable and unpredictable systems are never let you plan ahead. In order to draft and apply effective plan its important that systems need to be predicatble and stable. Abnormal variation or unpredictability in the system can be enemy of quality and quality is one of the important competitive advanatage, which a company can have. Quality processes helps incerease efficieny of resource utlization and satisfy customer needs. Proccesses need to be integrated through a framework of knowledge which decreases the friction between processes and act as a joining element of processes and human interaction towards processes and humans. Knowledge provides a famework of drive out unprodictability in systems, which helps in better implementations of strategies on system. If i define knowledge in more moderate terms, knowledge is like a software of any hardware(system). What so ever technical specifications(assets) hardware have, its almost ineffective without relevant software(knowledge).

: 06 Jul 2016 03:31 |  Tags: Kbam |  Comments (0) |  Close comments |  Report a problem

Increasing application of Facilities management

At the end of year financial statement are prepared to present financial position of any organization. One reason is that it is important to gain the confidence of shareholder and other reasons are that according to accounting standards it's compulsory to show financial position of the company at the every year end. In those financial statement assets value is stated and its existence is confirmed through audits. But who is supposed to show that how are those assets being managed, how well are they being maintained, what impact those assets are having on environment and what steps management is taking to minimize those assets, how much health and safety effects those assets are causing to employees operating them and how security and utilization of those assets are ensured. These all are important questions and concerns for management. Because assets constitute a significant proportion of any company balance sheet's value. It's important to report on the facilities performance as well, as how many near misses have been caused by an interaction of untrained or ill maintained machines. Are the assets being fully utilized or not, this helps management to identify if their project is being over-invested or under invested. For example, if current assets are not being fully utilized and new assets are purchased this represent over investment, and this is not the best interest of shareholder's as this is never going to maximize the shareholder's wealth, in fact, this will increase their opportunity cost. Reporting helps to identify the improvement and do a comparison of asset utilization and internal performance on a yearly basis. I think facilities management can become even more effective if it is made more attractive to compulsory to report on the facilities management. This would be in best interest of shareholders, will persuade management for the planning of better utilization of resources and will make organizations investment efficient organizations. As the life of assets will be prolonged due to better maintenance and organizations will be able to retain employees as well.

: 05 Jul 2016 15:47 |  Tags: Kbam |  Comments (0) |  Close comments |  Report a problem

Facilities management

Facilities of many organisation accommodate very expensive assets in form of machines,vehicles, and IT system. Facilities also accommodate humans who interact with those assets to operate them and to carry out operations. To manage both hard and soft infrastructure in orgaznaition along with thinking to deliver quality to customers. What normally happen is maintenance or safety of employees are done as a reactive function, like when management wait until anything goes wrong and then fix it. Reactive management in this regard is an expensive and ineffective way of dealing with facilities. Facilities need to be made self-sufficient in assisting management in maintaining them, provide a safe and healthy environment to its employees , have minimum impact on the environment. Facilities need a lot of investment to erect infrastructure to accommodate machines, adn employees. Better space utilization can also save space and hence investment on facilities. Cost effective facilities can help a leader to invest the excess funds somewhere else to diverse risk or to use it when an expansion is required.

Human and machines need support services to perform core activities, like eating, cleanliness, better lighting, repairing and powering services to run the operations. For that support services need to be managed and planned ahead of as well. Better infrastructure design of facilities can help save space and cost of development and operations, like a design of using sunlight in daytime can save electricity cost and reduce carbon footprints as well. If an asset is not being used for a while management need to think about it, instead of letting it rust so economic benefit can be derived out of it either by leaving it out or dispose of. In order to deal with all these elements in an organized way, academics and industry are increasingly realising the importance of facilities management. These are a lot of tools which assists in embedding quality and flexibility into processes. According to my understanding so far, FM will become on the important and effective way of achieving those targets.

: 01 Jul 2016 10:39 |  Tags: Kbam |  Comments (0) |  Close comments |  Report a problem

Did you heard about Information disaster?

We all would have had heard about the natural, economic, social or corporate disaster. But did you ever knew about information disaster? The World is facing a problem of information disaster. What is a disaster by the way? When it was asked to Mr. Google, its searched "an event or fact that has unfortunate consequences". Anything which is above the normal limits and threatens to break or disturb existing systems can be classified as a disaster as well. Intellects pronounced it as an information overload. In this lot of information is being created. A few years back, an international conference was held regarding "information overload" where experts from all around the world participated. Their information overload was considered as a problem for users to use, store and interpret that information. According to one statistical analysis, ten thousand pages were being written in one a few years back, and that trend was still increasing. Experts see this load as a threat to knowledge creation

Because information is the input for knowledge, and if information or various topics are abundantly available with diverse arguments, then analysing that information can be a challenge because developing a knowledge with the strong argument would become comparatively difficult and knowledge generation as a challenge. I think if this keep on happening information ocean can become a bottleneck in harmonious knowledge. For that, better and bigger systems need to be designed which can process and understand information faster than human brains so it can be converted into some summarized form. Which can then be further used by humans to develop an understanding of bigger picture of tacit, explicit and environmental knowledge? If not done developing knowledge on the basis of analysis of the small amount of data would be like catching fish from a sea and calling it unique without stronger evidence.

As in past information used to be unique and knowledge even more scarce. But a lot of information is available, even after that our global problem is increasing day by day either it is informed of terrorism, global warming, economic crisis and other. The question is what is still lacking even after so much availability of information our problems are increasing? Knowledge needs to address the problems or organisation or society, which is the challenge for knowledge management in future to create solutions. Knowledge management should be focused towards problems as well. We don't to fill data banks but another argument is that information generated by different people might be used by others which can lead to innovation. So nothing is wrong or right, but one thing I do know that human race hasn't reached its maximum intellectual capability. To achieve this goal more research is needed to develop better system for generating, processing and disseminating knowledge

: 13 Jun 2016 04:26 |  Tags: Kbam |  Comments (0) |  Close comments |  Report a problem

Why to manage assets?

Assets are the one the most valuable things which an organization possesses. That possession can be in different forms. Assets constitute a substantial part of any organization's total value. Assets help organizations to carry out operations by integrating different expertise into a system. They help to store and distribute knowledge. Assets enable better knowledge management, assets are tangible resource whereas knowledge is an intangible resource. Knowledge can't be generated and distributed without the availability of specific assets. In order to stay connected to a wider pool of knowledge, remain as an effectively integrated system, enhance the life of our investment in order to increase the chances of getting a better return on investment and reliable payback period, it's essential to maintain and manage assets. More they'll be managed longer they can be used. Assets are sometimes confused with the physical assets, in fact, they can be intangible as well like skills of people, organizational culture, brand image, possession of secret knowledge. All these need a physical and virtual infrastructure for protection and provide and environment for further development, which can be done through management of assets. People are very important assets of any successful organization. They use the knowledge and assets to develop and execute strategy. Security of people, physical and intangible assets is done through additional assets. Assets are like a body and knowledge its soul, both can't perform individually, they are tied into a complex relationship.

: 12 Jun 2016 16:40 |  Tags: Kbam |  Comments (0) |  Close comments |  Report a problem

Testing grounds of knowledge

Knowledge is needed to drive a system effectively. If the system is not working properly then there can be a problem in the process of knowledge management either the right information is not being generated or it is not being accessed properly or might not be being applied properly. The performance of assets is like the testing ground of managed and processed knowledge. Knowledge is developed to improve the utilization and enhance the performance of assets. If assets are being highly utilized and properly managed then it can be highly probable that they would be supported with an application of very reliable knowledge. Knowledge management provides a reason for particular performance fo an asset. If performance is good it helps to sustain that methodology and if performance is not as per target then this helps to rethink the methodology and this also leads to a process of continuous improvement. Capturing knowledge for no reason doesn't make any sense and value either. Developing and using knowledge for improving assets management is the most effective way of using asset and knowledge management together to work as a system to deliver more effective and robust solutions. Below is the image as an example of how knowledge can be used to manage assets.

: 12 Jun 2016 16:05 |  Tags: Kbam |  Comments (0) |  Close comments |  Report a problem

How to manage knowledge?

Component of knowledge management is related to three factor one is generating then distributing and finally applying. These three procedures are carried out by people and IT. Knowledge is generated and applied by people but stored and distributed through IT channels. People generate knowledge through tacit to tacit, explicit to tacit, tacit to the explicit form. Knowledge can be used in two ways one is to study tacit and explicit knowledge to refer and support your decision making. This is done when the current problem or plan is related somehow to the previous problem. But when there is innovation or redefinition in the process, old or available explicit knowledge might not help in its original form. In this case system thinking can be a better way of managing and creating knowledge. This is when the function is understood and a different way and knowledge bank which might be tacit, is used to fulfill the function. In this, the process explicit knowledge which is apparently not relevant can be used to develop a better understanding of the function and its performance. Experts from diverse backgrounds share their knowledge to develop better strategies, they can interact physically and virtually. Knowledge is generated and shared among people but by IT systems.

IT system can help to form virtual teams to share, critic and analyse each other knowledge to develop a knowledge which is applicable to address a problem. IT systems can be in a form of the well-categorized data bank, social media platform, intranet or extranets. All knowledge is not applicable everywhere, this can be due to the difference in the situation or environment. For example, most of the literature is generated in west, students travel from all around the world to and study the literature, but that doesn't mean they can apply that knowledge in their respective cultures as it is. They have to analyse it and find the bits of knowledge which might not be applicable by talking to people who already try to do this in past to know their experiences and study own culture more as well in order to find the conflicting areas. By resolving those conflicts is the most effective way to apply knowledge. This shows that all the business models and theories can't be applied everywhere randomly, but they need support and strong reason to apply. To do that good management of knowledge can help to draw robust and effective proposals.

: 11 Jun 2016 18:39 |  Comments (0) |  Close comments |  Report a problem

Knowledge and its management

Knowledge is a resource as like other resources, when controlled and managed are of more use then of uncontrolled and unmanaged. Knowledge needs to be captured, stored and managed to be used for the desired purpose. Knowledge is the abundantly available resource but capturing and managing that knowledge to draw a reasonable and beneficial conclusion is a challenge. Knowledge is a framework of any physical structure. More use of knowledge will help the physical structure to be more sustainable and strong. Knowledge acts as a very important sense of any system. It helps system to sense and interpret the circumstances and draw a better picture of the current situation in order to help to draw more effective conclusions and hence the decision. Knowledge helps to give a better view of the road ahead, sometimes digging knowledge shows a perspective which naked sense of an individual can't observe. An aim of knowledge management is to share the ideas, experiences and knowledge with others to educate, transform and inspire to achieve their desired goals. By managing knowledge means capturing, storing, distributing and finally applying knowledge. But the question is how to do it? For that wait for the next blog !

: 11 Jun 2016 18:20 |  Tags: Kbam |  Comments (0) |  Close comments |  Report a problem

Knowledge and it's types !

Humans are emotional and sensitive creatures. It's part of their instinct that they associate meaning to everything they observe and experience. People can have similar or differing experiences and can belong to similar or different social or cultural background. People learn through interaction and communication. They agree to some points and challenge the others. All this exercise done by human beings are creating a whole new type of knowledge called "tacit knowledge". Tacit knowledge is the knowledge which is formed on the basis of personal experiences, social, cultural background. People can have different experiences in the similar cultural backgrounds. This is when people add their own meaning to something or interpret some knowledge according to their point of view, that is knowledge is called tacit knowledge. Tacit knowledge is an important source of innovation. Because most the innovations were the thoughts of some individual as s/he observed the need of something in place which others were not aware of and then developed it, and it was a boom! Tacit knowledge is hard to formulate because it's not in static form, it's in the minds of people. It's the most abundant knowledge available, but it's very difficult to identify which knowledge is just a random thought and which is based on genuine experiences.

Explicit knowledge is the knowledge which is converted into some static form like soft or hard text or pictorial document. Explicit knowledge can't exceed tacit knowledge but explicit knowledge is used more to teach and train people because of its wider availability. It is separated from the man and then can be transmitted or communicated to anywhere needed. Efforts are being done to develop a system and framework to convert tacit knowledge into explicit knowledge, so it can be stored and reused. Tacit knowledge if not converted into explicit knowledge will perish along with the person. All the tacit knowledge can't be useful but most of the explicit knowledge can be used or updated for future. Tacit knowledge can be used for strategy making to differentiate from the competitor, this strategy can be more effective by supporting tacit knowledge decision with the explicit knowledge to find out what the world thinks about it? what the for and against arguments for a particular strategy? After identifying expected problems proactive measures can be taken to minimize or eliminate them.

: 04 Jun 2016 20:10 |  Tags: Kbam |  Comments (0) |  Close comments |  Report a problem