The formal commitment by the owner to a statement that governs how
be made about the circumstances and timing for optimal replacement
of assets (ie., "rules of
Replacement policies govern the
relationship between Potential
Failure ("P") and Functional
Failure ("F") of an
Goals and Principles
of the primary
goals of an asset replacement policy are as follows:
policy should be grounded in the following principles of asset
Elements of a Replacement Policy
A replacement policy should generally contain the following three
Replacement Timing (Mix)
- Different strategies that reflect the different attributes and
characteristics of each assets. For example, some assets are set up for
RTF whereas other assets are setup for BRP
. Replacement Strategies. Percentage of the whole and
internal component rebuild or swap-out.
- b. Replacement Types (Challenger)
- That is, what type of asset (the challenger) with replace
existing asset (the defender). Like-for-like versus upgrade.
Replacement Funding (Reserve) - that is, how will the owners
pay for the project through special assessment, demand loan or reserve
of Policies (Timing)
replacement policies can be considered to fall into two broad
categories in regards to the timing of the replacement, as follows:
below are some of the primary replacement strategies that can be
applied to different types of assets.
1: Preventive Replacement
Group 2: Failure Replacement:
The relative merits and limitations of each of these
discussed in more details on their respective pages in this online
of the agencies that are developing best practices for replacement
Asset replacement policies must align to asset risk profiles
order to achieve optimization and satisfy ISO 55001 requirements.
A balanced asset replacement mix helps the organization to achieve
optimization in conformity with ISO 55001 principles.
The Aspirational-Transactional Hierarchy with policy represented as one
of the aspirational layers.
Fig. The two
classes of replacement strategies and summary explanation of the five
alternative replacement strategies.
diagram of alternative asset replacement strategies.
Sample distribution of the percentage of assets under each of the five
replacement strategies - ie., the replacement mix.
Fig. Various types of asset replacement projects, including roof
renewal and domestic repiping.
I. Care is attempting to slow down or reserve the sands of time so that
he can undo the deferred maintenance. A futile but valiant attempt.
replacement policies mapped onto the P-F curve to illustrate their
with the point of Functional Failure ("F").
Regular. Components in this category are items like wood painting and
asphalt seal coating. These components require regular sealing or
rejuvenation or the association will face significant related repair or
replacement expenses. These projects are best to execute on schedule,
per the Reserve Study. You may be able to squeak a little more life
out, but it is often at the cost of higher repairs downstream.
Watch & Decide. Roofing and fencing are typical components in
category. The gradual approach of failure may be apparent, but the
actual failure point may be delayed or accelerated due to weather or
maintenance. For these projects, you can often make a wise decision to
wait another year, if the asset is still intact.
Benign. Components in this category are non-critical components such as
pool heaters or clubhouse trash compactors. It is not a problem to
simply wait until the component fails, because it not a big deal for
the association to survive a few days, waiting for the replacement
component to be installed. So if the Reserve Study shows zero life,
Catastrophic. These are components whose function is essential to the
association: the central hot water system, entry gate systems, etc.
Failure of any of these components is always unwelcome, and it causes
significant expense or disruption in the association. Do these projects
in advance of failure, on your terms, on schedule, to minimize
inconvenience to the homeowners.
Obsolescence (technological or aesthetic). These components have
functional lives longer than they can be described as “bringing value
to the association”. The gold shag carpet in the clubhouse, the old and
dated appearance of the elevator interior, and the old computer used by
the on-site manager are three good examples. While you can generally
get away with deferring these projects another year, you do so at your
own detriment. These are generally the low cost projects that yield a
high impact (reward) to your sense of well-being and style. So do them
if at all possible, on schedule.