Excerpts from the "Asset Management Guide for Local Agencies In Michigan", developed by the Michigan Transportation Asset Management Council.  (click link for entire guide .pdf)

ASSET MANAGEMENT DEFINED
In Michigan, asset management is defined as “an ongoing process of maintaining, upgrading, and operating physical assets cost-effectively, based on a continuous physical inventory and condition assessment.” Asset management consists of a set of business principles and practices for improving resource allocation decisions. It requires a shift from a traditional tactical project management approach to a strategic, comprehensive systems management concept.

ASSET MANAGEMENT PRINCIPLES
The core principles of asset management are:
• Performance-Based – Policy objectives are translated into system performance measures and targets that are used for both day-to-day and strategic management.
• Decisions Based on Quality Information – Resource allocation decisions are based on accurate information regarding inventory, condition, and funding availability. Where appropriate, analytical tools provide access to needed information and assist decision-makers.
• Policy-Driven – Resource allocation decisions are based on a well-defined set of policy goals and objectives. The objectives reflect desired system condition, levels of service, and safety levels. They may also be tied to economic, community, and environmental goals as well.
• Analysis of Mix of Fixes, Options and Tradeoffs – An assessment is made of the Mix of Fixes available to best preserve the system. Decisions on how to allocate funds across types of investments are based on an analysis of how different allocations will impact future performance. Alternative methods for achieving a desired set of objectives are examined and evaluated.
• Monitoring to Provide Clear Accountability and Feedback – Performance results are monitored and reported. Feedback on actual performance influences agency goals and resource allocation decisions.  In one form or another all agencies currently are applying aspects of these principles to their decision-making processes. However, no agency is applying all of them. Therefore, to get started, every agency can build on its existing practices as it moves towards implementing an asset management process.

BENEFITS OF ASSET MANAGEMENT
Many public agencies are faced with a severe shortfall in transportation funding.  The shortfall may be so severe that they are unable to maintain the current condition of the system, no less improve it. If your agency is in that situation, you may be asking, “Why should we spend any time doing this? Our funding is so limited we just try to keep the snow plowed and the potholes patched.” Throwing up your agency’s collective hands and saying, “This is the best we can do,” becomes a self-fulfilling prophecy. Agencies struggling to keep their heads above water have even more of a reason to adopt an asset management process. It becomes a way to communicate with your elected officials and the public about how bad the situation is and that it won’t get any better by ignoring it. When times are tough, you need asset management even more. Applying asset management principles and practices can improve an agency’s performance, cost-effectiveness, communication, accountability, and credibility.
Specific benefits include:
• Lower long-term preservation costs
• Improved service to customers
• Improved cost-effectiveness and use of available resources
• Improved communication with elected officials and the public
• Improved credibility and accountability for decision-making

In order to achieve these benefits, an agency must evaluate its current business practices, establish where significant improvement can be achieved, and develop a plan to institute changes where necessary.