What is Physical Asset Optimization? Physical asset optimization (PAO), also known as economic property optimization (EPO), is the technique of optimizing the physical value of assets, most notably by minimizing their environmental impact and increasing their total economic value. It considers two major questions when it comes to EEO: one, how much of the asset's value can be used? Two, what is the total environmental impact of the activity? The art of physical asset management, in its most simple form, involves physically installing and maintaining physical assets, ensuring their proper utilization, and ensuring that they are disposed in a manner that leaves them "out of sight, out of mind." These physical assets may include inventory, infrastructure, vehicles, technology, facilities, and even physical location. A physical asset is an item of tangible property such as a building, a piece of land, or a piece of equipment. An asset's physical condition determines its worth; an asset that is in excellent condition or fully functional, is worth more than an asset that is not functioning at its optimal level or that has only minimal use. Also, an asset's physical condition tends to affect the usability or functionality of that asset whether or not the physical condition is optimal or if the physical condition hinders usage.Visit this link to discover more on how physical asset optimisation can be of benefit to your organisation. When an investment property is located in an area prone to natural disasters or if the natural environment impacts the physical condition of the asset (e.g., poor air quality or a high level of salt in the soil), then these factors could diminish the overall value of the property. While natural disasters and environmental impacts do not necessarily diminish the overall physical value, they do affect the resale or "book" value of the property. They can also create a greater opportunity for depreciation due to the perceived decrease in value due to these environmental factors. The physical value of an asset does not always equal the book value. In order to maximize this economic value and to minimize the environmental impact of the property, an owner should consider buying assets from a qualified buyer. Another way to optimize the physical condition of assets is to perform preventative maintenance on the assets. By performing preventive maintenance, the physical asset will be protected and the overall asset value will increase. Preventive maintenance usually includes sealing cracks in the walls, repairing leakages, painting, and replacing deteriorated and broken components. Preventive maintenance typically costs less than necessary and is better suited for older, less expensive assets. A third way to optimize a physical asset is to make sure that the physical asset location is easy on the eyes. If there are many different signs for the different parts of the assets, then it is hard for people to locate the asset when needed. This can be especially problematic if the physical asset location is very close to an exit point for people. If there are many different signs for the assets, then people will have to drive several miles to find the asset. Therefore, assets should be situated in locations that are easy to find. Investing in physical real estate is a good idea for people who own multiple types of assets. Physical assets such as land, buildings, and vehicles can be difficult and expensive to sell. However, by making physical repairs to these assets and putting in new tenants, the owner can actually maximize the amount of money he or she receives for the investment. Proper utilization of space, location, and physical assets can help real estate owners maximize their profits. To get a detailed overview of this topic, see here: https://en.wikipedia.org/wiki/Asset_Management_Plan.
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